Bill Text: MI HB6224 | 2009-2010 | 95th Legislature | Engrossed
Bill Title: Liquor; authorized distribution agents; provision relating to dualing; modify and provide for certain new license categories and sampling activities. Amends secs. 109, 111, 113, 113a, 205, 307, 525, 537, 543, 603, 1025, 1027, 1111, 1113, 1114 & 1115 of 1998 PA 58 (MCL 436.1109 et seq.) & adds sec. 545.
Spectrum: Slight Partisan Bill (Democrat 48-30)
Status: (Passed) 2010-11-30 - Assigned Pa 213'10 With Immediate Effect [HB6224 Detail]
Download: Michigan-2009-HB6224-Engrossed.html
HB-6224, As Passed House, September 8, 2010
HOUSE BILL No. 6224
May 27, 2010, Introduced by Reps. Kandrevas, Rocca, Espinoza, Miller, Geiss, Roy Schmidt, Liss, Womack, Paul Scott, Segal, Byrum, Haase, Polidori, Gonzales, Switalski, Rick Jones, Moore, Melton, Schuitmaker, LeBlanc, Hammel, Robert Jones, Caul, Horn, Proos, Denby, Griffin, Dean, Huckleberry, Warren, Smith, Ebli, Meadows, Neumann, Green, Valentine, Durhal, Agema, Slezak, Hansen, Pavlov, Daley, Crawford, DeShazor, Opsommer, Stamas, Knollenberg, Meltzer, Moss, Marleau, Hildenbrand, Kowall, Johnson, Jackson, Spade, Lund, Walsh, Mayes, Angerer, Byrnes, Haugh, Bolger, Rogers, Stanley, Nathan, Corriveau, Leland, McDowell, Gregory, Constan, Lahti, Pearce, Ball, Clemente, Kennedy, Sheltrown, Slavens and Lisa Brown and referred to the Committee on Regulatory Reform.
A bill to amend 1998 PA 58, entitled
"Michigan liquor control code of 1998,"
by amending sections 205 and 307 (MCL 436.1205 and 436.1307),
section 205 as amended by 2001 PA 274.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 205. (1) If the commission privatizes any portion of the
system existing on December 19, 1996 under which spirits are
warehoused or distributed, the commission shall, as provided in
section 203(1), by order appoint authorized distribution agents to
engage in the warehousing and delivery of spirits in this state so
as to ensure that all retail licensees continue to be properly
serviced with spirits. An authorized distribution agent is subject
to uniform requirements, including business operating procedures,
that the commission may prescribe by rule, subject to this section.
(2) A person is eligible for appointment by the commission as
an authorized distribution agent if the following circumstances
exist:
(a) The person satisfies all applicable commission rules
prescribing qualifications for licensure promulgated under section
215.
(b) The person has entered into a written agreement or
contract with a supplier of spirits for the purposes of warehousing
and delivering a brand or brands of spirits of that supplier of
spirits.
(c) The person has an adequate warehousing facility located in
this state for the storing of spirits from which all delivery of
spirits to retail licensees shall be made.
(3) An authorized distribution agent shall not have a direct
or indirect interest in a supplier of spirits or in a retailer. A
supplier of spirits or a retailer shall not have a direct or
indirect interest in an authorized distribution agent. An
authorized
distribution agent shall not hold title to spirits.
After
September 24, 1996, an authorized distribution agent or an
applicant
to become an authorized distribution agent who directly
or
indirectly becomes licensed subsequently as a wholesaler shall
not
be appointed to sell a brand of wine in a county or part of a
county
for which a wholesaler has been appointed to sell that brand
under
an agreement required by this act. A wholesaler who directly
or
indirectly becomes an authorized distribution agent shall not
sell
or be appointed to sell a brand of wine to a retailer in a
county
or part of a county for which another wholesaler has been
appointed
to sell that brand under an agreement required by this
act,
unless that wholesaler was appointed to sell and was actively
selling
that brand to retailers in that county or part of that
county
prior to September 24, 1996, or unless the sale and
appointment
is the result of an acquisition, purchase, or merger
with
the existing wholesaler who was selling that brand to a
retailer
in that county or part of that county prior to September
24,
1996.
(4) An authorized distribution agent shall deliver to each
retailer located in its assigned distribution area on at least a
weekly basis if the order meets the minimum requirements. Except
that in those weeks that accompany a state holiday, the commission
may order a modified delivery schedule provided that a retailer
waits not longer than 9 days between deliveries due to a modified
delivery schedule. Until the system established by the commission
under section 206 is activated, the authorized distribution agent
shall provide retailers access to a computer application that
includes the capability to determine whether certain spirits are
currently available for delivery. Beginning on the date the system
is established by the commission under section 206, the commission
shall
provide for an integrated on-line online ordering system for
spirits and shall require the continuance of any ordering system in
existence on the effective date of section 206. The minimum
requirements shall be set by the commission and shall be a
sufficient number of bottles to comprise not more than 2 cases. A
retailer may pick up the product at the authorized distribution
agent's warehouse. To avoid occasional emergency outages of
spirits, a retail licensee may make up to 12 special emergency
orders to an authorized distribution agent per calendar year which
order shall be made available to the retail licensee within 18
hours of the placing of the order. A special emergency order placed
on Saturday or Sunday shall be made available to the retail
licensee before noon on the following Monday. An authorized
distribution agent may impose a fee of up to $20.00 to deliver a
special emergency order to a retail licensee.
(5) In locations inaccessible to a motor vehicle as that term
is defined by the Michigan vehicle code, 1949 PA 300, MCL 257.1 to
257.923, the authorized distribution agent shall arrange that a
delivery of spirits to a retailer be in compliance with the
following procedures:
(a) After processing an order from a retailer, an authorized
distribution agent shall contact a retailer to confirm the quantity
of cases or bottles, or both, and the exact dollar total of the
order.
(b) The authorized distribution agent shall have the
responsibility to coordinate with the retailer the date and time a
driver is scheduled to deliver the order to a ferry transport dock,
shall arrange any ferry, drayage, or other appropriate service, and
shall pick up the retailer's payment at that time.
(c) The ferry transport company or company representing any
other form of conveyance shall take the retailer's payment to the
mainland dock and give that payment to the authorized distribution
agent's driver.
(d) The ferry transport company or company representing any
other form of conveyance shall transport the order to the drayage
or other appropriate company at the island dock for immediate
delivery to the retailer.
(e) The drayage or other appropriate company shall deliver the
order to the retailer.
(6) The authorized distribution agent is responsible for the
payment of all transportation and delivery charges imposed by the
ferry, drayage, or other conveyance company and is responsible for
all breakage and any shortages, whether attributable to the ferry,
drayage, or other conveyance company or any combination of those
companies, until the order is delivered to the retailer's
establishment. This subsection does not in any way prevent the
authorized distribution agent from seeking reimbursement or damages
from any company conveying the authorized distribution agent's
product.
(7) Except as otherwise provided in subsection (4), an
authorized distribution agent shall not charge a delivery fee or a
split-case fee for delivery of spirits sold by the commission to a
retailer.
(8) An authorized distribution agent or prospective authorized
distribution agent shall maintain and make available to the
commission or its representatives, upon notice, any contract or
written agreement it may have with a supplier of spirits or other
authorized distribution agent for the warehousing and delivery of
spirits in this state.
(9) For any violation of this act, rules promulgated under
this act, or the terms of an order appointing an authorized
distribution agent, an authorized distribution agent shall be
subject to the suspension, revocation, forfeiture, and penalty
provisions of sections 903(1) and 907 in the same manner in which a
licensee would be subject to those provisions. An authorized
distribution agent aggrieved by a penalty imposed by the commission
may invoke the hearing and appeal procedures of section 903(2) and
rules promulgated under that section.
(10) A specially designated distributor may sell to an on-
premises licensee up to 9 liters of spirits during any 1-month
period and an on-premises licensee may purchase, collectively from
specially designated distributors, up to that amount during any 1-
month period. Notwithstanding any other provision of this act or
rule promulgated under this act, a specially designated distributor
is only liable for knowingly violating this section. Records
verifying these purchases shall be maintained by the on-premises
licensee and be available to the commission upon request.
(11) An authorized distribution agent shall demonstrate that
it has made a good faith effort to provide employment to those
former state employees who were terminated due to the privatization
of the liquor distribution system. A good faith effort is
demonstrated by the authorized distribution agent performing at
least the following actions:
(a) Seeking from the commission a list of names and resumes of
all such former state employees who have indicated a desire for
continued employment in the distribution of liquor in Michigan.
(b) Providing a list of employment opportunities created by
the authorized distribution agent in the distribution of liquor in
Michigan to each individual whose name and resume is transmitted
from the commission.
(c) Providing an opportunity for application and interview to
any terminated state worker who indicates an interest in pursuing a
job opportunity with the authorized distribution agent.
(d) Providing a priority in hiring for those individuals who
apply and interview under this process.
(12) Any former state employees terminated due to
privatization who have reason to believe that an authorized
distribution agent has not made a good faith effort to provide him
or her with employment opportunities as described in subsection
(11) may file a complaint with the commission who shall hear the
complaint and make a determination on its validity. If the
commission determines that the complaint is valid, the violation
may be treated as a violation of this act and the authorized
distribution agent may be subject to the suspension, revocation,
forfeiture, and penalty provisions of sections 903(1) and 907.
(13) In addition to paying a vendor of spirits the acquisition
price for purchasing spirits, the commission may pay a vendor of
spirits an additional amount of not less than $4.50 and not more
than $7.50 for each case of spirits purchased as an offset to the
costs being incurred by that vendor of spirits in contracting with
an authorized distribution agent for the warehousing and delivery
of spirits to retailers. The payment described in this subsection
shall not be included in the cost of purchasing spirits by the
commission and shall not be subject to the commission's markup,
special taxes, or state sales tax. The per-case offset established
by this subsection may be increased by the state administrative
board each January to reflect reasonable increases in the
authorized distribution agent's cost of warehousing and delivery.
As used in this subsection, "case" means a container holding twelve
750 ml bottles of spirits or other containers containing spirits
which are standard to the industry.
Sec.
307. (1) A manufacturer, and an
outstate seller of wine,
and a master distributor shall grant to each of its wholesalers a
sales territory within which the wholesaler shall be a distributor
of
the specified brand or brands of the manufacturer, or outstate
seller of wine, or master distributor under an agreement as
required under this act. The territory shall be the territory
agreed
upon between the wholesaler and manufacturer, or outstate
seller
of wine, or master distributor. A manufacturer or outstate
seller
of wine may grant the right to sell a specified brand or
brands
in a sales territory to more than 1 wholesaler. Except as
provided for in subsection (9) and beginning June 1, 2010, a
manufacturer, outstate seller of wine, or master distributor shall
not grant the right to sell a specified brand or brands of wine in
a sales territory to more than 1 wine wholesaler. A master
distributor shall not itself distribute a specified brand or brands
of wine in the same sales territory where that master distributor
has granted the right to distribute that specified brand or brands
of wine in that sales territory to another wine wholesaler. As used
in this section, "master distributor" means a wholesaler that acts
in the same or similar capacity as a wine maker, wine manufacturer,
or outstate seller of wine for a brand or brands of wine to other
wholesalers on a regular basis in the normal course of business.
(2) Notwithstanding subsection (1), a brand extension is not
considered a new or different brand. A manufacturer or outstate
seller of wine shall assign a brand extension to the wholesaler
that was granted the sales territory for the brand from which the
brand extension resulted.
(3) Subsection (2) does not apply where, before January 1,
1994, a manufacturer or outstate seller of wine had assigned a
brand extension to a wholesaler that was not the appointed
wholesaler for the brand from which the brand extension was made.
(4) Until July 1, 1995, a manufacturer or outstate seller of
wine who acquired or otherwise obtained the right to assign brands
of another manufacturer or outstate seller of wine between January
1, 1994 and July 1, 1995 shall assign a brand extension to the
wholesaler that was granted the sales territory for the brand from
which the brand extension resulted. Beginning July 1, 1995, a
manufacturer or outstate seller of wine who acquires or otherwise
obtains the right to assign brands of another manufacturer or
outstate seller of wine is not required to assign a new brand
extension to the wholesaler that is granted the exclusive sales
territory to the brand from which the new brand extension results.
Any brand extension assigned between January 1, 1994 and July 1,
1995 shall remain assigned to the assigned wholesaler.
(5) A manufacturer of a mixed wine drink, mixed spirit drink
manufacturer, outstate seller of a mixed wine drink, or outstate
seller of mixed spirit drink shall grant to each of its wholesalers
an exclusive sales territory in which the wholesaler shall be a
distributor of the specified brand or brands of the manufacturer or
outstate seller. The territory shall be the territory agreed upon
between the wholesaler and the manufacturer of a mixed wine drink,
mixed spirit drink manufacturer, outstate seller of mixed wine
drinks, or outstate seller of mixed spirit drink.
(6) Notwithstanding subsection (5), a brand extension is not
considered a new or different brand. A manufacturer of a mixed wine
drink, mixed spirit drink manufacturer, outstate seller of a mixed
wine drink, or outstate seller of mixed spirit drink shall assign a
brand extension to the wholesaler that was granted the exclusive
sales territory for the brand from which the brand extension
resulted.
(7) Subsection (6) does not apply where, before January 1,
1994, a manufacturer of a mixed wine drink, mixed spirit drink
manufacturer, outstate seller of a mixed wine drink, or outstate
seller of mixed spirit drink had assigned a brand extension to a
wholesaler that was not the appointed wholesaler for the brand from
which the brand extension was made.
(8) Until July 1, 1995, a manufacturer of a mixed wine drink,
mixed spirit drink manufacturer, outstate seller of mixed wine
drink, or outstate seller of mixed spirit drink who acquired or
otherwise obtained the right to assign brands of another
manufacturer of a mixed wine drink, mixed spirit drink
manufacturer, outstate seller of a mixed wine drink, or outstate
seller of mixed spirit drink between January 1, 1994 and July 1,
1995 shall assign a brand extension to the wholesaler that was
granted the exclusive sales territory for the brand from which the
brand extension resulted. Beginning July 1, 1995, a manufacturer of
mixed wine drink, mixed spirit drink manufacturer, outstate seller
of mixed wine drink, or outstate seller of mixed spirit drink who
acquires or otherwise obtains the right to assign brands of another
manufacturer of mixed wine drink, mixed spirit drink manufacturer,
outstate seller of mixed wine drink, or outstate seller of mixed
spirit drink is not required to assign a new brand extension to the
wholesaler that is granted the exclusive sales territory to the
brand from which the new brand extension results. Any brand
extension assigned between January 1, 1994 and July 1, 1995 shall
remain assigned to the assigned wholesaler.
(9) Subsection (1) does not prohibit any of the following:
(a) A manufacturer of wine, an outstate seller of wine, or a
master distributor from continuing or renewing an agreement under
this act with a wholesaler for a specified brand or brands for any
county or part of a county where more than 1 wholesaler has an
agreement with the manufacturer of wine, outstate seller of wine,
or master distributor in effect on June 1, 2010 if the wholesaler
had an agreement to distribute that specified brand or brands in
that county or that part of a county and was a master distributor
or was actively selling that brand or brands of wine to a retailer
in that county or that part of a county on June 1, 2010.
(b) A wholesaler from selling or transferring the wholesaler's
distribution rights or a manufacturer of wine, outstate seller of
wine, or master distributor from approving the sale or transfer of
a wholesaler's distribution rights to a specified brand or brands
of wine for any county or part of a county to another wholesaler if
the selling or transferring wholesaler, or any of its predecessors,
had the right to distribute that brand or brands of wine in that
county or part of that county and was actively selling that brand
or brands to a retailer in that county or that part of a county on
June 1, 2010 or was acting as a master distributor for that county
or part of that county on June 1, 2010.
