Liquor: other; leasing, selling, and transferring portions of certain alternating proprietors under approval of commission; allow, the official text

Act
No. 9

Public
Acts of 2025

Approved
by the Governor

August
15, 2025

Filed
with the Secretary of State

August
15, 2025

EFFECTIVE
DATE:  Sine Die

(91st
day after final adjournment of the 2025 Regular Session)

state of michigan

103rd Legislature

Regular session of 2025

Introduced by Reps. Wendzel, Kelly, Hoadley, Wilson and
Glanville

ENROLLED HOUSE BILL No. 4403

AN ACT to amend 1998 PA 58,
entitled “An act to create a commission for the control of the alcoholic
beverage traffic within this state, and to prescribe its powers, duties, and
limitations; to provide for powers and duties for certain state departments and
agencies; to impose certain taxes for certain purposes; to provide for the
control of the alcoholic liquor traffic within this state and to provide for
the power to establish state liquor stores; to prohibit the use of certain
devices for the dispensing of alcoholic vapor; to provide for the care and
treatment of alcoholics; to provide for the incorporation of farmer cooperative
wineries and the granting of certain rights and privileges to those
cooperatives; to provide for the licensing and taxation of activities regulated
under this act and the disposition of the money received under this act; to
prescribe liability for retail licensees under certain circumstances and to
require security for that liability; to provide procedures, defenses, and
remedies regarding violations of this act; to provide for the enforcement and
to prescribe penalties for violations of this act; to provide for allocation of
certain funds for certain purposes; to provide for the confiscation and
disposition of property seized under this act; to provide referenda under
certain circumstances; and to repeal acts and parts of acts,” by amending
sections 105 and 603 (MCL 436.1105 and 436.1603), as amended by 2022 PA 226.

The People of the State of
Michigan enact:

Sec.
105. (1) “Alcohol” means the product of distillation of fermented liquid,
whether or not rectified or diluted with water, but does not mean ethyl or
industrial alcohol, diluted or not, that has been denatured or otherwise
rendered unfit for beverage purposes.

(2) “Alcohol vapor device” means any device that provides for
the use of air or oxygen bubbled through alcoholic liquor to produce a vapor or
mist that allows the user to inhale this alcoholic vapor through the mouth or
nose.

(3) “Alcoholic liquor” means any spirituous, vinous, malt, or
fermented liquor, powder, liquids, and compounds, whether or not medicated,
proprietary, or patented, and by whatever name called, containing 1/2 of 1% or
more of alcohol by volume that are fit for use for food purposes or beverage
purposes as defined and classified by the commission according to alcoholic
content as belonging to 1 of the varieties defined in this chapter.

(4) “Alternating proprietorship” means 1 of the following:

(a) An arrangement in which 2 or more wine makers or small
wine makers take turns using the same space and equipment to manufacture wine
under section 603(9)(a) and in accordance with 27 CFR 24.136.

(b) An arrangement in which 2 or more brewers or micro
brewers take turns using the same space and equipment to manufacture beer under
section 603(9)(b) and in accordance with 27 CFR 25.52.

(c) An arrangement in which 2 or more distillers or small
distillers take turns using the same space and equipment to manufacture spirits
under section 603(9)(c) and in accordance with 27 CFR 19.141.

(d) An arrangement in which 2 or more mixed spirit
manufacturers take turns using the same space and equipment to manufacture
mixed spirit drinks under section 603(9)(d) and in accordance with 27 CFR
19.141.

(5) “Approved tasting room” means a tasting room that is
approved by the commission. A licensee with an approved tasting room is not a
retail licensee as that term is used in this act and the rules promulgated
under this act except for sections 701, 801, 803, 815, 905, and 906.

(6) “Authorized distribution agent” means a person approved
by the commission to do 1 or more of the following:

(a) To store spirits owned by a supplier of spirits or the
commission.

(b) To deliver spirits sold by the commission to retail
licensees.

(c) To perform any function needed to store spirits owned by
a supplier of spirits or by the commission or to deliver spirits sold by the
commission to retail licensees.

(7) “Bar” means a barrier or counter at which alcoholic
liquor is sold to, served to, or consumed by customers.

(8) “Beer” means a beverage obtained by alcoholic
fermentation of an infusion or decoction of barley, malt, hops, sugar, or other
cereal in potable water.

(9) “Bottle” or “bottling” means a process, separate from
manufacturing, using owned or leased equipment to fill and seal a container,
including a keg, with alcoholic liquor for sale at wholesale or retail in
accordance with this act. Bottle or bottling does not include filling a growler
for sale at retail.

(10) “Brand” means any word, name, group of letters, symbol,
trademark, or combination, or any word, name, group of letters, symbol,
trademark adopted and used by a supplier to identify a specific beer, malt
beverage, wine, mixed wine drink, or mixed spirit drink product and to
distinguish that product from another beer, malt beverage, wine, mixed wine
drink, or mixed spirit drink product that is produced or marketed by that or
another supplier. As used in this subsection, “supplier” means a brewer, micro
brewer, an outstate seller of beer, a wine maker, a small wine maker, an
outstate seller of wine, a manufacturer of mixed wine drink, an outstate seller
of a mixed wine drink, a mixed spirit drink manufacturer, or an outstate seller
of mixed spirit drink.

(11) “Brand extension” means any brand that incorporates all
or a substantial part of the unique features of a preexisting brand, regardless
of whether the extension is beer, wine, mixed wine drink, or mixed spirit
drink.

(12) “Brandy” means an alcoholic liquor as defined in former
27 CFR 5.22(d).

(13) “Brandy manufacturer” means a wine maker or a small wine
maker licensed under this act to manufacture brandy. A wine maker or small wine
maker authorized to manufacture brandy shall not manufacture any other spirits.
The commission may approve a brandy manufacturer to sell brandy that it
manufactures at retail in accordance with section 537.

(14) “Brewer” means a person located in this state that is
licensed to manufacture beer and sell at retail in accordance with section 537
and to licensed wholesalers beer manufactured by the person.

(15) “Brewpub” means a license issued in conjunction with a
class C, tavern, class A hotel, or class B hotel license that authorizes the
person licensed with the class C, tavern, class A hotel, or class B hotel
license to manufacture and brew not more than 18,000 barrels of beer per
calendar year in this state and sell at its licensed premises the beer produced
for consumption on or off the licensed brewery premises in the manner provided
for in sections 405, 407, and 537.

Sec.
603. (1) Except as provided in subsections (5) to (9), subsections (14) to
(16), and section 605, a supplier, warehouser, or wholesaler shall not have any
direct or indirect financial interest in the establishment, maintenance,
operation, or promotion of the business of any other vendor.

(2) Except as provided in subsections (5) to (9), subsections
(14) to (16), and section 605, a supplier, warehouser, or wholesaler or a
stockholder of a supplier, warehouser, or wholesaler shall not have any direct
or indirect interest by ownership in fee, leasehold, mortgage, or otherwise in
the establishment, maintenance, operation, or promotion of the business of any
other vendor.

(3) Except as provided in subsections (5) to (9), subsections
(14) to (16), and section 605, a supplier, warehouser, or wholesaler shall not
have any direct or indirect interest by interlocking directors in a corporation
or by interlocking stock ownership in a corporation in the establishment,
maintenance, operation, or promotion of the business of any other vendor.

(4) Except as provided in subsections (5) to (9), subsections
(14) to (16), and section 605, a person shall not buy the stocks of a supplier,
warehouser, or wholesaler and place the stock in any portfolio under an
arrangement, written trust agreement, or form of investment trust agreement,
issue participating shares based on the portfolio, trust agreement, or
investment trust agreement, and sell the participating shares within this
state.

(5) The commission may approve a brandy manufacturer or small
distiller to sell brandy and spirits made by that brandy manufacturer or small
distiller in a restaurant for consumption on or off the premises if the
restaurant is owned by the brandy manufacturer or small distiller or operated
by another person under an agreement approved by the commission and is located
on premises where the brandy manufacturer or small distiller is licensed.
Brandy and spirits sold for consumption off the premises under this subsection
must be sold at the uniform price established by the commission.

(6) The commission shall allow a small distiller to sell
brands of spirits it manufactures for consumption on the licensed premises at
that distillery.

(7) A brewpub may have an interest in up to 5 other brewpubs
if the combined production of all the locations in which the brewpub has an
interest does not exceed 18,000 barrels of beer per calendar year.

(8) This section does not prohibit a supplier from having any
direct or indirect interest in any other supplier.

(9) The commission may approve the following under R
436.1023(3) of the Michigan Administrative Code, subject to the written
approval of the United States Department of Treasury Alcohol and Tobacco Tax
and Trade Bureau:

(a) A wine maker participating with 1 or more wine makers in
an alternating proprietor operation in accordance with 27 CFR 24.136.

(b) A brewer participating with 1 or more brewers in an
alternating proprietor operation in accordance with 27 CFR 25.52.

(c) A distiller or small distiller participating with 1 or
more distillers or small distillers in an alternating proprietor operation in
accordance with 27 CFR 19.141.

(d) A mixed spirit manufacturer participating with 1 or more
mixed spirit manufacturers in an alternating proprietor operation in accordance
with 27 CFR 19.141.

(10) A manufacturer shall not have any direct or indirect
interest in a wholesaler.

(11) A wine maker shall not collectively deliver wine, with
any other wine maker, to retailers.

(12) Except for a warehouser, all licensees in this state
must be separated into 3 distinct and independent tiers composed of the
following:

(a) Supplier tier, comprising suppliers.

(b) Wholesaler tier, comprising wholesalers.

(c) Retailer tier, comprising retailers.

(13) Except as otherwise provided in subsection (14), the
commission shall not allow any of the following:

(a) A retailer to hold, directly or indirectly, a license in
the wholesaler or supplier tier.

(b) A wholesaler to hold, directly or indirectly, a license
in the retailer or supplier tier.

(c) A supplier to hold, directly or indirectly, a license in
the wholesaler or retailer tier.

(14) Subsection (13) does not prohibit a class C, tavern,
class A hotel, or class B hotel licensee from receiving a brewpub license or a
micro brewer or brewer from having an on-site restaurant.

(15) A person licensed in the supplier tier may manufacture a
private label of beer, wine, or mixed spirit drink for a retailer if the
commission determines that all the following requirements are met:

(a) The supplier registers the private label with the
commission as required under R 436.1611, R 436.1719, and R 436.1829 of the
Michigan Administrative Code.

(b) The supplier, independent of the retailer’s involvement,
appoints 1 or more wholesalers to distribute the private label as required
under section 307 or 401, as applicable. However, if the supplier is a micro
brewer, the supplier may distribute the private label in accordance with
section 203a.

(c) The supplier complies with and does not violate section
305 or 403, as applicable.

(d) The wholesaler engages in commercially reasonable efforts
to make the private label available to a retailer that places an order for the
private label beer, wine, or mixed spirit drink.

(e) An appointed wholesaler remains the wholesaler for the
private label and any brand extensions of the private label regardless of
whether the retailer switches the supplier that manufactures the private label,
unless the wholesaler is terminated under section 305 or 403, as applicable.

(16) The commission shall not issue a wholesaler license to a
producer of nonalcoholic beverages or an entity that the producer of
nonalcoholic beverages has a direct or indirect ownership or financial interest
in, if the producer of nonalcoholic beverages or the entity the producer of
nonalcoholic beverages has a direct or indirect ownership or financial interest
in has a direct or indirect ownership or financial interest in a person
licensed in the supplier tier.

(17) As used in this section:

(a) “Manufacturer” means, notwithstanding section 109(2), a
wine maker, small wine maker, brewer, micro brewer, manufacturer of spirits,
distiller, small distiller, brandy manufacturer, mixed spirit drink
manufacturer, direct shipper, licensee with an approved tasting room, or person
licensed by the commission to perform substantially similar functions.

(b) “Private label” means a brand of beer, wine, or mixed
spirit drink that is manufactured by a supplier on behalf of a retailer using
the retailer’s recipe or intellectual property.

(c) “Supplier” means a manufacturer, mixed spirit drink
manufacturer, outstate seller of beer, outstate seller of wine, outstate seller
of mixed spirit drink, or vendor of spirits or a person licensed by the
commission to perform substantially similar functions, but does not include a
master distributor.

Clerk of the House of
Representatives

Secretary of the Senate

Approved___________________________________________

____________________________________________________

Governor