Lansing — The Michigan Senate on Wednesday approved legislation that would continue to prohibit liquor stores from operating within a half-mile of each other, defying efforts by state bureaucrats to scrap a longstanding proximity rule.
The 27-9 vote came hours after dozens of furious liquor store owners flooded a legislative hearing at the Michigan Capitol, protesting a pending rule change they claimed could kill their small businesses by allowing competitors to sell liquor next door.
In a battle that has been brewing for months, the Michigan Liquor Control Commission is attempting to strike a 1978 rule limiting liquor stores from operating within 2,640 feet of one another. The commission argues the rule is “protectionist” and anti-competitive.
The Senate legislation would thwart those plans by writing the so-called half-mile rule into law. It would also create exemptions allowing larger retailers and grocery stores to get around the rules.
Sponsoring Sen. Rick Jones said it would protest small businesses.
“You have families that have invested their life savings in a store, now suddenly they can have a store right across the street, right next to them?” said Jones, R-Grand Ledge.
His measure was opposed by nine of 26 Republicans who were present for the vote and no Democrats. It now heads to the House for further consideration.
The half-mile rule “significantly limits the ability for smaller businesses to grow, or even get into the business in the first place,” commission Chairman Andy Deloney told legislators earlier Wednedsay in written testimony. “The vast majority of applicants that are denied (liquor store) licenses because of the rule are small independent businesses.”
Liquor store owners, who say they purchased their stores at a premium with the expectation a competitor could not open next door, are urging the state Legislature to intervene and protect a rule they say is critical to their livelihoods.
“My business will decrease, I will have to lay off many of my employees and eventually close the doors due to the unfair new rule,” said Scott Batris of Saginaw, who opened a liquor store 22 years ago with his father. “That will also mean that I default on my student loan, my mortgage and my business loan.”
The liquor commission initially attempted to eliminate the so-called half-mile rule in March through a process that did not require public hearings, prompting outcry and a lawsuit to force feedback sessions. Commissioners ultimately voted to rescind the half-mile rule in late September.
Lawmakers on the Joint Committee on Legislative Rules could object to the rule change through mid-January. Doing so would delay implementation for another 15 days and give them time to approve a legislative alternative.
Liquor store owners questioned claims the rule change was prompted by free-market concerns, noting the state also controls liquor prices and operates a three-tiered licensing system to regulate suppliers, wholesalers and retailers.
“We have a huge monopoly in Michigan with alcohol laws,” said Brian Zetouna of the Allied Liquor Stores of Michigan. “If we really want to play the competition card, let’s start at the top, not the bottom with the middle-class family that’s trying to earn an honest living.”
The Michigan Retailers Association supports the effort to end the half-mile rule, and an attorney for the 7-11 convenience store chain testified in support.
“It seems to us that a level playing field for being able to obtain the limited supply of quota-restricted licenses is overall a good thing,” said Stephen Ormund of the Clark Hill law firm representing 7-11.
While eliminating the half-mile rule would not increase the number of available licenses, critics warn it would allow multiple liquor stores to operate next door to each other or on the same street corner, creating potential magnets for crime.
“It would be possible to take a section of your city or township and put eight liquor stores all next to each other, in essence creating a liquor district, maybe in a low income area somewhere where the community may not want that or like that,” said Rep. Andy Schor, D-Lansing.
Deloney told legislators the task of measuring distances between existing stores and proposed locations “presents a significant administrative burden” on commission staff resources, which could better used to enforce other regulations.
“The rule is a never-ending source of absurdly inventive lawyering and litigation and will continue to be unless rescinded,” he said.
But public health and neighborhood groups were among those urging legislators to retain the half-mile distance requirement, arguing that allowing liquor stores closer to one another could encourage crime and bad behavior.
Rishi Makkar, who owns liquor stores in Grand Rapids and Kentwood, predicted scrapping the rule would lead to an influx of liquor stores next door to college campuses.
“Alcohol is largely consumed on college campuses and lower-income neighborhoods, which are already fighting saturation issues,” he said. “All you’re doing is adding fuel to the flames.”