Law Would Make Bringing Large Amount of Alcohol into Michigan a Felony

Bills pushed by wholesalers to ‘keep a higher profit for themselves’

If you’re planning a party this summer, don’t let an out-of-state relative offer to stock your bar. The Michigan House passed a set of bills on Thursday that will create new civil and criminal penalties for individuals who bring too much alcohol into the state without a liquor distributor’s license.

Michigan is one of 18 “liquor control” states where the government acts as a statewide alcohol wholesaler. It maintains a Liquor Control Commission that publishes and maintains a Liquor Control Code and requires minimum prices for different beverages. (The requirements raise prices by as much as 20 percent, which encourages rampant smuggling). It completely monopolizes the wholesaling of hard liquor by purchasing all liquor before reselling it to wholesalers and heavily regulates the wholesaling, distribution and retail sale of beer and wine. In practice, this means that most alcoholic beverage producers must grant exclusive monopolies to private wholesalers to sell their beverages to stores within each of Michigan’s sales territories.

In states without government-run distribution systems, like Washington, beverage-makers can sell their products directly to retailers, increasing efficiency and lowering prices. But Michigan retailers are forced by the threat of criminal prosecution to use state-sanctioned middlemen to purchase and import their alcohol – and so are private people who want to obtain alcoholic beverages for personal consumption.

Under current Michigan law, individuals who want to bring alcohol into the state for personal consumption are capped at 312 liquid ounces – about 24 12-oz beers or 12 bottles of wine. No one may bring in any beverage that is more than 21 percent alcohol by volume (which would rule out some wines and basically all hard liquor). Anyone wishing to exceed these limits must submit a written application to the state liquor control commission.

The sanctions for violating the law vary by substance. Criminal penalties for the illegal sale, importation or distribution of hard liquor vary from a civil infraction to a felony depending on the quantity. There are no specific quantity-dependent sanctions for other alcoholic beverages, only provisions that make violating the Liquor Control Code a misdemeanor. It also is a felony to do something for which a liquor control license is required without first obtaining that license.

The new bills under consideration in the House would set up harsher penalties for bringing in too much beer or wine, bringing the punishment up to the same standard as that for hard liquor. They would make exceeding the 312-ounce personal maximum a civil infraction with a potential $500 fine. Bringing in more than 45,000 milliliters of beer or wine (which is equivalent to about 60 bottles of wine or five cases of beer) would be a misdemeanor with a potential $2,500 fine and 93-day imprisonment. Bringing in more than 225,000 milliliters or beer or wine (300 bottles of wine , 26 cases of beer or 10 kegs) would be a felony. The felony would be a Class F “felony against the public order” with a potential $5,000 fine and four-year prison term.

The justification for creating these new crimes has nothing to do with protecting the public order. A House Fiscal Agency analysis reports that the bills are intended to crack down on some beer and wine retailers who are allegedly skirting the state’s ridiculous three-tier liquor distribution system “and thus keep a higher profit for themselves.” (The system prevents retailers from making direct purchases and deliveries of alcohol, requiring them to pay a state-licensed distributor to transport alcohol.) The House agency report explains that “some feel that if the penalty for the illegal purchase and transport of beer and wine across state lines” were higher, the retailers would stop trying to cut distributors out of the middle.

Of course, the report refers here to the distribution companies themselves. The state of Michigan has granted these companies a monopoly over the delivery of alcohol, and the House has introduced this legislation in response to the pressure that distributors are putting on lawmakers to continue protecting this monopoly.

Distribution companies know that local retailers and their customers could save money if the retailers weren’t forced to pay a third-party distributor, so they have pressured the Legislature to make it illegal for retailers to cut out distributors, with success.

The bills to create new liquor control crimes are on their way to the Michigan Senate, but senators should reject them. They would not meaningfully protect public safety and order. Their true purpose is to protect an unnecessary and expensive monopoly, and the Legislature should stop wielding the threat of criminal prosecution to bring individuals and small businesses to heel.