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Michigan slaps liquor distributor with 'historic' $3 million fine

Craig Mauger
The Detroit News

Lansing — A spirits distributor tied to a 2019 liquor shortage in Michigan will face a $3 million fine, which state officials labeled "historic" and "unprecedented" in a Wednesday announcement.

Attorney General Dana Nessel and Pat Gagliardi, chairman of the Michigan Liquor Control Commission, revealed in a press release they had secured the fine and an independent audit of NWS Michigan LLC for 88 violations of the Liquor Control Code. 

The 88 violations are an unusually high number of violations, but it's unclear whether they set a record, said Jeannie Vogel, a spokeswoman for the liquor commission.

The violations by NWS Michigan LLC, which does business as Republic National Distributing Co., "contributed to liquor supply shortages throughout the state during the 2019 holiday season," according to the release.

Michigan Attorney General Dana Nessel announces the kick off for the "Be Counted" campaign for the Michigan Census in Pontiac on Monday, February 17, 2020.

"I appreciate the work of my assistant attorneys general and the Michigan Liquor Control Commission in reaching this significant settlement, which should serve as a strong reminder of accountability in the state’s liquor inventory and delivery system," Nessel said. "The state will not tolerate vendor mismanagement that results in financial hardship which impacts the livelihood of liquor retailers across Michigan."

The company had invested in numerous improvements "to operations at its state-of-the-art liquor warehousing and distribution facility in Livonia," said Joe Gigliotti, Republic National's regional president of control states.

He added "part of the upgrade process" was not to the standards of the state or the company.

"We are glad to have this matter behind us,” Gigliotti said in a Wednesday statement. "We have apologized for the short-term difficulties that startup problems caused our customers and the state.

"But we also know RNDC is providing even better service today thanks to our investment in Michigan, and we plan to be an exemplary partner with the state for years to come."

Republic National "acknowledged" the violations of the liquor code in the settlement, according to the Attorney General's Office. The violations included failure to deliver liquor orders and failure to maintain an adequate physical plant. The settlement also stipulates an independent audit of the company's distributing businesses must take place and institutes a one-month probation.

Republic National's "logistical failures" began in spring 2019 and contributed to liquor shortages at Michigan liquor stores that extended through the 2019 holiday season, according to the Attorney General's Office.

Michigan has a three-tier system for liquor sales. The first tier of businesses, licensed manufacturers, sell liquor to the state. The state, as the second-tier wholesaler, takes orders and distributes that liquor through authorized distribution agents such as Republic National, which warehouse and then distribute the liquor to the third tier businesses — bars and liquor stores.

The Michigan Liquor Control Commission received hundreds of complaints from liquor retailers who could not obtain products from Republic National to stock their shelves, the Attorney General's Office said.

Staff Writer Beth LeBlanc contributed