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Specially Designated Merchant (SDM) License

Specially Designated Merchant (SDM) License

Specially Designated Merchant (SDM) Licensing Requirements & General Information

    A Specially Designated Merchant license, as defined by MCL 436.1111(15), is licensed to sell, at retail, beer, wine, and mixed spirit drink products in the original package for consumption off the premises.

    Grocery stores, convenience stores, food specialty stores, pharmacies, gas stations, and other establishments selling beer, wine, and mixed spirit drink products for consumption off the premises require a Specially Designated Merchant license.

Required Forms, Fees, and Documents

    All applicants requesting a new SDM license, seeking to transfer ownership of a SDM license, or transferring interest (stock or membership interest) in a SDM license must submit the following:

Application Form

Inspection Fee

A $70.00 nonrefundable inspection fee is required.

License & Permit Fees

The initial and annual renewal fee for a Specially Designated Merchant license is $100.00.  Additional fees will vary based upon whether permits are requested in conjunction with a Specially Designated Merchant license.

Livescan Fingerprints

Applicants that are not currently licensed through the Michigan Liquor Control Commission and will hold 10% or more interest in a liquor license must be fingerprinted.  After reviewing your application, the MLCC will provide you with a copy of the Livescan Fingerprint Background Request (LCC-105) form that you will need when you are fingerprinted by a Livescan Agency.

Purchase Agreement

Applicants requesting to transfer a license from another licensee must submit an executed purchase agreement or other documentation signed by both the applicant and the current licensee, which details the sale of the liquor license(s) and other business assets.

  • Purchase agreements must specifically indicate that the liquor license is being sold and provide the purchase price and terms of the sale.
  • Purchasers of on-premises licenses must have at least 10% of the purchase price of the business, excluding real estate.
  • Purchase agreements that are not for cash only sales and include real estate must list the personal property, including the licenses, and real estate with the terms and price for each.
  • If the personal property and real estate are being purchased by separate people or entities, the purchase agreement must indicate those names and who is purchasing which items.
  • If the applicant will not pay the full purchase price at closing, the balance due may be covered by a security agreement or promissory note.  Alcoholic beverage inventory cannot be included on a security agreement or promissory note.

Property Document

  • Applicants must provide documentation that demonstrates they will have control over the property that comprises the proposed licensed premises.  Property documents include deeds, land contracts, and lease agreements.
  • A provision to reassign the license in the event of a default on a land contract or termination of a lease agreement may be included, but may only provide for the reassignment subject to Commission approval.
  • If the applicant is a company and its members or stockholders own the real estate as individuals or under another company, a lease agreement is needed.
  • If the applicant is an individual and he or she owns the real estate with a spouse or someone else who will not be named on the license, a lease between the applicant and the owners of the real estate is needed.

Retail Food Establishment License or Extended Retail Food Establishment License

MCL 436.1533(5) requires applicants for Specially Designated Merchant  licenses to hold and maintain a Retail Food Establishment License or Extended Retail Food Establishment License issued under the Food Law of 2000, MCL 289.1101 to MCL 289.8111.  Applicants for a standalone SDM license or a SDM license to be held in conjunction with a Specially Designated Distributor (SDD) license must provide a copy of their food establishment license.

In addition to the documents required by all applicants:

Corporations must submit the following information per Administrative Rule R 436.1109:

  • Report of Stockholders/Members/Partners (LCC-301)
  • Copy of current, filed Articles of Incorporation.
  • Current Certificate of Good Standing from the state where incorporated and Certificate of Authority to Do Business in Michigan, if incorporated outside of this state.
  • Certified copy of the minutes of a meeting of its board of directors or a statement signed by an officer of the corporation naming the persons authorized by corporate resolution to sign the application and other documents required by the Commission (or Part 3 of Form LCC-301).

Limited Liability Companies (LLC) must submit the following information pursuant to Administrative Rule R 436.1110:

  • Report of Stockholders/Members/Partners (LCC-301)
  • Copy of Articles of Organization and copies of any amendments to the Articles of Organization.
  • Current Certificate of Authority to Do Business in Michigan, if the LLC is a non-Michigan LLC.
  • Copy of Operating Agreement entered into by members.
  • Copy of most recent annual statement filed with the Corporations Division, if an existing LLC.
  • Statement signed by a manager of the limited liability company or by at least 1 member if management is reserved to the members naming the person authorized to sign the application and other documents required by the Commission (or Part 3 of Form LCC-301).

Partnerships must submit the following information per Administrative Rule R 436.1111:

Licensing Process

  • The Licensing Division reviews the application and corresponding documents for completeness and verifies the appropriate fees have been received. If additional documents, fees, or corrections to documents are needed, Licensing will notify the applicant.
  • Once all the necessary documents have been received Licensing will submit the request to the Enforcement Division for its investigation. If an applicant has applied for and meets the requirements for a conditional license, the request will be considered by the Commission
  • The Enforcement Division will contact the applicant to schedule an interview with the applicant (and current licensee for license transfers). At this meeting an investigator will review with the applicant documents, including:
  • purchase agreement
  • financial documents
  • property documents
  • other items pertaining to the application
  • After the interview, the investigator will prepare a report for the Commission regarding the investigation and submit the request back to Licensing for further processing.
  • Licensing reviews the report from Enforcement and any additional documents received during the interview process. The request is prepared for the Commission to consider and placed on a docket for an upcoming licensing meeting.
  • The Commission considers the request, including:
  • the liquor license operating history of the applicant (if a current or prior licensee)
  • the arrest and conviction record of the applicant
  • whether the applicant meets the requirements for a license
  • the applicant's financial information
  • opinions of the local legislative body or police department, if received.
  • The Commission will approve or deny the request based on these factors. Occasionally, the Commission will request more information from the applicant before making a final decision.
  • After the Commission makes a decision on the request, the file is returned to Licensing for final processing.
  • Approval orders are sent to the applicant requesting any final items before the issuance of the license.
  • Denial orders are sent to the applicant and the applicant may appeal the decision.
  • When all the final items are received by Licensing, the completed request is forwarded to the Renewal Unit for the issuance of the physical license documents. Any changes in financial provisions at the time of closing which do not conform to the terms previously indicated and investigated may require submission of new forms and possible additional investigation.

Permits, Permissions, and Authorizations

Sunday Sales Permit (A.M.)

A permit that allows the sale of spirits, mixed spirit drink, beer, and wine on Sunday mornings between 7:00am and 12:00 noon, if allowed by the local unit of government.

Sunday Sales Permit (P.M.)

Allows the sale of mixed spirit drink and spirits on Sunday afternoons and evenings between 12:00 noon and 2:00am (Monday morning), if allowed by the local unit of government.

Catering Permit

Authorizes licensee to sell, deliver, and serve beer, wine, and spirits in the original containers at private events. A licensee must have a food service establishment license or retail food establishment license to qualify for this permit.

Living Quarters Permit

Allows living quarters to be directly connected to the licensed premises.

Direct Connection Permission

Allows connections from the licensed premises to unlicensed premises.

Motor Vehicle Fuel Pump Permission

Allows the licensee to have motor vehicle fuel pumps on or adjacent to the licensed premises.  The minimum distance between the fuel pumps and the site of selection and payment for alcoholic liquor is at least five (5) feet, except for a Specially Designated Merchant license issued to a marina that qualifies under MCL 436.1539.

Off-Premises Storage Permission

Allows a licensee to store alcoholic inventory off the licensed premises in a secure storage area.

License Quotas and Local Government Unit Approval for New SDM Licenses

  • Each local governmental unit (city, village, or township) has a limited number of SDM licenses that may be issued based on the population from the most recent federal census.
  • Unless an applicant qualifies for one of the exemptions or waivers below, an applicant requesting a new Specially Designated Merchant license must first verify that the license quota limit for Specially Designated Merchant licenses in the local governmental unit has not been reached and an available Specially Designated Merchant license exists.
  • A Specially Designated Merchant license issued in conjunction with an eligible on-premises license is exempt from the quota under MCL 436.1533(5)(a).  The Specially Designated Merchant license is not transferable by location.
  • A Specially Designated Merchant license issued to an applicant whose establishment is at least 20,000 square feet and at least 20% of gross receipts are derived from the sale of food is exempt from the quota under MCL 436.1533(5)(b)(i).  The Specially Designated Merchant license is not transferable by location.
  • A Specially Designated Merchant license issued to a pharmacy as defined in the Public Health Code, MCL 333.17707, is exempt from the quota under MCL 436.1533(5)(b)(ii).  The Specially Designated Merchant license is not transferable by location.
  • A Specially Designated Merchant license issued to an applicant that qualifies as a marina under MCL 436.1539 is exempt from the quota under MCL 436.1533(5)(e).   The Specially Designated Merchant license is transferable by location as long as the applicant at the new location meets the requirements of MCL 436.1539.
  • The Commission may waive the quota requirement under MCL 436.1533(6) for a Specially Designated Merchant license if there is no existing Specially Designated Merchant license within two (2) miles of the applicant, measured along the nearest traffic route.  The Specially Designated Merchant license is not transferable by location.

Proof of Financial Responsibility

Liquor liability coverage of at least $50,000.00 is required by Michigan law for active operation of a licensed business.  Types of acceptable coverage are:

  • liquor liability insurance
  • cash
  • unencumbered securities
  • constant value bond
  • membership in an authorized group self-insurance pool

For more information, please read the instructions in the Proof of Financial Responsibility (LC-95) form.

Beverage Deposit & Container Law

Under Michigan’s Beverage Containers Act (also known as the “Bottle Bill”), a dealer, meaning a person who sells beverage containers to consumers, cannot sell a consumer a beverage in a nonreturnable container.  A “nonreturnable container” means a beverage container upon which no deposit has been paid.  “Beverage” includes beer, ale, malt drink, mixed wine drink, or mixed spirit drink, in addition to nonalcoholic carbonated drinks.  Thus, a licensee who sells products that fall within the definition of “beverage” in a container that does not exceed 1 gallon must collect a deposit of at least 10 cents during the sale.  If a person returns a container to the licensee, the licensee generally must refund the deposit, even to a non-customer, as long as the licensee offers that brand for sale.  For more information on the Bottle Bill, please contact the Michigan Department of Treasury’s Miscellaneous Taxes and Fees Unit at 517-636-0515.