June 29, 2012  - Today, the Office of Regulatory Reinvention (ORR) publicly released its report to Governor Rick Snyder containing 72 recommendations for improving Michigan's liquor control system while continuing to protect Michigan's citizens. Gov. Snyder has reviewed the ORR recommendations and believes the ORR report is an important step in the process of reinventing Michigan government.

The ORR formed the recommendations after a comprehensive review process, including convening an Advisory Rules Committee of stakeholders that included representatives from law enforcement, substance abuse prevention organizations, retailers, tourism promotion organizations, chambers of commerce, craft breweries, wineries, distilleries, distributors and restaurants, as well as the Chairman of the state's Liquor Control Commission (LCC).

"The ORR identified several ways to improve the liquor control system to encourage business growth and job creation," said Steven H. Hilfinger, Chief Regulatory Officer and Department of Licensing and Regulatory Affairs Director. "The ORR's recommendations cover a wide range of topic areas, including improving state licensing processes and encouraging economic development in our micro-brewing and winemaking industries, which are important to the State's economic development and placemaking efforts. We are confident that these recommendations will lead to job creation while maintaining necessary public health and safety benefits."

The ORR worked closely with the LCC in reviewing existing administrative rules and developing the recommendations through the Liquor Control Advisory Rules Committee.

"My top priority as Chairman has been to improve outdated processes that exist in the LCC," said LCC Chairman Andy Deloney. "A substantial portion of the ORR's recommendations focus on process improvement and I believe these recommendations will make Michigan more competitive nationally as both a tourist and manufacturing destination - leading to more jobs created throughout the state."  

The ORR's recommendations generally fall into one of five categories:

1) Economic Development Examples:   

Recommendation #34. Allow for more resort licenses - amend the Liquor Control Code to annually allow up to 40 on ‐ premises licenses where the licensee has invested at least $500,000.

Recommendation #46. Allow for more festivals for wines and spirits.

Recommendation #59 . Allow microbrewers to have off-premise tasting rooms and provide complimentary samples. 

2) Process Improvement Examples:   

Recommendation #10. Provide the LCC with the option of granting a limited-term conditionally approved license to an applicant who has fulfilled the fundamental requirements for licensure. This license will allow the licensee to open and operate their establishment while the process is being completed.

Recommendation #16.  Eliminate investigation on individuals already licensed with the Commission. Use the term "currently licensed" or have existing licensees sign a form that says "no changes since last investigated." 

3) Prevention, Safety and Enforcement Examples: 

Recommendation #62. Levy a $20 surcharge on all licenses (manufacturer, wholesale and retail) to support an education and enforcement competitive grant program to be administered by the LCC.

Recommendation #2: Separate the Enforcement Division into two sections: Licensing Investigation and Violation Enforcement.

Recommendations # 1; 3; 5-6; 8-9 : All of these recommendations (and others) eliminate unnecessary activities providing the LCC with more time to enforce laws to promote public safety.

4) ADA System

Example: Recommendation #65.   Empower the LCC to exclusively conduct the review of the per-case ADA fee and set the fee.  

5) The Three Tier System Example:   

Recommendation #59. Allow microbrewers to sell beer to a wholesaler, to a consumer by direct shipment, or at retail for consumption on or off the licensed brewery premises.

Public health and safety interests were represented on the committee and shaped many of the recommendations. The law enforcement representative concurred with virtually all of the recommendations.

"The ARC weighed the public health and safety implications of each recommendation," said Ionia County Sheriff Dwain Dennis. "Overall, the recommendations improve our liquor control system without compromising public safety. In fact, we have recommendations that enhance public safety such as the recommendation for a new enforcement and education fund."

The recommendations contain several improvements to the regulation of craft brewing which will increase economic growth. Craft beer is a burgeoning segment in the state's economy. Despite ranking 6th for the total number of breweries and 15th for breweries per capita, Michigan produced beers account for just 2.5 percent of all beer sold in the state -- well below the national average where craft beer is 7.6 percent of all beer sold. The ORR's recommendations should help Michigan brewers bridge the gap.

"These recommendations enhance economic freedom and opportunity for Michigan's craft brewers and remove competitive disadvantages compared to breweries from other states.  Getting government out of the way and allowing Michigan's brewers the same opportunities already enjoyed by Michigan's wine-makers to make critical business decisions will be a catalyst for growth in this expanding industry," said Matt Greff, owner of the Arbor Brewing Company. "Supply chain decisions and other marketing considerations should be left to businesses. These recommendations should be applauded by everyone in the state who supports job growth and small business development."

The recommendations also include a series of process enhancements. From recommending the increased use of electronic communications to identifying multiple bottlenecks in the system, the report outlines several ways to improve the efficiency of the LCC's operations.

"Michigan's liquor control system is outdated and is not designed to meet citizens' needs in 2012," said Linda Gobler, President and CEO of the Michigan Grocers Association. "These recommendations go a long way to streamline bureaucracy and modernize our system. Ultimately, consumers should benefit from the decreased cost of the system."

These benefits would all be realized while maintaining Michigan's existing "control" regulatory structure. Michigan is one of 19 states to control the distribution and selling of alcoholic beverages.

"Economic development should be our number one priority when thinking about our regulatory system," said Pat Moody, Executive Vice President of the Cornerstone Chamber of Commerce. "The hospitality industry is important to Michigan's economic well-being. These recommendations encourage economic development by allowing for new resort licenses and creating an environment more conducive to economic activity. The system will be more customer friendly to the hospitality industry and that means the system will be more job-creation friendly as well."

To view the complete recommendations, visit: http://www.michigan.gov/documents/lara/ORR_LCC_ARC_Recommendations_391015_7.pdf  

For more information about other ORR recommendations, visit here

For more information about the ORR, please visit www.michigan.gov/ORR

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