Michigan legalizes alternating proprietorships for distillers and mixed spirit manufacturers

In a recent meeting of the Michigan Legislature, lawmakers discussed a significant regulatory reform aimed at supporting the state's growing distillery industry. The proposed legislation, known as HB 4403, seeks to clarify and expand the existing laws surrounding alternating proprietorships for distillers and mixed spirit manufacturers, aligning them with the already established provisions for breweries and winemakers.

Currently, Michigan law permits alternating proprietorships for beer and wine producers, allowing them to share space and equipment to reduce the financial burden of starting a production facility. However, the law has been ambiguous regarding spirits, leading to confusion among distillers despite no explicit prohibition. The new bill aims to eliminate this gray area by explicitly authorizing distillers to participate in these arrangements, thereby fostering growth in a capital-intensive industry.

John O'Connor, president of the Michigan Craft Distillers Association, emphasized the importance of this legislation for nearly 40 small distillers in the state. He pointed out that the federal law already allows such agreements, but Michigan's liquor code, largely written in 1998 when the distilling industry was virtually nonexistent, has not kept pace with the sector's growth. Today, Michigan ranks among the top ten states for small distilleries, and the proposed changes are seen as vital for sustaining this momentum.

O'Connor highlighted that mixed spirit manufacturers, who create products with distilled spirits that contain less than 13.5% alcohol, represent the fastest-growing segment in the adult beverage market. By enabling alternating proprietorships, the legislation would not only support small distillers but also enhance the overall competitiveness of Michigan's beverage industry.

The discussions at the meeting underscored a commitment to nurturing local businesses and adapting regulatory frameworks to meet the evolving needs of the industry. As the bill progresses, it is anticipated that it will provide a clearer path for distillers to innovate and expand, ultimately benefiting Michigan's economy and its vibrant craft beverage scene.