MLCC On The Road
The MLCC On The Road podcast is brought to you by the Michigan Liquor Control Commission (MLCC). The MLCC On The Road podcast will provide helpful information for businesses, licensees, local governmental units, and anyone interested in the alcoholic beverage industry in Michigan.
The mission of the Michigan Liquor Control Commission is to make alcoholic beverages available for consumption while protecting the consumer and the general public through regulation of those involved in the sale and distribution of these alcohol beverage products.
For more information on the MLCC, please visit our website at www.michigan.gov/lcc. To submit a question or idea for a podcast topic, please email mlccinfo2@michigan.gov.
MLCC On The Road
Alphabet Soup: The ABCs of Liquor Licensing in Michigan
Ever wondered about the difference between "alcohol" and "alcoholic liquor"? What does "ABV" or "ADA" mean? This first episode of the MLCC On The Road Podcast's new series called Alphabet Soup will explore words and phrases in Michigan's liquor laws that start with the letter "A".
Whether you're a licensee navigating regulations, an applicant preparing to enter the industry, or simply curious about how Michigan's liquor control system operates, this engaging episode demystifies key terminology while laying the groundwork for future alphabetical explorations.
The MLCC On The Road podcast is brought to you by the Michigan Liquor Control Commission (MLCC). For more information on the MLCC, please visit our website at www.michigan.gov/lcc. To submit a question or idea for a podcast topic, please email mlccinfo2@michigan.gov.
The mission of the Michigan Liquor Control Commission is to make alcoholic beverages available for consumption while protecting the consumer and the general public through regulation of those involved in the sale and distribution of these alcohol beverage products.
You're listening to the MLCC On the Road podcast brought to you by the Michigan Liquor Control Commission with hosts Sara Weber and David Marvin.
Speaker 2:Welcome to the MLCC On the Road podcast. I'm Regan Minnick and I'm here to tell you that this week's episode is part of a series that will be called Alphabet Soup. Today, David and Sara will be talking about words that start with the letter A. I hope you all enjoy the show.
Speaker 1:Sara and I would like to give a huge thank you to Megan Minnick, one of our deputy directors in the MLCC licensing division, and her daughter, Reagan, who did our wonderful intro today. So, Sara, let's talk a little bit about our new concept that we're rolling out, called Alphabet Soup, which is going to be the ABCs of liquor licensing here in Michigan.
Speaker 3:So a little backstory here. David and I both discovered that we have a love of PBS and we both grew up on Sesame Street. So in honor of our common love for Sesame Street, we decided that we are going to do a few episodes that are geared towards that learning exercise that we were brought up on.
Speaker 1:With Alphabet Soup. We're going to take certain letters of the alphabet and talk about specific things in liquor control code or some of the things that we talk about when we're doing liquor licensing in Michigan, and talk about those definitions so that when you hear a definition or you hear an acronym which we have a lot, state government always has a lot of acronyms you will know what those acronyms mean and you'll be able to be better versed in what the liquor control code says here in Michigan and some of the things you may see on applications or hear as a licensee or an applicant for a license. We figured it would be a fun way to talk about it and, as Reagan mentioned, today's episode is all about the letter A and that's what we're going to talk about today.
Speaker 3:So I think we'll just jump right in and we're going to start with the very basic definitions first, and I say basic and they're not basic whatsoever, but we're going to do our best to explain them in a way that everyone can understand. David, can you explain the difference between alcohol versus alcoholic liquor, because I think that there is some confusion about them being the same thing when in reality they really are not.
Speaker 1:That is correct. Alcohol is by definition something totally different than alcoholic liquor. Most people when they think about what our licensees sell beer, wine, spirits at a store or what they manufacture, they think just generally that's the sale of alcohol and for all intents and purposes, somebody saying that's a sale of alcohol not a problem. We say it around here all the time, but at the end of the day alcohol in the Liquor Control Code is a different thing than alcoholic liquor. Alcohol is actually the component that makes alcoholic liquor alcoholic. We have a number of things that are alcohol, like industrial alcohol or denatured alcohol, a number of different things that go into products that the Liquor Control Commission does not regulate. That alcohol itself is just the component that makes something alcoholic versus alcoholic liquor. And alcoholic liquor is actually something that confuses a lot of people because it has that word liquor in it and liquor traditionally has been something that a lot of people think of as what one would consider a distilled spirit product, that's of a higher alcohol content.
Speaker 3:So, like your vodkas, tequilas, whiskeys, something of that nature.
Speaker 1:Correct, yeah, and so you hear that and people think liquor. When you think of a liquor store, you generally think about your tequilas, your vodkas and some of those things that have that higher alcohol content. But alcoholic liquor, as it is defined in the Liquor Control Code, includes everything Beer, wine, low alcohol content, spirit products, which we call mixed spirit, drink products, which we did a whole podcast about, and then also spirits, which are the higher alcohol content products. All of that is liquor from the standpoint of the term alcoholic liquor, and so all of our licensees sell some form of alcoholic liquor. Only a handful of them actually sell what we would consider as alcohol and that's something like a limited alcohol buyer can purchase for doing manufacturing of products and scientific research and some industrial manufacturer licenses and then the sellers of alcohol that can sell that really high alcohol content pure alcohol for things that are not going into alcohol that one's consuming.
Speaker 3:And you mentioned denatured alcohol and I'd like you to expand on that a little bit as to what that is and what that means, Because I know sometimes you hear that word denatured. What does that mean exactly?
Speaker 1:So denatured alcohol is alcohol that has something that has been put into it so that a person cannot consume it. It is something that makes it bitter. It's ultimately to make it so that the alcohol is not used for consumption, and it's very hard to take denatured alcohol and turn it back into undenatured alcohol. It's not something where people could just go buy denatured alcohol and do it at home, and that's intentional so that people aren't being able to make their own alcohol and get around all of the requirements for making alcoholic beverages. So denatured alcohol whenever you hear that term, it just means it's something that you can't drink.
Speaker 3:So something like rubbing alcohol, or I'm trying to think of what other heavy machinery type materials that they use Industrial alcohols.
Speaker 1:Yes, Thank you. So it's items like that.
Speaker 3:So that's kind of our differentiation between that and alcoholic liquor, which is something that is consumable.
Speaker 1:Correct, rolling back four or five years, when we were right at the very onset of the pandemic the coronavirus pandemic there was a lot of hand sanitizer being made and the hand sanitizer was being made out of the same spirits that were going into vodka and going into bourbon and all of that. But instead of doing all the aging and flavoring, they were putting in things to denature it. So people weren't drinking it and it would have been a really bad drink to drink, but it was also something that they could use the spirits for something else than just making beverages because of all the stuff that was going on during that period of time. So when you think of, like, hand sanitizer is a perfect example because it has a high alcohol content in it but it's nothing that you would want to drink because of that denaturing. And also you mentioned rubbing alcohol. Most rubbing alcohol is actually isopropyl alcohol, which is totally different than the ethanol that goes into alcoholic beverages.
Speaker 3:So, at the end of the day, the important thing to note here is, if you're not sure, contact our office and we can advise you on whether or not it's something that you would need some type of approval for or not, depending on what you're going to be using your product for. I think this is a good segue into our next one, which is alcohol by volume, which is also known as ABV, and can you expand on that a little one?
Speaker 1:Yeah, actually I mentioned it a little bit here. I didn't use the term ABV because I didn't want to talk about that until we got to the definition part of it.
Speaker 1:But ABV is something that you're going to hear a lot. Abv literally is the percentage of alcohol in alcoholic liquor. Actually, most people talk about the proof of alcohol as opposed to the ABV. Some of your lower alcohol content products. Typically you'll see where it says the percentage in there, but generally with distilled spirits that are higher ABVs, you'll see a proof, and the easy way to remember this is the proof is always double, whatever the percentage is. So if you see 80 proof vodka, you know that that is 40% alcohol by volume, and so that alcohol by volume is a percentage of whatever the content in that bottle is. How much of that is actual alcohol, whether it's beer, wine, distilled spirits. So, Sara, it's my turn to ask you a couple definitions and we're going to start with alcohol to go. What is alcohol to go?
Speaker 3:Well, alcohol to go is what we would commonly refer to, or what you hear people say commonly is cocktails to go. So if you're at a restaurant or a bar and you would like to order a drink or mixed spirit drink to go, that is what you're getting. You're getting a sealed container of a cocktail that you can then leave the establishment with, and there's certain parameters that have to be met in order for that person to leave the establishment or for it to even be sold to you.
Speaker 1:And just so everyone's clear, alcohol to go or cocktails to go does involve more than just a mixed drink. So you could go in and get a glass of beer in one of these sealed containers, or a glass of wine, or a cocktail, the actual cocktail to go.
Speaker 1:The other thing is and it's not just bars and restaurants that we traditionally think as bars and restaurants that are retailer licensees this can also be done at a tasting room for a brewery or distillery or a winery. If they do it correctly, there's no extra permit that's either as needed here, as long as they are licensed correctly for this, and so that's something that a lot of people also ask do I need to have something extra to do the cocktails to go? And no, you don't. You just have to have the license that allows for on-premises consumption.
Speaker 3:And it's just. It's an interesting concept. It still feels relatively new, even though it's been around for a few years now, because, again, this is another pandemic era allowance that took place. Era allowance that took place. So I think that there's still some confusion around it and how these things are able to leave the establishment in the containers that they have and how they're, in some cases, even delivered to people.
Speaker 1:On our website there is a several page document that has breakdowns for each type of license and what they can do for either off-premises consumption taking a bottle and leaving or on-premises consumption, for having the cocktails to go type situation. There's actually a little chart at the top that has X's and check marks showing what you can do in each one of those, and I think that's a very handy thing for people to have. It's kind of a quick visual representation of oh, I am a Class C license. I can't sell you a bottle of spirits to go, but I can make a mixed drink for you and put it in the correct cup that's sealed and then you could take that cocktail. So that's also on our website In the description of this podcast. I will have a link to that so that people can see that.
Speaker 3:And I also want to differentiate the alcohol to go from a social district cup as well. I hadn't thought about that until we started talking about that just now as well. I hadn't thought about that until we started talking about that just now. But with a social district, if you have a social district permit issued to your licensed business, a person can go in and order a drink and, as long as it's in a properly logoed container, it can be removed and consumed in that social district, which is completely different than this alcohol to go or cocktails to go concept.
Speaker 1:Sara. Let's go to our next definition, which is a hotel license. What is an a hotel license?
Speaker 3:All right. An a hotel license is actually a license that's issued to a hotel that allows for the sale of beer, wine and mixed spirit drink to the hotel rooms within that establishment. It's a little bit different than what we have as a B hotel sale of beer, wine and mixed spirit drink to the hotel rooms within that establishment. It's a little bit different than what we have as a B hotel, which we'll go ahead and talk about even though we're not on the letter B today. The B hotel allows for beer, wine, spirits and mixed spirit drinks, so that's the only distinction between the two. Coincidentally, we only have one A hotel license issued in the state of Michigan at this time one A hotel license issued in the state of Michigan.
Speaker 1:At this time I think there's about 450 B hotel licenses, so there's obviously only one, but it was in the list of A letters and so we had to talk about the letter we definitely needed to.
Speaker 3:It was right there. All right back to me, david. What is an additional bar permit?
Speaker 1:An additional bar permit is exactly what it sounds like. It is a permit that a retailer licensee that can sell alcohol for on-premises consumption can get to have an additional bar on their licensed premises, whether inside the building or in an outdoor service area. However, there's only a couple types of licenses that actually need these. It's a Class C license and a B hotel license. So if you have a tavern license or an A hotel license or you have a tasting room under a manufacturer or you're a club licensee, you do not need an additional bar permit for each additional bar. So the Class C licenses and the B hotel licenses come with essentially one bar. So if you have a main bar where people can come up and purchase alcohol at that bar, that's considered already a part of your license. But let's say you have a banquet room or you have a big facility or you've got an outdoor service area where you don't want to have people to have to come inside to purchase alcohol. You want to be able to sell them alcohol out in that outdoor service area and you want to have another bar there where people can literally come up and pay you at that point to purchase the alcohol and you have a Class C license or a B hotel license, you would need the additional bar permit. The additional bar permits are $350 per year. They're renewable.
Speaker 1:We also think about golf courses, when you have a little cart that's driving around the golf course. If you had a golf course that had something like that, you would need an additional bar permit for each one of those little carts that are going around. Or maybe you set up something out on the ninth hole. You wanted to have people get a drink there. You would need to have an additional bar permit for that. But again, if you have only a tavern license or only an A hotel license or club license or tasting room, you don't need those. You can have additional bars without actually having to pay for that permit.
Speaker 3:I think it's also important to note, too, that if you want to set up a bar and just have your wait staff work from it and you're not allowing anyone from the public to come up and order any drinks there, you don't need an additional bar permit for that. That is just a service bar that you are handling internally and there's no additional permit required for that particular type of service. All right, david, we're going to move on to ad space or adding space. Do you want to talk about what that is?
Speaker 1:So adding space and its opposite, dropping space, it's kind of what it sounds like. It's where you have a licensed premises and you've added onto your building and you need to get permission so that you can sell alcohol there. You can't just add onto your building. You have to actually come to the commission, apply to add space. Or let's say you drop space from your building and you no longer want that space licensed. You have to have approval for that. On our applications it actually says add space or drop space and some of them also say redefine license premises, which is a whole episode almost in its own. But you will check those boxes when you're filling out the application so that you can do that.
Speaker 1:Now, adding space when it's an outdoor service area is a different thing. You still need approval from the commission. Let's say you have an outdoor service area and you want to add on to that. That's enlarging an outdoor service area. It is still adding space, but it's treated differently under the law because you're not actually adding to the physical premises. That has walls and a roof over it.
Speaker 3:It's a change to the footprint itself. Correct. So a good example of that, like you mentioned, is a renovation where you're putting an addition onto your building or you're tearing a wall down between two different suites in an existing structure to expand the footprint of your licensed premises. That's what we're talking about in cases of an ad space or even a drop space.
Speaker 1:And you mentioned renovation. If the physical walls and the physical footprint doesn't change and all you're doing is I'm going to rearrange where all the booths or the tables are, or I'm going to move the bar from one side of the room to the other, that doesn't require liquor control commission approval. You can change all that interior stuff. You can paint the walls, you can put new flooring in. You can do all of that. It's where you're actually adding space. So if you had a really tall ceiling and you added a second floor in somehow, I'm not sure if we could even do that, but if you did something like that, that would be an additional space.
Speaker 3:We actually had one that we did, we did okay. Within the last few years.
Speaker 1:yeah, oh well, see, look at that, they added a second floor. There you go.
Speaker 3:Yep add space.
Speaker 1:Yep, so that's an add space or, obviously, if you get rid of it, it's the drop space.
Speaker 3:Correct. All right, david, we're going to talk about alternating proprietorships now, and I know that this one is going to be a little feel like this one is kind of hard to understand unless you're the people doing or performing these functions.
Speaker 1:Yeah, no, you're correct in that. So alternating proprietorships or alternating proprietorship agreements you can hear them called different things depending on what section of the Michigan law or even the federal law you're looking at. An alternating proprietorship is only something that deals with manufacturers, so retailers such as bars, restaurants, gas stations, stores, liquor stores. This has nothing to do with you. This has everything to do with manufacturers, and in Michigan currently, it only affects beer manufacturing and wine manufacturing, and so what this is is where you have two licensees that are licensed with the same license, so a microbrewer and another microbrewer, and one microbrewer is going to be the host microbrewer and the other one is going to be the tenant microbrewer. The host is exactly what it sounds like they're hosting the tenant. The tenant is coming in and using the host's equipment to manufacture some beer.
Speaker 3:Their own product.
Speaker 1:Their own product. They're going to make their own product at somebody else's licensed premises. This is allowed both under the federal law and the state law. On the federal level it can be beer, wine and spirits, but under Michigan law, currently it's only beer and wine. And so the tenant will come in and they will use that premises on alternating days, and so that's where the alternating proprietorship comes in. They don't actually own the place. All they're doing is using it when the host is not using it.
Speaker 1:Now what you will see is they will either come in and use it themselves the tenant, their staff, will come over and use the premises or, what is probably more common is the tenant will not only rent the facility but they will lease the people that are doing the work.
Speaker 1:So you've got people that work for the host that know their equipment. They know exactly where all the buttons are to press, they know where the light switches are, they know where the broom is to sweep up after they're done. They will actually rent that labor for that period of time to make the beer for the tenant, and then that beer goes back to the tenant and the tenant can sell it like it was beer that was made at their premises and that's used for situations where you might have a special product that you need special machinery for equipment for. Or maybe you're just wow, you have hit on the spectacular beer of the year that everybody wants and you don't have the capacity to make it, so you need some help making a little bit more to meet all of the demand for it.
Speaker 3:Now the tenant that is going in. Do they have to bring their own product in or can they contract with their host to use their products as well? And when I'm talking about product, I'm talking about the grains and the other particulars that go into brewing their beer or producing their wine. Are they able to use any of the host's materials in that regard?
Speaker 1:producing their wine. Are they able to use any of the host's materials? In that regard, it depends. They would have to purchase it outright. It can't be just hey, I want to use as much as I need to get me what I need and then we're done with it. What it really can't be is a pretend I'm doing this, but literally you're just giving me some of your beer. There has to be. They have to own and take ownership of all the materials that go in. Now can they buy some of that from the host? Yes, they can do that. You've got people that use certain strains of yeast, so maybe they're not going to want the host yeast. They're not going to want to buy from the same supplier there.
Speaker 1:Maybe they've got something special they put in grain-wise or certain grapes that they want. You don't see wine alternating proprietorships as commonly as you do, at least here in Michigan, as you do on the beer side. The beer side is very popular. Now, when I first started out I said beer and wine is allowed in Michigan. On the federal level, spirits alternating proprietorships are allowed.
Speaker 1:There is some legislation that has been introduced that's going through the Michigan legislature. Whether that will happen or not in the next year and a half don't know, but that would actually allow for distillers to do the same thing and that would probably be a very popular option for folks that are especially getting into the industry and say, hey, I know how I can make a certain product, but this guy over here might be able to help me out, get going with this other product if I could do this alternating proprietorship with him. So it's a way that you can use what you're already licensed for and what somebody else is already licensed for cooperatively and especially if you're a brewer that's got some extra capacity, it's a good way so that your machines aren't sitting idle and that you can help out a fellow brewer to get something made that way.
Speaker 3:I like the collaboration with this too.
Speaker 1:It really shows how much or how invested everyone in the particular communities are with making a good product and working together to for people that really want to be able to make a product but just don't know how to do it yet, or don't have the capacity to do it, and you've got somebody over here that can walk you through it and help you make a quality product. So that number one you can learn how to make the quality product, but you're also not starting out with a product that's maybe not up to the quality you would like Right.
Speaker 1:And people go well, we don't want that product right from the beginning, and so it's neat, the cooperation and collaboration.
Speaker 3:Yep, and you touched on using the host staff and whatnot not only to protect equipment, but it also helps serve as a teaching moment for those coming in too, if they are still waiting for their own machinery to come in or to be able to build up to the capacity to be able to purchase or make those purchases as well. So I like the educational component of that. It's very interesting. It's interesting.
Speaker 1:In the past few years we've seen a lot more growth in this. When I first started with the MLCC working on manufacturing type things, alternating proprietorships were rare and we've had just a lot of them in the last few years, and so it's something that, like you said, the people that know what it is know what it is, and most licensees out there, most consumers out there, don't even know all of that stuff that's going on behind the scenes, but it's a really neat tool for our manufacturers to use to cooperate and collaborate here in Michigan.
Speaker 3:Exactly. Well, I think we have time for one more definition this morning, and this one is a pretty common one. Most of the time people will hear it as an ADA, which under the common tongue is an authorized distribution agent. You want to elaborate on that one?
Speaker 1:Sure, and yeah, ada is probably what you're going to hear more. People hear the term ADA all the time, but the really long one is authorized distribution agent, and that's exactly what they are. They are an agent of the commission that is authorized to distribute and that what they're distributing for us are spirits. When you think about beer and wine and low alcohol, spirit products or what we call mixed spirit drink, those products are all distributed through licensed wholesalers, private companies that are all throughout Michigan that will deliver to people nearby in a couple county region or maybe just one county, and they have those relationships with those folks and they deliver directly. But spirits all go through the state. The state is essentially the wholesaler, but there's not a bunch of Sara and I aren't driving trucks around and dropping off cases of spirits to people.
Speaker 3:Even though that would be really cool and we'd love to see all of you, they won't. Let us do that. So, we have three different companies, three different ADAs.
Speaker 1:Yes, Yep and these ADAs, and just for some history about that, there was a time where the Liquor Control Commission back you go 30 years ago, well before Sara and my term here at the commission, Before.
Speaker 3:I was born, but that's not really accurate.
Speaker 1:But we're going to say it's close.
Speaker 3:Sara wasn't born, yet she was not born to say it's close. Sara wasn't born yet. She was not born to liquor control yet but we did work with a lot of people who did work in those state stores before they were privatized under Governor Engler.
Speaker 1:Correct. And all that privatization took away the warehouses from the Liquor Control Commission delivering those products and we had these three, now three authorized distribution agents. There's been different numbers over the years. There's always been, it seems, like three or four at any given time.
Speaker 3:They do a fantastic job for the commission. We enjoy working with them. We've had a very good and privileged relationship with our ADAs over the years.
Speaker 1:Our three authorized distribution agents deliver to almost 14,000 licensees every week. There's actually between the three of them when you add up all the different things that they deliver, and some of them will go to the same licensee as the other one will. There's almost 16,000 deliveries that are made every week and that accounts to almost 1.2 million bottles of spirits that get delivered from the three ADAs every week throughout Michigan, all 83 counties, all the way from Monroe up to Iron Mountain. They cover everything and that is just a sizable amount. And that adds up to 175 million bottles every year that the ADAs deliver to retailers on behalf of the commission because they purchase the alcohol, they purchase the spirits from the commission and then the ADAs deliver.
Speaker 3:It's just, it's amazing how many bottles go through the state system over to our ADAs and then out to all of these companies, and the operations themselves are amazing to see.
Speaker 3:I know that you and I both had the opportunity to visit several of these ADAs over the years, and I always call it visiting Willy Wonka's Chocolate Factory.
Speaker 3:I mean it is an amazing process watching how much work goes into handpicking a number of these items, how much work goes into handpicking a number of these items.
Speaker 3:So there's a lot of customization or automation that goes into the bottle selections, but there's also a lot of hands-on practices that have to go into this as well, because these cases that go out to our licensees are not just one case of the same product. It could have numerous different items in there. So hats off to our ADAs and their staff for what they do to provide such great customer service to everybody here. On a final note about our ADAs, I think it's important to note that the state of Michigan is a lot different from other control states in that because we don't have state stores where we are responsible for delivering or having our retailers pick up their own products. It allows us to provide more types of spirits that are available to the public than many other states. We have about 14,000 different products that are available for our retailers to order in our system at any given time, and that is an astronomical number compared to some of the other states around the US.
Speaker 1:Okay, Sara. Well, this has been fun doing our first Alphabet Soup episode talking about the letter A. But before we go, I have to ask you and I think I know what the answer is already, before we go, I have to ask you, and I think I know what the answer is already, but when you were a kid, or even today still, because my favorite Sesame Street character is still the one that I liked back when I was a kid who was your favorite Sesame Street character?
Speaker 3:Well, my favorite Sesame Street character was a tie, and I know that you and I share the love of Oscar the Grouch, of course, and if anybody out there knows David and I, you know that there is a reason for that and we will live and die by Oscar the Grouch every day. But my second favorite was the Count, because I loved him doing his one, two, three Never gets old Ever.
Speaker 1:Oscar the Gaucho is definitely my favorite character. I think Cookie Monster probably was number two for me. He just I wish I had that much excitement about one thing in my life.
Speaker 3:Cookies.
Speaker 1:Cookies.
Speaker 3:I don't know about you, but I had a lot of fun taping this podcast today. I love Sesame Street. I love that we were able to incorporate our ABCs into this. I think our A's were quite successful. I hope all of you enjoyed it as well and we look forward to talking to you next time.
Speaker 1:The MLCC On the Road podcast is brought to you by the Michigan Liquor Control Commission. For more information on the Michigan Liquor Control Commission, please visit our website at wwwmichigangovlcc. Thank you for listening.
