Source: https://www.mlive.com/
A bipartisan package of bills that included more self-distributing options for craft beer, wine and spirits producers were left unsigned by Gov. Gretchen Whitmer this week, leaving many Michigan distillers concerned at the prospect of surviving a pandemic winter without in-person business.
Taken together, Senate Bills 934, 1138, 1139 and 1140 would have made several changes to the state’s liquor laws, including letting small distilleries self-distribute their products and letting retailers ship alcohol directly to Michigan consumers.
The bills passed with wide bipartisan support in both the House and Senate in December, but Whitmer opted not to sign the legislation before the two-week review period expired in what’s known as a “pocket veto.”
A separate bill that would have expanded options for a person to hold both on- and off-premises tasting room licenses at the same location was signed by Whitmer, but it won’t go into effect because it was tie-barred to three of the bills that were pocket vetoed.
Industry insiders say the main concern from the governor’s office was with a bill that would have changed how certain canned alcoholic beverages are taxed.
Currently, low-calorie hard seltzers like Whiteclaw and Truly have lower tax rates than other canned mixed drinks because they are classified as malt beverages. If signed into law, the Senate package would have reclassified mixed spirit drinks as wine, lowering the tax rate on the products from 48 cents a liter to 20 cents a liter.
The short-term budget hit the change would have caused was the main point of concern from the governor’s office, said Jon O’Connor, president of the Michigan Craft Distillers Association. He said the association is working closely with the governor’s office and lawmakers to get similar proposed policy changes reintroduced in the next session.
“Our argument has been that we understand that there’s a revenue hit, but if there’s going to be an industry and Michigan businesses are going to be competitive in it, then we need to realign that right now,” O’Connor said.
Read more: Michigan craft distillers say more options to deliver products to customers would be ‘massive lifesaver’
Supporters of the changes have pointed to the struggles Michigan distillers are facing as a result of the COVID-19 pandemic, arguing recalibrating Michigan’s liquor distribution laws to make it easier for craft distillers to sell their products is necessary to keep them afloat.
Without indoor seating, Nicolas Lefebre, co-owner of the Elk Rapids distillery Ethanology, said his business has been weathering the Northern Michigan winter by offering pickup options and investing in several outdoor yurts with the help of a grant.
But the self-distribution bill would have given Ethanology the option to work with local retailers and bars and get their products out to people who still aren’t comfortable visiting the tasting room in person, or are unable to do so due to weather conditions, Lefebre said.
“For a small entity like us that’s not in distribution, it would literally mean the world to us – it would open up markets that we’ve never had access to,” he said. “The timing of the pocket veto was really detrimental, it’s been devastating, actually. We had high hopes for the bill.”
In a statement, Michigan Beer & Wine Wholesalers Association President Spencer Nevins said the legislation mirrored past efforts to help grow the state’s craft beer and wine industries, calling the pocket vetoes disappointing.
“By failing to sign these bills into law, the governor and Michigan Liquor Control Commission missed a golden opportunity to provide a shot in the arm for a distilled spirits industry reeling from the COVID-19 pandemic,” Nevins said.
The package is among several bills passed by both chambers that Whitmer pocket vetoed without much or any public explanation.
Her other major vetoes from the Legislature’s lame-duck session included line-item nixes of parts of the COVID-19 supplemental relief bill – including a $220 million appropriation into the employer-funded Unemployment Trust Fund – as well as legislation that would have exempted Meijer from sales taxes on the purchase of automated material handling systems and another bill that would have allowed first-time DUI offenses to be expunged.