HB-4581, As Passed House, December 15, 2015HB-4581, As Passed Senate, December 15, 2015

SUBSTITUTE FOR

HOUSE BILL NO. 4581

     A bill to amend 1998 PA 58, entitled

"Michigan liquor control code of 1998,"

by amending section 205 (MCL 436.1205), as amended by 2010 PA 213.

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 engage

in the warehousing and delivery of warehouse and deliver spirits in

this state so as to ensure that all retail licensees continue to be

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 for the purposes of warehousing

and delivering 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 for the storing of to store spirits from which all

delivery of spirits to retail licensees shall 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 those weeks a week that accompany accompanies a state

holiday, the commission may order a modified delivery schedule

provided that if a retailer waits will not wait longer than 9 days

between deliveries due to a because of the modified delivery

schedule. The commission shall provide for an integrated on-line

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 shall be set by the commission and shall 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 per in each

calendar year. which order shall be made An authorized distribution

agent shall make a special emergency order available to the retail

licensee within 18 hours of the placing of the order. A An

authorized distribution agent shall make 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 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 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 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 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 on notice, any contract or

written agreement it may have has with a supplier of spirits or

other authorized distribution agent for the warehousing and

delivery of delivering spirits in this state.

     (9) For any a violation of this act, rules a rule promulgated

under this act, or the terms of an order appointing an authorized

distribution agent, an authorized distribution agent shall be 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 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 1 month and an on-premises licensee may purchase,

collectively from specially designated distributors, up to that

amount 9 liters of spirits during any 1-month period. 1 month.

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 An on-premises licensee and be

shall maintain and make available to the commission upon request

records verifying the purchases described in this subsection.

     (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.

(11) (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 $8.25 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 delivering spirits to retailers. The

payment described in this subsection shall may not be included in

the cost of purchasing spirits by the commission and shall is 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. delivering. As used in this

subsection, "case" means a container holding twelve 750 ml bottles

of spirits or other containers containing spirits which that are

standard to the industry.

     Enacting section 1. This amendatory act takes effect 90 days

after the date it is enacted into law.