Michigan Liquor Control Commission briefs committee on licensing, sales and revenue distribution

Officials from the Michigan Liquor Control Commission briefed the House Committee on Regulatory Reform on the agency's structure, licensing activity, sales trends and how liquor-sale revenues are distributed across state funds.

"This is a $2,000,000,000 business. We do not take that lightly," said the Chair of the Michigan Liquor Control Commission during opening remarks. The commission's presentation described Michigan's control-state model for spirits, the three-tier system of manufacturers, wholesalers and retailers, and a high-level breakdown of licensing and sales statistics.

Carrie Crowe, the commission's business manager, said the agency issued "over 110,000 licenses and permits" and that the office handles annual renewals for those records. Crowe said the commission processes more than 42,000 licenses and 68,000 permits, manages roughly 20,000 licensees and handles about 4,800 off-premise and 9,500 on-premise retailers.

David Marvin, director of the commission's executive services division, explained how the state sets minimum shelf prices for spirits under statute. "The statute says the Commission shall price spirits products so that it will return a 65% profit to the state of Michigan," Marvin said, describing components that contribute to the minimum shelf price and noting retailers receive a statutory 17% discount off that price.

Marvin and Crowe provided annual-volume figures: the commission described roughly 10.5 million cases and about 173 million bottles sold statewide and said the commission distributes estimated fiscal-year-24 profits and license fees to multiple state funds. Crowe summarized the distribution illustrated in the commission's chart: an estimated $410 million to the general fund; roughly $76 million to the convention facilities development fund; about $75.5 million to school aid; local governments receive 55% of retail license fees (Crowe said that share aggregates to nearly $9 million), and the commission retains an operational portion. Crowe also said the commission transfers about $2.8 million to the Department of Health and Human Services for alcoholism programs and that other statutory distributions support craft-beverage programs and county road patrol funds.

Sarah Weber, the commission's Director of Licensing, told the committee the processing time for new licenses typically runs "60 to 90 days on average" depending on completeness of an application; she said the licensing unit has increased outreach and published FAQs to assist applicants.

Committee members asked questions about the volume and administration of one-day special licenses, inventory reviews and the impact of nonalcoholic "mocktail" products on the market. Crowe said the commission grants roughly 9,000 24-hour special licenses annually, noting that number has returned to pre-COVID levels. Regarding inventory, the commission said it performs spot inventory checks four times a year and monitors stock levels tied to sales and warehousing practices.

On statutory retail discounts, Weber said the 17% retailer discount is set in statute and was temporarily increased to 23% for on-premise retailers during the COVID period; the commission said the single-rate discount was reestablished by the legislature roughly a decade earlier.

Commission staff offered contact information and told members they remain available to answer follow-up questions from legislators and constituents.