Grocery stores, gas stations, convenience stores, and other stores that sell spirits for consumption off the licensed premises are required to obtain a Specially Designated Distributor (SDD) License from the Michigan Liquor Control Commission. Unlike a license to sell beer and wine (often referred to as an SDM License), there is generally a restriction that prevents SDD licensees from being located within a half mile of another SDD licensed store. This is often called the “Half-Mile Rule.”
Earlier this year, the Half-Mile Rule was rescinded. This was obviously good news for store owners that did not previously qualify for an SDD License. However, it was bad news for existing SDD licensees because it would bring increased competition.
Our law firm received numerous calls from licensees eager to obtain an SDD license that did not previously qualify. However, very soon after the Half-Mile Rule was rescinded, a lawsuit was filed challenging whether the rescission of the rule was valid. Soon thereafter, the parties to the lawsuit agreed that the rescission would be invalidated. Therefore, the Half-Mile Rule remains in effect and prospective SDD licensees will continue to be required to either locate their stores further than a half mile from another store or meet one of the specific exceptions to the rule. This is obviously discouraging for business owners who thought that they may finally be able to obtain an SDD license but is great news for the existing retailers of spirits.
Scott A. Breen is an attorney and shareholder at Willingham & Cote’, P.C. in East Lansing, Michigan. He specializes in the areas of hospitality and alcohol beverage law as well as business and real estate transactions. Mr. Breen may be reached at 517-324-1021 or firstname.lastname@example.org.