Navigating the Liquor License Landscape for Retailers
Mark Vanneste
Howard & Howard Attorneys PLLC
Last month in the Wine Law article, I briefly described different types of liquor licenses available in Michigan for manufacturers of wine, beer, or spirits. There are different liquor licenses available for retailers. Within the retail tier of licenses, there are two main categories: on-premises licenses and off-premises licenses.
On-premises licenses allow for the sale of alcohol to be consumed at the location where it is sold, such as restaurants, bars, hotels, and clubs. Off-premises licenses, on the other hand, permit the sale of alcohol for consumption elsewhere, such as convenience stores, grocery stores, and gas stations.
It’s important to note that most retailer licenses are “quota” licenses, meaning there is a limited number of specific license types based on the population of a local governmental unit. Resort licenses and licenses issued in redevelopment areas or development districts are additional options that may be issued over the quota limits. Resort licenses have specific investment thresholds, cannot be transferred to another location once issued, and require a minimum number of operating days and hours each week. Similarly, licenses issued in redevelopment areas or development districts have specific investment requirements, cannot be transferred to another location once issued, and have minimum operating requirements.
Now let’s delve into the specific types of on-premises retailer licenses available:
A-Hotel: This license permits hotels with a minimum of 25 rooms to sell and serve beer, wine, and mixed spirit drink products for on-premises consumption. It can be issued as a quota, resort, redevelopment area, development district, or special act license.
B-Hotel: Similar to the A-Hotel license, the B-Hotel license allows hotels with a minimum of 25 rooms to sell and serve beer, wine, mixed spirit drink, and spirits to customers for on-premises consumption. It can also be issued as a quota, resort, redevelopment area, development district, or special act license.
Tavern: This license is granted to restaurants or bars and allows for the sale and service of beer, wine, and mixed spirit drink products for on-premises consumption. It can be issued as a quota, resort, redevelopment area, development district, or special act license.
Class C: Class C licenses are for restaurants or bars that sell and serve beer, wine, mixed spirit drink, and spirits to customers for on-premises consumption. Similar to other on-premises licenses, it can be issued as a quota, resort, redevelopment area, development district, or special act license.
G-1: This license is specific to private, corporate golf clubs and permits the sale and service of beer, wine, mixed spirit drink, and spirits to members only. It requires reclassification from an existing quota on-premises license and local legislative approval for the reclassification.
G-2: Similar to the G-1 license, the G-2 license allows private, corporate golf clubs to sell and serve beer, wine, and mixed spirit drink products to members only. It also requires reclassification from an existing quota on-premises license and local legislative approval for the reclassification.
Brewpub: A Brewpub license is available to Class C, Tavern, A-Hotel, or B-Hotel licensees and allows them to manufacture, sell, and serve their own beer to customers. Brewpubs can also sell their beer for off-premises consumption. This license is not subject to the quota system and requires local legislative approval for new, previously unissued licenses.
Aircraft, Train, and Watercraft: These licenses permit the sale and service of beer, wine, mixed spirit drink, and spirits on airplanes, trains, and boats, respectively. They are not quota licenses and do not require local legislative approval for licensure.
Club: This license is intended for private, nonprofit organizations and allows them to sell and serve beer, wine, mixed spirit drink, and spirits to their members only. It is not subject to the quota system and requires local legislative approval for new, previously unissued licenses.
There are also specific licenses for limited-term events or purposes:
Special License: A limited-term license, usually for one day, can be issued to nonprofit organizations for fundraising purposes. It allows for the sale and consumption of beer, wine, and spirits, as well as wine auctions with privately donated wine. Each organization can be issued a maximum of twelve Special Licenses per calendar year. No local legislative approval is required for licensure, but police or sheriff approval is necessary.
Beer Festival Special License: This limited-term license is granted to associations of Brewer, Micro Brewer, or Brewpub licensees for organizing beer festivals. Each association is limited to a maximum of six events per calendar year, usually spanning two to three consecutive days. No local legislative approval is required for licensure, but police or sheriff approval is necessary.
Lastly, let’s explore the different types of off-premises retailer licenses:
Specially Designated Merchant (SDM): This license allows convenience stores, grocery stores, and gas stations to sell beer and wine for off-premises consumption. On-premises retailers may also hold an SDM license to sell beer, wine, and mixed spirit drink products for takeout. SDM licenses are subject to quotas, but there are exemptions available. No local legislative approval is required for licensure.
Specially Designated Distributor (SDD): SDD licenses allow convenience stores, grocery stores, and gas stations to sell spirits for off-premises consumption. Typically, an SDD license is held in conjunction with an SDM license. Class C and B-Hotel licensees are the only on-premises retailers eligible to hold an SDD license. SDD licenses can be issued as quota or resort licenses. No local legislative approval is required for licensure.
Third Party Facilitator Service (TPFS): Although not strictly considered a retailer tier license, TPFS licenses facilitate the sale and delivery of alcoholic beverages from SDD or SDM licensees to consumers via webpages or mobile applications. TPFS licenses are not subject to the quota system, and no local legislative approval is required for licensure.
If your business is on the retail side of the industry, understanding the specific requirements and privileges associated with each retail license type is necessary to comply with the relevant laws and regulations and successfully operate your businesses in Michigan.
Have a wine law question? Reach out to Mark Vanneste of Howard & Howard at:
