Liquor: authorized distribution agents; authorized distribution agent fees; increase, the official text

Act No. 72

Public Acts of 2026

Approved by the Governor

July 21, 2026

Filed with the Secretary of State

July 27, 2026

EFFECTIVE
DATE: July 27, 2026

state of michigan

103rd Legislature

Regular session of 2026

Introduced by Senators Polehanki and Webber

ENROLLED SENATE BILL No. 604

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
section 205 (MCL 436.1205), as amended by 2022 PA 142.

The People of the State of
Michigan enact:

Sec.
205. (1) The commission shall, as provided in section 203(1), by order appoint
authorized distribution agents to warehouse and deliver spirits in this state
to ensure that all retail licensees are 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 all of 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 to warehouse and deliver a brand or brands
of spirits of that supplier of spirits.

(c) The person has an adequate warehousing facility located
in this state to store spirits from which all delivery of spirits to retail
licensees must 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.

(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 a week that
accompanies a state holiday, the commission may order a modified delivery
schedule if a retailer will not wait longer than 9 days between deliveries
because of the modified delivery schedule. The commission shall provide for an
integrated online ordering system for spirits and shall require the continuance
of any ordering system in existence on the activation date of the system
established under section 206. The commission shall set minimum requirements
that must 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
in each calendar year. An authorized distribution agent shall make a special
emergency order available to the retail licensee within 18 hours of the
placing of the order. An authorized distribution agent shall make a special
emergency order placed on Saturday or Sunday 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 section 33 of the Michigan vehicle code, 1949 PA 300, MCL 257.33,
an 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 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) An 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 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, on notice, any contract or written agreement
it has with a supplier of spirits or other authorized distribution agent for
the warehousing and delivering of spirits in this state.

(9) For a violation of this act, a rule promulgated under
this act, or the terms of an order appointing an authorized distribution agent,
an authorized distribution agent is 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
section 903.

(10) A specially designated distributor may sell to an
on-premises retailer up to 120 liters of spirits during any calendar year and
an on-premises retailer may purchase, collectively from specially designated
distributors, up to 120 liters of spirits during any calendar year.
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. An on-premises retailer shall maintain and make available to the
commission on request records verifying the purchases described in this
subsection. For each month in which an on-premises retailer purchases spirits
under this subsection, the on-premises retailer shall submit a report to the
commission indicating the purchases the on-premises retailer made under this
subsection during that month. By July 1, 2020, the commission shall establish
the method and form for the electronic reporting of purchases made under this
subsection by on-premises retailers. The commission shall not require an
on-premises retailer to submit a report under this subsection in less than
monthly intervals and shall not require a report from an on-premises retailer
in a month in which the on-premises retailer did not purchase spirits under this
subsection.

(11) Except as otherwise provided in this subsection, 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
$8.25 and not more than $12.50 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 warehousing and delivering spirits to
retailers. Beginning July 1, 2026, the payment described in this subsection is
$12.50. Beginning October 1, 2026, and each October 1 after that date, the
state treasurer shall adjust the dollar amount under this subsection by the
percentage increase in the Consumer Price Index for the preceding calendar year
or 5%, whichever is less. In addition to the per-case offset described in this
subsection, a vendor of spirits shall pay to the authorized distribution agent
$1.75 for each case of spirits purchased by the commission. The $1.75 per-case
amount must not be adjusted by the commission or state treasurer, but a vendor
of spirits and an authorized distribution agent may agree to a payment amount
per case that is greater than the $1.75 per case amount allowed under this
subsection. A payment described in this subsection must not be included in the
cost of purchasing spirits by the commission and is not subject to the
commission’s markup, special taxes, or state sales tax.

(12) The commission may, with the approval of the state
administrative board, make additional payments to an authorized distribution
agent based on a methodology established by the commission. The methodology
must be designed to reflect reasonable and necessary costs of warehousing,
distribution, and related logistics services, and must be applied uniformly to
similarly situated authorized distribution agents. Additional payments under
this subsection must be paid only by the commission.

(13) As used in this section:

(a) “Case” means a container holding twelve 750 ml bottles of
spirits or other containers containing spirits that are standard to the
industry.

(b) “Consumer Price Index” means the most comprehensive index
of consumer prices available for this state from the United States Department
of Labor, Bureau of Labor Statistics.

This act is ordered to take
immediate effect.

Secretary of the Senate

Clerk of the House of
Representatives

Approved___________________________________________

____________________________________________________

Governor