News Story

Liquor Store Owners Think It’s Great For State To Ban Nearby Competition

Free-market think tank expert testifies to committee that it’s not great at all

The state of Michigan is believed to have been the only state in the country that imposed a peculiar prohibition on one liquor store being located within a half-mile of another liquor store.

That changed when the Michigan Liquor Control Commission rescinded the restriction on Sept. 26. But it could be reinstated if two bills pending in the Michigan Legislature are passed and signed by Gov. Rick Snyder. They would override the commission’s decision and restore the half-mile restriction.

Jarrett Skorup, the author of a study published by the Mackinac Center for Public Policy on how licensing laws hurt consumers, testified before a House committee on the legislation.

Skorup said other kinds of businesses operate without a law banning competitors from operating within a half mile.

“Meijer isn’t real happy when a Kroger operates nearby and they would love a law that prevents them from doing so, but the Legislature won’t pass that because we believe in the spirit of competition.”

No commercial enterprise should be artificially protected from market competition, Skorup said. “We’re a free-market think tank and we believe in competition in all areas.”

He also told the committee there was no evidence that more liquor stores would lead to more drinking.

State Rep. Michael Webber, R-Rochester Hills, sponsored the House version of the bill.

“The rule has been in place for nearly 40 years, and it has worked well,” Webber said in an email. “It has allowed small business owners to make educated and predictable decisions in what is arguably the most regulated market in the state.”

“This rule was temporarily taken away without public input and changes a decades-old rule that in my opinion did not need to be changed. By introducing this legislation we can have an open discussion on the benefits and drawbacks of the half-mile rule and allow the Legislature to decide if it needs to be eliminated or codified.”

The Michigan Liquor Control Commission did have an open hearing in June, and many business owners showed up to complain about the possibility of the half-mile law being rescinded.

Brian Zeer represented several establishments that sell liquor in Waterford and West Bloomfield and spoke against lifting the half-mile law. He said in June there were already too many liquor licenses, and more and more gas stations were getting liquor licenses approved.

Other business owners that sell liquor said at the public hearing they were concerned about layoffs and going bankrupt due to too much competition if the half-mile rule is rescinded.

“[Rescinding] [t]his half-mile rule gonna bring more small liquor stores in this area. That’s gonna kill our business completely. We’ll be out of business,” said Hardip Singh, who owns a liquor store in Saginaw.

But other states don’t have a half-mile restriction and aren’t seeing the drawbacks feared by many of the liquor store owners, Skorup said in the October legislative hearing.

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.