Ever tasted a great craft beer at a microbrewery and then tried in vain to find it for sale at a local bar? Ever wondered why your favorite whiskey seems to cost so much more in Michigan than it does in, say, Indiana? There’s no mystery behind these frustrations: you can thank the State of Michigan and powerful special interest groups for our inefficient and costly statewide alcohol distribution system.
Whether you purchase your beer or wine at a store or enjoy it at a bar, it first passes through Michigan’s “three-tiered” distribution system. Under this system, beer and wine suppliers are required to sell their products to state-sanctioned beer and wine wholesalers. These wholesalers are granted a monopoly on beer and wine sales in a given region – and retailers within these regions must deal with their designated wholesaler. The wholesalers both determine the beer and wine selections available to establishments within their regions and tack on additional costs that retailers have no choice but to pay.
Government meddling: the worst cocktail garnish you can imagine
Liquor is handled in a slightly different, but equally deleterious, manner. Rather than granting private companies explosive distribution rights for spirits, the state of Michigan has set itself up as sole distributor. Yet like the beer and wine wholesalers, the state takes a hefty cut before selling booze to private establishments. Lansing marks up the price of every bottle by 65% and pockets the difference – and that’s before further state taxes are applied.
This Byzantine system was put in place after the end of Prohibition in 1933 – and its beneficiaries, including the members of the Michigan Beer & Wine Wholesalers Association, have made sure it has remained in place ever since. Most consumers are unaware of the existence of this monopolistic distribution system, let alone its impact on their choices and budgets. That’s exactly how the wholesalers want it to stay; their distribution monopoly is a virtual license to extort money from Michigan’s alcohol retailers.
But Michael LaFaive, director of the Morey Fiscal Policy Initiative for the Mackinac Center for Public Policy, isn’t content to let the status quo stand. LaFaive and his Mackinac Center colleagues are exposing the operations of special interest groups like the Michigan Beer & Wine Wholesalers, and they’re working hard to eliminate the laws that make it possible for them to profit at the expense of consumers.
The U-M John Locke Society is bringing Michael LaFaive to campus this Wednesday. He’ll discuss the myths and misunderstandings surrounding Michigan’s alcohol distribution system and highlight other ways in which the government enables special interests to gain an upper hand. Special interests are doing much more than raising the cost of your favorite beer – don’t miss out on this chance to learn more about how they use our political system to profit at your expense and find out what is being done to stop them.
Michael LaFaive will be speaking on U-M’s campus this Wednesday, March 21 at 6:00PM in the Wolverine Room of the Michigan Union. Attendees will also be provided with free books and literature courtesy of the John Locke Society.
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