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BoozeLaw: Automated Service of Beer and Wine Available to Michigan Licensees

January 27, 2017

Fifty years in the future, historians will likely consider this decade (incidentally, there should be a more a creative moniker for this period than the “20-10s” or “10s”) as the advent of true automation. Following regulatory changes that gave rise to automated or driverless vehicles, our Michigan Liquor Control Commission (“MLCC”) likewise has adopted a rule change that will permit restaurants, brewpubs, breweries, microbreweries and other on-premises licensed establishments to employ the use of automated self-dispensing beer and wine equipment.

These devices will permit a patron or group of patrons to pre-pay for a volume of alcohol that may then be dispensed directly to customers at their table or booth at their leisure, without the need to chase or wildly wave down a server during a time out or between innings. This new rule became effective in December 2016, and is likely to be the impetus for automated dispensing equipment that could be installed for use in your favorite brewpub, bistro or local tavern in the near future.

While the technology associated with dispensing equipment is not new, until the MLCC announced the rule change in December, the practical use for these self-pouring apparatuses in Michigan was very limited: prior to the change, the devices could only be employed in bedrooms or suites of licensed hotels. Previously, almost all self-automated dispensing devices were collectively treated by the MLCC as “vending machines,” defined by the commission as “any machine that directly dispenses any type of alcoholic liquor directly to a customer, regardless of whether any such machine was operational solely by coin or other currency.”

As part of the denial of a request by one of the Michigan casinos to install dispensing equipment that was not coin-operated but required initial activation by one of the casino’s trained servers, the MLCC issued a Declaratory Ruling in 2012 which held that any machine that would permit a patron to pour their own alcohol was a form of a vending machine, and would be prohibited in a licensed establishment, even if the machine was not coin or currency operated.

As a result of modifications to administrative Rule R 436.1045, the commission has created parameters that will distinguish legally-permitted “dispensing equipment” from the broad category of devices that are treated as prohibited “vending machines,” if the equipment and its use comply with the following conditions to the satisfaction of the commission under Rule 45(4):

  • The dispensing equipment does not dispense more than 96 ounces of beer or wine in a single order;
  • The apparatus is only situated at the booth or table of the patron, and not in a common area of the restaurant or microbrewery where its use cannot be effectively policed;
  • The machine does not dispense spirits or any mixed spirit drink and is therefore limited to either beer or wine;
  • A server employed by the licensee has verified that the customer is not less than 21 years of age and does not display any signs of physical intoxication; and,
  • The licensee does not offer to sell or advertise the sale of an unlimited quality of beer or wine from the devices.

While the commission has promulgated the rule changes, it has yet to offer clear guidance for restaurant, brewery or other licensed owners to consider when evaluating the value of the use of the equipment, in light of the enforcement obligations that will be imposed on each owner.

For example, if the equipment is installed at tables or booths, the establishment will be required to demonstrate not only that a trained server has verified the age of the patrons who are present at the booth or table at the time that the transaction was completed, but that the establishment also exercised due diligence to monitor any additional patrons who may later join an existing group at the table or booth while alcohol is readily available for disbursement to anyone who may self-serve.

The commission also has yet to offer guidance that may help a licensee mitigate or defend a violation associated with a sale or service to an intoxicated patron, which arguably may occur where any one particular patron in a group consumes all or a significant portion of the 96 ounce allotment that is permitted for consumption at any given time. Unlike the traditional interaction between a waiter or waitress and a customer, where a trained or experienced server can assess the condition of a customer at the time that each order is placed, no one may be readily available to observe each customer who can unilaterally partake from the equipment without server intervention.

Owners should be certain of one fact: the commission is not likely to impose a lesser standard of care on licensees who are cited for alcohol service violations arising from the employment of self –service equipment than the standards otherwise imposed on those licensees who utilize the traditional server model.

The debate that undoubtedly will occur as a result of the Rule 45 changes is not unique: the advent of any new technology, especially related to automation where the human intervention is limited or removed, typically leads to debate over the cost associated with the potential problems and the value of the benefits. From a business standpoint, owners will need to determine whether the benefits associated with the convenience of a self-pour option outweigh the potential loss of marketing and good will associated with the typical interaction between the customer and his or her favorite waiter and waitress. From a legal standpoint, additional steps may need to be undertaken to address a number of unanticipated consequences that may arise once dispensing equipment is installed.

Whether entirely positive, negative or a combination thereof, changes and new technologies are always interesting and challenging, and the Hospitality and Beverage Control Practice Team at Varnum is available to help restaurant, brew pub, microbrewery and other licensees navigate these issues and to assist with the new permitting requirements. You may contact yours truly or any other member of the practice team at [email protected] or (248) 567-7425.

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