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AG Nessel, MLCC Chair Gagliardi Announce Historic $3 Million Fine Against Liquor Distributor RNDC for 88 Violations
July 08, 2020
LANSING – Attorney General Dana Nessel and Michigan Liquor Control Commission (MLCC) Chair Pat Gagliardi have secured an unprecedented $3 million fine and independent audit against NWS Michigan LLC, one of the state’s authorized spirits distributors, for 88 violations of the Liquor Control Code.
The violations by NWS Michigan LLC – which does business as Republic National Distributing Co. (RNDC) – contributed to liquor supply shortages throughout the state during the 2019 holiday season.
“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 order approving the settlement was signed today by MLCC Hearings Commissioner Ed Clemente and is believed to be unprecedented in the liquor regulatory industry.
In the historic settlement, RNDC acknowledged all 88 violations of the Michigan Liquor Control Code that included failure to deliver liquor orders, failure to maintain an adequate physical plant, and failure to provide records requested by the MLCC. In addition to the $3 million fine, the order stipulates an independent audit of RNDC’s distributing business (with MLCC approving the auditor); places RNDC on probation for one year; and requires RNDC to submit monthly compliance reports to the MLCC during that time.
“Distributors must abide by the rules or be subject to a fine,” said Gagliardi, who looks forward to a stronger liquor distribution system, and to a better and more productive relationship with RNDC. “I am deeply appreciative of the assistance from the Attorney General’s office and all of the hard work of the MLCC staff in negotiating this agreement.”
RNDC’s logistical failures began in spring 2019 and contributed to liquor shortages at Michigan liquor stores that extended through the 2019 holiday season. During that time the MLCC received hundreds of complaints from liquor retailers who could not obtain products from RNDC to stock their shelves. Retailers reported that RNDC delayed or missed deliveries completely, or did not deliver the products ordered. They also complained of RNDC’s lack of customer service, failure to return phone calls and of having to drive to RNDC’s warehouse to pick up their products.
Any downturn in retail spirit sales due to unstocked shelves also impacts the State’s bottom line as the sole wholesaler of spirits products in the state. Last year, distilled spirit sales in Michigan topped nearly $1.5 billion.