SENATE BILL NO. 349

May 24, 2019, Introduced by Senators VANDERWALL, VICTORY, HERTEL, STAMAS, WOJNO, MACDONALD, BUMSTEAD, BIZON, HORN and ZORN and referred to the Committee on Regulatory Reform.

"Michigan liquor control code of 1998,"

by amending section 233 (MCL 436.1233).

the people of the state of michigan enact:

Sec. 233. (1) The commission shall establish uniform prices for the sale of alcoholic liquor in state liquor stores and by specially designated distributors. The Except as otherwise provided in this section, the prices shall must return a gross profit to the commission of not less than 51% and not greater than 65%. If alcoholic liquor purchased by the commission has not met sales standards established by the commission for a period of 6 months, the commission may sell the alcoholic liquor at a price to be approved by the state administrative board.

(2) Notwithstanding subsection (1), the commission may establish by rule prices for the sale of alcoholic liquor to hospitals, charitable institutions, and military establishments located in this state.

(3) There shall be allowed a discount of 17% deducted from the sale price established by the commission on the sale of Specially designated distributors and on-premises licensees are entitled to a 17% discount from the uniform price described under subsection (1) on alcoholic liquor made by the purchased from this state. liquor stores to specially designated distributors and establishments licensed to sell for consumption on the premises.

(4) Not later than February 1, 2020 and each February 1 thereafter, a small distiller or an out-of-state entity that is the substantial equivalent of a small distiller may file an application with the department of agriculture and rural development to be certified as a qualified small distiller. An application under this subsection must be on a form prescribed and furnished by the department of agriculture and rural development. The department of agriculture and rural development may charge a reasonable certification fee.

(5) Beginning January 1, 2021, for each bottle of spirits produced by a qualified small distiller of which at least 40% of the base distillate is distilled from grain grown and harvested in this state as determined by the department of agriculture and rural development, the price for each bottle must return a gross profit to the commission of 32.5%.

(6) The department of agriculture and rural development shall certify that an applicant under subsection (4) is a qualified small distiller if the department of agriculture and rural development determines that the base distillate of the small distiller or the out-of-state entity that is the substantial equivalent of a small distiller is at least 40% distilled from distilled grain grown and harvested in this state.

(7) Not later than October 1, 2020 and each October 1 thereafter, the department of agriculture and rural development shall submit a report to the commission. A report under this subsection must include the name of each qualified small distiller certified under subsection (6).

(8) A qualified small distiller certificate expires on February 1 following the date of issuance.

(9) A small distiller or an out-of-state entity that is the substantial equivalent of a small distiller that supplies false information to the department of agriculture and rural development or the commission under this section is guilty of a misdemeanor punishable by imprisonment for not more than 1 year or a fine of not more than $3,000.00, or both. A small distiller or an out-of-state entity that is the substantial equivalent of a small distiller that supplies false information as described in this subsection shall pay the commission the difference between the gross profit the commission would have received under subsection (1) if the small distiller or the out-of-state entity that is the substantial equivalent of a small distiller was not a qualified small distiller, as determined by the commission.

(10) A qualified small distiller shall keep a complete and accurate set of records and accounts of all transactions pertaining to the operation of its distillery, including, but not limited to, records and accounts of all distilled grain received in or withdrawn from the distillery, all acknowledgment forms and Michigan certification of origination statements in the qualified small distiller's possession, copies of all contracts, and acknowledgment forms returned to and settled by the qualified small distiller. The department of agriculture and rural development and the commission may examine the records and accounts pertaining to the qualified small distiller's distilled grain handling business at any time during normal business hours.

(11) As used in this section:

(a) "Acknowledgment form" means a scale weight ticket, a load slip, or any other evidence of deposit issued by a small distiller, an out-of-state entity that is the substantial equivalent of a small distiller, or the authorized representative of a small distiller or out-of-state entity that is the substantial equivalent of a small distiller to a depositor that identifies the distilled grain being transferred from possession of the depositor to the possession of the small distiller or the out-of-state entity that is the substantial equivalent of a small distiller.

(b) "Depositor" means either of the following:

(i) A person that delivers distilled grain to a small distiller or an out-of-state entity that is the substantial equivalent of a small distiller for storage, processing, shipment, or sale and that has title to distilled grain at the time of delivery.

(ii) A person that owns or that is the legal holder of an acknowledgment form issued by a depositor for distilled grain.

(i) Dry barley.

(ii) Malted barley.

(iii) Oats.

(iv) A small grain.

(v) A cereal grain.

(vi) Potato.

(vii) Corn.

(viii) Fruit.

(ix) Sugar beets.

(x) Honey.

(d) "Michigan certification of origination statement" means a signed statement from a depositor or producer on an acknowledgement form that deposited distilled grain was grown and harvested in this state.

(e) "Qualified small distiller" means a small distiller or an out-of-state entity that is the substantial equivalent of a small distiller certified by the department of agriculture and rural development under this section as having at least 40% of the base distillate of the small distiller or the out-of-state entity that is the substantial equivalent of a small distiller distilled from distilled grain grown and harvested in this state.