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Apr 2020
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April 15, 2020

Michigan Liquor Control Commission Begins Spirits Buyback Program

Update: On April 17, 2020, the Michigan Liquor Control Commission extended the deadline for requests to participate in the program through April 24, 2020, after which requests were no longer accepted. On May 4, 2020, Governor Whitmer announced that, statewide, 657 bar and restaurant owners had elected to participate in the buyback program and will be receiving an aggregate of $3.3 million in payments as part of the program.

On April 13, 2020, Governor Whitmer signed Executive Order No. 2020-46, which created a spirits buyback program for Michigan restaurants and bars. Holders of certain on-premise liquor licenses (specifically, Class C, B-Hotel, G‑1, Club, Continuing Care Retirement Center, Aircraft, Watercraft and Train licenses) are eligible to participate in the buyback program. Licensees are not eligible if their license was in escrow as of March 10, 2020, or if the licensee has any unpaid non-sufficient funds payments to the MLCC.

When an eligible licensee requests to participate in the buyback program, the Michigan Liquor Control Commission (MLCC) will pay the licensee 100% of the purchase price of spirits that: (i) are in the licensee's inventory; (ii) were ordered and received before March 16, 2020; and (iii) are unopened and saleable and not delisted or expired. The buyback program applies only to spirits (defined as alcoholic beverages obtained by distillation) and does not apply to beer or wine. While the MLCC has not committed to a timeframe for issuing payments to licensees, they have indicated they intend to mail checks as quickly as possible.

Upon payment of the purchase price to the licensee, the MLCC will hold title to the purchased inventory. However, the licensee will retain physical possession of the inventory until at least 90 days after the end of the declared state of emergency related to COVID-19, and may not sell or otherwise dispose of the inventory. At any point during that time, the licensee may repay to the MLCC the full amount advanced to the licensee and retake title to the inventory. 

Upon the expiration of the 90-day period after the end of the declared state of emergency, a licensee who participated in the buyback program will not be permitted to purchase additional spirits until either: (i) the licensee repays the MLCC for the amount advanced to the licensee; or (ii) the MLCC takes physical possession of the pledged inventory. While further guidance may be issued by the MLCC, at this time a licensee is not prohibited from purchasing additional inventory prior to the end of the 90-day period or selling such additional inventory during or after the 90-day period.

To participate in the buyback program, a licensee must submit a request to the MLCC. The request may be submitted online through the MLCC's website, available here, by 5:00 p.m. on Friday, April 17, 2020. Alternatively, the request may be submitted by first class mail postmarked no later than April 17, 2020. As part of their request to participate in the program, the licensee must submit a list of the inventory eligible to be purchased and the purchase price paid by the licensee for that inventory.

For more information about this program, please contact Emily Cantor, David Eberhard or Dennis Loughlin.

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