Read All About It

The appointment by Gov. Rick Snyder of a new liquor advisory committee has raised hopes for some long overdue reforms in this state’s regulation of beer, wine and liquor distribution. Most people have little idea of how, among other things, this complex and archaic regulatory regime enriches a small handful of monopoly distributors at the expense of both consumers and taxpayers.

Now that the issue may be in play, this is a good time to review reporter Jennifer Dixon’s 2005 Detroit Free Press series, which contain a concise yet comprehensive explanation of the beer and wine wholesale distribution system. The Free Press has graciously allowed the Mackinac Center to post the full series on our website.

The articles begin with an account of how, in Ms. Dixon’s words, “Michigan beer and wine distributors have it made. And they wine, dine and finance legislators to keep it that way.” She documents how the wholesalers’ PAC gave $2 million to Michigan politicians over several years prior to the article’s publication. See Under the Influence (Part I) and (Part II).

The next installment describes perverse outcomes that result from forcing most beer sold in Michigan to pass through a handful of distribution monopolies granted by the state. For example, at one time Northwest Airlines was busted trying to save money by bypassing the monopoly, hauling in beer from Minnesota to Detroit’s Metro Airport. See Northwest in Hot Water with Wholesalers.

Subsequent articles document the extraordinary dealings between beer and wine wholesalers and power brokers in Lansing. They make clear that lawmakers, appointees to the state Liquor Control Commission and the law itself appear to have been captured by a small group of families who operate the system to their own benefit.  See State Beer, Wine Dealings Done Secretly; and Beer, Wine Wholesalers are Life of Politicians Parties (Part I) and (Part II).

“State Law is at Root of Wholesale Power.” goes into more detail about the territorial distribution monopolies and the “exclusive turf” that are mandated in state law, including anti-competitive wholesalers’ protections called “post and hold’.” See also In Michigan, Beer Distribution is a Family Affair.

This series is a reminder of the importance of quality journalism for a free people and economy. It should be required reading for every member of the new liquor advisory committee, and also economics and political science students. Regular people, including Michigan beer and wine consumers, will also find fascinating — and maddening — this tale of political influence peddling and favor-seeking that extends over decades.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.