Hand Wringing Over Liquor Reforms

The Detroit News this morning published a story about the possibility of reforming the Michigan Liquor Control Code and its related rules. The author correctly notes that some groups and residents in Michigan are “on edge” over what the reforms may bring.

One of those quoted, Mike Tobias of the group Michigan Alcohol Policy Promoting Health & Safety, argued that “We (Michigan) have plenty of liquor licenses and plenty of beverages sold over the counter. We know that the more alcohol outlets there are, the more alcohol-related problems and harm there is.”

There are two problems with this quote. First, it is a little presumptuous. Who is Mr. Tobias to declare that Michigan has enough licenses to sell alcohol and enough alcohol sales themselves? I meet with frustrated entrepreneurs frequently who might beg to differ.

One of those, an immigrant from Mexico, moved his family to Decatur, about halfway between Kalamazoo and Benton Harbor, in search of opportunity. He and his wife scraped together enough money to start a restaurant, only to be told no liquor license was available to them for purchase due to state quota restrictions.

Have you ever heard of a Mexican restaurant that can’t offer a cold cerveza or margarita with their burritos? They are complementary goods for heaven sakes. This honorable entrepreneur sees his potential customers drive a short distance to Indiana for the adult, legal beverages they desire.

It is deeply troubling that people want to prevent an adult business owner from serving a beer to adult buyers, but that’s exactly what happens as a result of the state’s archaic quota system. (As an aside, the restaurant continues to struggle — and may close — as the owner's 18-month licensing odyssey grinds forward.) 

Second, Mr. Tobias seems to assert as fact the notion that alcohol outlets and alcohol problems are always and everywhere correlated. Not so fast: Research conducted by Dr. Patrick McCarthy and published in 2003 looked at changes in alcohol sales establishment density (in several licensing categories) in 111 California cities over an eight-year period in the 1980s.

He found that an increase in the density of general off-site (like a package liquor store) alcohol sales licenses were associated with decreases [emphasis added] in “fatal, non-fatal, and total alcohol-related traffic accidents.” Conversely, he found that an increase in the density of on-premise licenses (such as a bar) was associated with “increases in non-fatal, but not fatal, accidents.”

Other scholarly literature also exists that seems to undermine the “more government control equals more safety” approach to alcohol regulation.

Indeed, my colleague Todd Nesbit and I cited two of those studies in previous work, including our Dec. 1 Detroit News Op-Ed, in which we argue that the state unnecessarily drives up the cost of alcohol, inhibits free association between adults and does so without providing consumers and residents greater safety measures than found in states with a lighter regulatory touch.

In the future I would hope that supporters of Michigan’s alcohol regulation status quo — who are no doubt very well intentioned — familiarize themselves with the scholarly literature on this topic before making any more generalizations about existing government alcohol regulations and public safety.

Reforms should be made to the code and those include repealing the exclusive sales territory mandate in the law and streamlining the licensing process.

For more of the Mackinac Center’s work on this topic and specific ideas for reforming the Michigan Liquor Control Code to go

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.