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Fight brewing over Michigan booze laws: Government backs bid to ease making, selling of alcoholic beverages

The Snyder administration and the Michigan Liquor Control Commission director are seeking sweeping reforms they say will encourage a burgeoning home-grown industry by making it easier to make, buy and sell alcoholic beverages.

The state ranks fifth nationally in the number of breweries and eighth in the number of wineries in the United States, according to Drink Michigan, a group promoting state-made wine, beer and spirits. But Michigan’s complex regulatory system restricts business expansion and unnecessarily drives up prices that consumers pay, proponents argue.

Dozens of outdated rules would be scrapped or revised under legislation that also gives small wineries, microbreweries and distilleries more freedom to bring their blends directly to customers.

“We’re aiming for a more efficient and streamlined process,” said state Liquor Control Commission director Andrew Deloney, who became familiar with complaints about state licensing bureaucracy as public affairs vice president for the Michigan Restaurant Association. “I know about a lot of the issues: It took too long, too uncertain, too inconsistent.”

But a fight is brewing over the plan in Lansing, where the powerful lobby of beer and wine wholesalers is leery of changing a system that divvies up the state into exclusive distribution regions for alcoholic beverages. The wholesalers find themselves allied with temperance groups worried about the social consequences of increased access to alcohol.

“It’s not like any other product; it’s a dangerous product,” said Mike Tobias, director of a three-year-old nonprofit called Michigan Alcohol Policy. “Every day people are dying as a result of alcohol-related accidents and diseases. Research is very clear: The more outlets you have, the more problems you have.”

More responsive to business

As part of a rules review when he took over in 2011, Deloney learned established bars and stores seeking licenses to sell alcoholic beverages on Sunday mornings under a 2010 law were being scrutinized nearly as much as new liquor license applicants.

A new simplified process now leads to quicker approval for establishments that already have regular liquor licenses, no change in ownership and no history of violations.

“Generally the idea is … to make the state code more responsive to business while continuing to protect the public health and welfare,” Deloney said.

Other proposed changes face more opposition. They include:

Allowing small wineries to offer tasting and sell their creations at farmers’ markets through special permits.

Letting microbreweries making up to 30,000 barrels of beer a year sell to wholesalers, to retailers and directly to customers in limited amounts.

Permitting smaller distilleries to sell limited amounts of their liquor directly to bars, stores or restaurants.

Allowing new liquor license applicants to be issued provisional licenses so they could open for business and serve customers while waiting for permanent licenses.

Wholesalers see these as a threat to Michigan’s three-tier system, which separates producers, distributors and retailers of alcoholic beverages. The setup dates to post-Prohibition concerns a beverage maker who also owned a bar would push as much intoxicating product on customers as possible.

The separation also was intended to protect the public from the potency or impurity of home-brewed concoctions that once were common, according to the Mackinac Center for Public Policy, a free-market think tank in Midland.

Divisive distribution laws

Wine and beer are distributed through wholesalers, many of them family operations passed down through generations that have what Mackinac Center researcher Michael LaFaive describes as “effective territorial monopolies.”

Liquor is more tightly controlled. The state itself acts as the wholesaler, determining brands, quantities and prices.

Distribution rules have been eased somewhat so smaller in-state producers can sell their wine or spirits off shelves in tasting rooms they operate. Wineries also can ship directly to customers in limited amounts. But brew pubs technically still can’t share ownership with microbreweries.

Kent Ravish, whose Grand Traverse Distillery soon will open its fifth Michigan tasting room in Novi, said the proposed legislative revisions would let his small firm, producing True North vodka and a new line of premium whiskies, continue to expand. He could get limited amounts of his six products into bars and restaurants without going through a distributor.

“We’re a drop in the bucket in terms of sales,” said Ravish, who sells about 4,000 bottles a year. “But the laws are set up in a way that prevents expansion.”

Dennise Barber, who is a partner with her husband Kip at Lone Oak Vineyard Estate in Grass Lake, favors the proposed changes because they will help their winery gain customers and expand into a line of craft beers in about a month.

The Barbers’ vineyard is one of nine southeast Michigan wineries working together as the Pioneer Wine Trail. Adding beer to their beverage lineup was a natural next step, Barber said.

“We’re going to be small potatoes,” Barber said. “There’s no reason a small guy like us should have to share the results of our hard work with distributors.”

Michael Lashbrook, president of the Michigan Beer and Wine Wholesalers Association, said his group is concerned about disrupting a system that has been in place for decades. He said the rapid expansion in the number of wineries and breweries in recent years shows it doesn’t impede growth.

“The existence of the distribution tier is what has allowed (wineries and breweries) to really go out and create a market.” Distributors “are tripping over themselves to cater to this market,” Lashbrook said.

Lansing — The Snyder administration and the Michigan Liquor Control Commission director are seeking sweeping reforms they say will encourage a burgeoning home-grown industry by making it easier to make, buy and sell alcoholic beverages.

The state ranks fifth nationally in the number of breweries and eighth in the number of wineries in the United States, according to Drink Michigan, a group promoting state-made wine, beer and spirits. But Michigan’s complex regulatory system restricts business expansion and unnecessarily drives up prices that consumers pay, proponents argue.

Dozens of outdated rules would be scrapped or revised under legislation that also gives small wineries, microbreweries and distilleries more freedom to bring their blends directly to customers.

“We’re aiming for a more efficient and streamlined process,” said state Liquor Control Commission director Andrew Deloney, who became familiar with complaints about state licensing bureaucracy as public affairs vice president for the Michigan Restaurant Association. “I know about a lot of the issues: It took too long, too uncertain, too inconsistent.”

But a fight is brewing over the plan in Lansing, where the powerful lobby of beer and wine wholesalers is leery of changing a system that divvies up the state into exclusive distribution regions for alcoholic beverages. The wholesalers find themselves allied with temperance groups worried about the social consequences of increased access to alcohol.

“It’s not like any other product; it’s a dangerous product,” said Mike Tobias, director of a three-year-old nonprofit called Michigan Alcohol Policy. “Every day people are dying as a result of alcohol-related accidents and diseases. Research is very clear: The more outlets you have, the more problems you have.”

More responsive to business

As part of a rules review when he took over in 2011, Deloney learned established bars and stores seeking licenses to sell alcoholic beverages on Sunday mornings under a 2010 law were being scrutinized nearly as much as new liquor license applicants.

A new simplified process now leads to quicker approval for establishments that already have regular liquor licenses, no change in ownership and no history of violations.

“Generally the idea is … to make the state code more responsive to business while continuing to protect the public health and welfare,” Deloney said.

Other proposed changes face more opposition. They include:

Allowing small wineries to offer tasting and sell their creations at farmers’ markets through special permits.

Letting microbreweries making up to 30,000 barrels of beer a year sell to wholesalers, to retailers and directly to customers in limited amounts.

Permitting smaller distilleries to sell limited amounts of their liquor directly to bars, stores or restaurants.

Allowing new liquor license applicants to be issued provisional licenses so they could open for business and serve customers while waiting for permanent licenses.

Wholesalers see these as a threat to Michigan’s three-tier system, which separates producers, distributors and retailers of alcoholic beverages. The setup dates to post-Prohibition concerns a beverage maker who also owned a bar would push as much intoxicating product on customers as possible.

The separation also was intended to protect the public from the potency or impurity of home-brewed concoctions that once were common, according to the Mackinac Center for Public Policy, a free-market think tank in Midland.

Divisive distribution laws

Wine and beer are distributed through wholesalers, many of them family operations passed down through generations that have what Mackinac Center researcher Michael LaFaive describes as “effective territorial monopolies.”

Liquor is more tightly controlled. The state itself acts as the wholesaler, determining brands, quantities and prices.

Distribution rules have been eased somewhat so smaller in-state producers can sell their wine or spirits off shelves in tasting rooms they operate. Wineries also can ship directly to customers in limited amounts. But brew pubs technically still can’t share ownership with microbreweries.

Kent Ravish, whose Grand Traverse Distillery soon will open its fifth Michigan tasting room in Novi, said the proposed legislative revisions would let his small firm, producing True North vodka and a new line of premium whiskies, continue to expand. He could get limited amounts of his six products into bars and restaurants without going through a distributor.

“We’re a drop in the bucket in terms of sales,” said Ravish, who sells about 4,000 bottles a year. “But the laws are set up in a way that prevents expansion.”

Dennise Barber, who is a partner with her husband Kip at Lone Oak Vineyard Estate in Grass Lake, favors the proposed changes because they will help their winery gain customers and expand into a line of craft beers in about a month.

The Barbers’ vineyard is one of nine southeast Michigan wineries working together as the Pioneer Wine Trail. Adding beer to their beverage lineup was a natural next step, Barber said.

“We’re going to be small potatoes,” Barber said. “There’s no reason a small guy like us should have to share the results of our hard work with distributors.”

Michael Lashbrook, president of the Michigan Beer and Wine Wholesalers Association, said his group is concerned about disrupting a system that has been in place for decades. He said the rapid expansion in the number of wineries and breweries in recent years shows it doesn’t impede growth.

“The existence of the distribution tier is what has allowed (wineries and breweries) to really go out and create a market.” Distributors “are tripping over themselves to cater to this market,” Lashbrook said.

Source: Detroit News

http://www.detroitnews.com/article/20130422/POLITICS02/304220351/Fight-brewing-over-Mich-booze-laws?odyssey=tab|topnews|text|FRONTPAGE