Lt. Gov. Garlin Gilchrist II last month signed into law a bill that aims to keep Michigan’s local breweries competitive by limiting the conditions alcohol manufacturers can put on distributors.
Michigan has a three-tier distribution system, meaning that a company that manufactures alcohol can’t sell it directly to a bar, restaurant or liquor store. Instead, it gets to those places through a wholesaler.
But in some cases, said Rep. Beth Griffin, R-Mattawan, a large manufacturer can put biased conditions in its contracts with wholesalers that end up disadvantaging smaller manufacturers.
“It’s the larger beer manufacturers that sometimes use their size to force those terms,” Griffin said.
One example is not letting distributors with trucks wrapped in a big brand’s logo use it to distribute any other kinds of beer.
A bipartisan package of bills — House Bill 4960, sponsored by Rebekah Warren, D-Ann Arbor, and House Bill 4961, sponsored by Griffin — don’t let manufacturers put restrictions on which products can be in trucks with their logo on them in contracts.
The new laws also don’t allow a large manufacturer to request a wholesaler’s financial records as a condition for renewing an agreement, intentionally ship the wholesaler more alcohol than requested, or prohibit a wholesaler from using any of its property or equipment to promote or deliver products from other manufacturers.
The new law is welcomed by wholesalers.
“We applaud Lt. Gov. Gilchrist and the Legislature for standing up to large beer and wine producers and sending a strong message that the growth of Michigan’s beer and wine industries won’t be stymied by foreign producers, regardless how much clout they might have,” said Spencer Nevins, president of the Michigan Beer & Wine Wholesalers Association, in a press release.
“Michigan’s beer and wine industries have grown by leaps and bounds over the years and this new law will ensure breweries and wineries continue to grow and thrive.”
The bills were approved by large margins in the House and Senate.
But one large manufacturer, Anheuser-Busch, opposed the bills as they wound through the legislature.
“We opposed this legislation because it interferes with our longstanding contracts with our wholesaler partners and makes it harder to do business in Michigan,” said a spokesperson for the company in a statement.
Griffin said she sees a successful beer and wine market in Michigan, but it was time for the state to step in with regulations kept the playing field level between manufacturers and wholesalers.
“Those small breweries are successful and vibrant and growing,” Griffin said. “We don’t want them to get pushed out.”
The new laws are Public Acts 126 and 127 of 2019.
