In 1968, the Michigan Liquor Control Commission established an administrative rule that generally prevented a retail store from obtaining a liquor license to sell “spirits” if there was another store selling spirits within a half mile. This is known as the “half mile” rule. This rule only applied to grocery stores, convenience stores, and other retail establishments for off premise consumption (alcohol not consumed on the licensed premises). It also only applied to stores selling “spirits” but had no impact on a store’s ability to sell beer or wine. The Michigan Liquor Control Commission rescinded this rule in 2017 (because they believe it to be anti-competitive) and a lawsuit was filed to keep the rule in place. Obviously, existing liquor stores have a strong interest in protecting their business investments by preventing other liquor stores from obtaining licenses and selling spirits within a half mile of their stores.
On April 16, 2018, a Michigan court dismissed the lawsuit filed on behalf of the existing liquor store owners. As a result, the “half mile” rule is now a thing of the past. However, it is very important to note that there are strong advocates in Lansing who are trying to get the half mile rule (or some version of it) codified by the Legislature into the Liquor Control Code. Essentially, if enacted by the Legislature, some version of the half mile rule would become law and would not be able to be rescinded by the Michigan Liquor Control Commission. We are waiting to see what happens in Lansing on this issue.
The recent ruling and current state of the law is positive for businesses that desire to sell spirits for off premise consumption within a half mile of an existing liquor store. The possible increased competition could certainly hurt existing businesses.
If you would like more information on this topic, or liquor licensing in general, our firm can assist you.
Scott Breen is a shareholder at the law firm of Willingham & Coté, P.C. He is the chair of the firm’s Hospitality and Alcohol Beverage Group as well as the Corporate and Real Estate Groups. Mr. Breen assists clients with obtaining/transferring liquor licenses and permits, succession planning, and business and real estate transactions. He can be reached at 517-324-1021 or at firstname.lastname@example.org.