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Michigan Initiates Limited Spirit Buyback Program

April 14, 2020
Hospitality & Beverage Control Advisory

Update: The deadline for the liquor buyback program discussed in this advisory has been extended to Friday, April 24.

Liquor bottles on shelvesOn April 13, 2020 Michigan Gov. Gretchen Whitmer implemented Executive Order 2020-46 in an effort to provide some relief to on-premises retail licensees in Michigan in the form of a buyback of liquor ordered from the state of Michigan through any one of the Authorized Distribution Agents (ADAs) in March 2020. The classes of licensees eligible for the program are limited and include Class C, B-Hotel, G-1, Club, Continuing Care Retirement Center, Aircraft, Watercraft and Train Licenses. Off-premises retail license holders, such as SDM (packaged beer and wine) and SDD (packaged spirits) license holders are not eligible for this program. There are a multitude of components to the program.

First, eligible spirits are those purchased from an ADA prior to March 16, 2020. At the moment, those spirits purchased subsequent to the cutoff date shall not be included.

Second, the Michigan is authorizing the Liquor Control Commission (MLCC) to accept buyback requests by either email or the MLCC website. At the time of this advisory, the MLCC webpage has not been updated with the appropriate application. Further updates with either a dedicated webpage or a link to the new application will follow.

When a licensee elects to participate, the MLCC will advance to the licensee an amount equal to 100 percent of the purchase price of the spirits in the inventory of the licensee (note that no other alcoholic product is eligible, such as beer or wine).

At the moment, the cutoff deadline for the program is Friday, April 17, 2020 at 5:00 p.m (see note above; the deadline has been extended to Friday, April 24). The order does not authorize an extension, and therefore this deadline may be hard with no exceptions for late requests.

Upon advancing cash to a licensee pursuant to this buyback program, the MLCC will acquire legal title to all spirits purchased by the licensee before March 16, 2020 that are in the licensee’s inventory at the time the licensee opts into this buyback program. This transfer of title does not suggest nor require the licensee to return the product through the appropriate channels. Rather than requiring the licensee to physically return the product, the licensee must exercise reasonable care to account for and preserve the inventory of any such spirits.

Under the terms of the order, until such time as the MLCC takes actual possession of the spirits, which will not transpire earlier than 90 days after the end of the declared state of emergency by the governor's office, the licensee may regain title by repaying in full the amount of the buyback.

As forms are released or further details are announced by the MLCC or the governor's office, the members of Varnum's Hospitality and Alcohol Beverage Control Practice Team will provide updates to this development. In the meantime, please contact Christopher P. Baker at 734/372-2922 or cpbaker@varnumlaw.com, or other members of the practice team, for further information.

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