CONDITIONAL LIQUOR LICENSE S.B. 981:
SUMMARY OF INTRODUCED BILL
IN COMMITTEE
Senate Bill 981 (as introduced 5-24-16)
Sponsor: Senator Wayne Schmidt
CONTENT
The bill would amend the Michigan Liquor Control Code to do the following:
-- Require a conditional license applicant to submit an affidavit that the proposed licensed location met the requirements regarding the minimum allowed distance between a church or school building and a licensed location.
-- Delete a requirement that a license be at the same location, when a conditional license is requested by an applicant seeking to transfer ownership of or interest in an existing license.
-- Allow an applicant seeking a public on-premises license to apply for a conditional license.
-- Allow an applicant seeking a resort or resort economic development license to apply for a conditional license.
The bill would take effect 90 days after its enactment.
Affidavit Requirement
The Code allows the following applicants to request a conditional license:
-- An applicant seeking to transfer ownership of or interest in an existing license at the same location to sell alcoholic liquor for consumption on or off the premises.
-- An applicant seeking an initial license other than a specially designated distributor license or a license for the sale of alcoholic liquor for consumption on the premises.
If in addition to a completed application for a liquor license, the applicant submits a separate form requesting a conditional license with an acceptable proof of financial responsibility form and an executed property document, the Commission must approve or deny the conditional license, after considering the arrest and conviction records or previous violation history in the management, operation, or ownership of a licensed business. A conditional license issued for the transfer of an existing license at the same location must include any existing permits and approvals held in connection with the license.
The bill would require a conditional license applicant also to submit an affidavit signed by the applicant that the proposed licensed location met the requirements of Section 503 of the Code; and would require a conditional license issued for the transfer of an existing license (at any location) to include any existing permits and approvals held in connection with the license.
(Section 503 states that a new application for a license to sell alcoholic beverages at retail, or a request to transfer the location of an existing license, must be denied if the contemplated location is within 500 feet of a church or a school building. The section provides exceptions to this requirement, and does not apply to specially designated merchants not in conjunction with on-premises licenses. (Specifically designated merchants are licensed to sell beer and/or wine at retail for off-premises consumption. The Commission may waive the section in the case of other classes of licenses. If the church or school does not file an objection, the Commission may issue the license without a hearing.)
Eligible Applicants
As noted above, an applicant may request a conditional license if the applicant is seeking to transfer ownership of or interest in an existing license at the same location to sell liquor for on- or off-premises consumption. The bill would delete the requirement that the license be at the same location.
In addition, the bill would allow the following applicants to request a conditional license:
-- An applicant seeking a public on-premises license under Section 521a.
-- An applicant seeking a resort or resort economic development license under Section 531(2), (3), or (4).
(The Code prohibits the Commission from granting more than one public license for on-premises consumption for each 1,500 of population, but makes a number of exceptions to this quota. Section 521a allows the Commission to issue public on-premises licenses in addition to the quota licenses, for licensees located in a redevelopment project area or in a development district or area that is a tax increment finance authority district, a development area established under the Corridor Improvement Authority Act, a downtown district established under the downtown development authority Act, or a principal shopping district. An applicant for this type of license must meet further criteria and requirements regarding the amount of money invested within the area and the amount spent to rehabilitate or restore the licensed building.
Under Section 531(2), (3), and (4), the Commission may issue a limited number of resort licenses and resort economic development licenses without regard to the quota under specific circumstances.)
BACKGROUND
A conditional license allows a liquor license applicant to sell alcoholic liquor during the licensing process. Generally, conditional licenses are granted to existing locations (if an existing business will be sold to a new owner, for example). The conditional license permits the business to sell alcoholic liquor without having to wait until a formal license is granted. As a rule, a conditional license must be issued within 20 business days if an applicant is approved. A conditional license is not transferable or renewable, and expires when whichever following occurs first:
-- The Commission issues an order of denial of the license application that serves as the basis for the conditional license after all administrative remedies before the Commission have been exhausted.
-- Twenty business days after the Commission issues an order of approval of the license application that serves as the basis for the conditional license.
-- The licensee or conditional licensee notifies the Commission in writing that the initial application should be cancelled.
-- One year after the date the conditional license was issued.
FISCAL IMPACT
The bill would have an indeterminate fiscal impact on the Michigan Liquor Control Commission (MLCC) within the Department Licensing and Regulatory Affairs, and a small, but likely positive fiscal impact on local units of government. Under the bill, those applying for an on-premises license, resort license, or economic development license would be able to apply for a conditional license while their licenses were being processed. The MLCC charges a $300 conditional license fee as well as a $70 inspection fee per license covered by the conditional license. Expanding the number of license types eligible for a conditional license would generate some amount of additional revenue, depending on the number of businesses that applied. Any additional revenue would be subject to the statutory formula that dictates that the MLCC receive 41.5% of liquor license revenue, county sheriffs receive 55.0%, and 3.5% be dedicated to alcohol abuse and treatment programs. Additional revenue would be offset to some extent by the additional costs related to verification of required application information and issuance of licenses.
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.