Michigan panel lifts distance rule for liquor stores

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — The Michigan Liquor Control Commission on Tuesday voted to lift a long-standing rule prohibiting liquor stores from operating within a half-mile of each other, advancing the plan despite opposition from existing owners and public safety concerns.

Approval from the three-member panel allows the rule-making process to proceed following a contentious public comment period. Michigan legislators could still intervene before the rule is officially revoked.

Owners argue they built or bought their businesses with the expectation other stores could not open within a half mile, and because the state sets minimum liquor prices, they say their ability to compete is already limited.

But commission Chairman Andrew Deloney said Tuesday he does not think state government should provide liquor stores with “protection” from competition that is not afforded to bar, restaurant or night club owners.

“If I’m a restaurant owner, am I going to be concerned when another restaurant opens across the street or down the block? Absolutely, I’d be concerned by that,” DeLoney said. “At the same time, is that a compelling reason why the state should offer one class of licensee protection when no one else has that, and no one else is asking for it?”

Michigan retail liquor sales topped $1 billion in 2016, according to the state. The liquor control commission publishes annual sales data that critics say would-be competitors could use select sites near successful stores if the half-mile rule is lifted.

The top four sellers were Meijer stores in Grand Rapids, Traverse City and Ann Arbor, which sold between $1.8 million and $2 million each in spirits. A&L Market on Joy Road sold the most in Detroit, topping $1.15 million last year. Most liquor-specific stores sell much less.

While the state limits the number of liquor licenses it hands out, supporters of the half-mile rule fear that lifting it would lead to liquor stores on all four corners of busy intersections in large urban areas.

Wayne County Sheriff Benny Napoleon has called the rule “necessary for public safety.”

Auday Arabo, president and CEO of the Associated Food and Petroleum Dealers, said Tuesday’s vote was an “embarrassment to government and good public policy.”

His trade group sued the Liquor Control Commission to force a public hearing, “but they never had any intention to really listen to the public,” Arabo said. “Their minds were made up beforehand. It was really more of a sham.”

Commissioner Teri Quimby said she does not think the half-mile rule would survive a legal challenge and agreed with Deloney that it has proven a “significant administrative burden.”

The state must physically measure the distance between existing and proposed liquor stores when reviewing license applications, Deloney said. In one case, an owner wanted to move a wall four feet to comply, Quimby said.

Ben Baldwin, who owns the Sand Lake Party Store and is working to open a new Broad Street Market Tavern in Hillsdale, argued that lifting the half-mile rule would “basically just start a territory war” in some communities.

He noted the state sets minimum liquor prices, which most stores stick with, so competition is already limited to customer service and location.

“We didn’t foresee this law coming when we got into it,” said Baldwin, who has one child in college and another approaching it. “We’ve gotten business loans based on what we currently thought the market was going to do, and we didn’t think somebody could open a half-mile from us and take half our business.”

A series of consumers shopping at liquor stores in south Lansing on Tuesday afternoon said they were fine with existing location rules.

“It’s good for this business not to have another one just two blocks away,” said Ryan Smith, who works in landscaping and was buying beer at the Jackpot Party Store.

Jayda Shines, who was with her mother about a mile away at Louie’s Party Store, said she did not know the state limited store locations but appreciates that it has.

“There’s no point to have them close together. I just don’t think there’s need for more,” said Hines, who is preparing to go to college. “I feel like more robberies would happen. A lot of things go on in liquor stores.”

Michigan legislators will have a chance to object to the rule change through the Joint Committee on Administrative Rules or separate legislation.

The state Senate Regulatory Reform Committee is considering a bill that would write the half-mile rule into Michigan law. It would also simplify enforcement by directing the commission to use a digital “global positioning system,” or GPS, to measure distances.

“We’re taking it to our elected body, because our elected body should have a say on this issue,” Arabo said.