Change is in the air at MLCC

Posted on January 20, 2012

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I recently had a conversation with Jim Stariha (a man I’ve often heard referred to as the “godfather” of Michigan liquor law) about what licensees, brokers, and lawyers can expect from MLCC in the near future. I’ve compiled our thoughts below:

First, a few general observations:

  1. The Commission is attempting to go “back to basics” by focusing on the exact language of the law and the rules
  2. Chairman Deloney stated that the current administration wants to take away unnecessary roadblocks and nonsensical requirements
  3. Chairman Deloney expressed dislike for any rule (such as the “half-mile rule” R. 436.1133) that impedes free markets and competition
  4. Chairman Deloney noted that the Governor had not ruled out dramatic changes to our current system, including complete privatization of liquor sales
  5. The Governor created an Office of Regulatory Reinvention, charged with “reducing obsolete, unnecessary and burdensome rules that are limiting economic growth”
  6. The Governor created a Liquor Control Rules Advisory Committee which met behind closed doors and created a (still undisclosed) list of recommendations for changes in the current law
Next, a few specific observations both from our personal experiences and from conversations with others:
  1. Rather than deny applications where the Commission has concerns about the violation history of an applicant’s stockholders/members, the Commission has requested meetings with the stockholders/members. These meetings seem to be informal and have resulted in an immediate decision on the application.
  2. In at least one situation where the Commission decided to request a meeting with stockholders of an applicant, no attempt was made to inform the stockholders of the Commission’s request.
  3. A number of requests sent to the Commission have gone without response for over a month.
  4. The Commission has put in place measures to expedite the process of approving several types of permits.
  5. In adherence to a strict reading of the relevant statute, the Commission now requires that all transfer fees be paid up front, before any requests will be considered. These changes are being applied retroactively.
  6. Where the statute or rules dictate a specific timeframe that must be adhered to by a licensee, the Commission is now requiring strict adherence to that timeframe. Failure to comply will result in automatic suspension of the license(s).
Finally, our thoughts on what this all means:
  1. The current administration is obviously looking to overhaul our current liquor control system. At this point, it is impossible to say how comprehensive that overhaul might be. At the very least, it would seem reasonable to expect changes to some of the more frequently maligned rules (the half mile rule, the gas pump rule, etc).
  2. While the Commission appears to be working hard to streamline and expedite certain aspects of MLCC’s functions, it seems that MLCC, as a whole, is still undergoing a period of transition. Therefore, it would behoove applicants, licensees, and attorneys to regularly watch the status of their request(s) and to contact MLCC if there is a protracted period without results.
  3. Those who have been working with MLCC for longer periods of time may expect things to work “as they always have.” It is becoming apparent that such an expectation is no longer wise; change is in the air at MLCC. We recommend regularly watching for news updates from MLCC (on this blog, or here).
  4. It is also becoming more and more apparent that the Commissioners are conducting a line-by-line review of the Liquor Control Code and the Rules. As noted above, this means that working with MLCC will not necessarily work “as it always has.” Prior Commissions were known to stray from the Rules and Statutes, for better (flexibility in deadlines, etc) or worse (denial of a request without a statutory basis for such a denial). Now that the Commission is adhering strictly to the Code and Rules, practitioners and licensees can expect a greater degree of predictability; however, determining that predictability will only come from a thorough knowledge of the law.
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