Bill Summary – FastDemocracy

Legislative Analysis
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LIQUOR RETAILER DISHONORED PAYMENTS
                                                                           http://www.house.mi.gov/hfa
Senate Bill 731 (S-2) as reported from House committee                     Analysis available at
Sponsor: Sen. Roger Hauck                                                  http://www.legislature.mi.gov
Senate Bill 732 (S-2) as reported from House committee
Sponsor: Sen. Paul Wojno
House Committee: Regulatory Reform
Senate Committee: Regulatory Affairs
Complete to 12-13-24
SUMMARY:
       Senate Bills 731 and 732 would amend the Michigan Liquor Control Code to modify the
       penalties for retailers that have payments to wholesalers dishonored by a financial institution.
       Currently, section 903b of the code makes it a violation for a retailer to make payments to a
       wholesaler, the Michigan Liquor Control Commission (MLCC), or the state that are dishonored
       by a financial institution for lack of sufficient funds.
       Senate Bill 731 would amend the code to provide penalties for retailers that have payments
       dishonored in violation of section 903b. Specifically, the bill would allow wholesalers to
       require retailers to pay an administrative fee for each dishonored payment (within 12 months
       of the first violation for repeat offenses) as follows.
         Violation                                      Fee
         First                                          $50
         Second                                         $100
         Third                                          $150
         Fourth                                         $200
         Fifth and above                                $250
       The bill would also provide that having a dishonored payment to a wholesaler for any reason
       would be a violation, as opposed to the currently required for lack of sufficient funds. In
       addition, dishonored payments to the MLCC or the state would no longer be violations.
        MCL 436.1903b
       Senate Bill 732 would amend the code to require the MLCC to suspend a retailer’s license if
       they have made at least six payments (on different dates) to a wholesaler that were dishonored
       by a financial institution in violation of section 903b within the last 12 consecutive months.
        Proposed MCL 436.1804
House Fiscal Agency                                                                          Page 1 of 2
BRIEF DISCUSSION:
       According to committee testimony, the rise of electronic payments has increased the rate at
       which payments by retailers have been dishonored. The bills are intended to disincentivize this
       behavior and ensure that retailers are a responsible part of the alcohol industry.
FISCAL IMPACT:
       Senate Bills 731 and 732 would have an indeterminate fiscal impact on the state.
       Senate Bill 731 would require that retailers be considered in violation of the Liquor Control
       Code if a payment to a wholesaler is dishonored for any reason. Under current law, only
       dishonored payments due to insufficient funds are considered violations, so the revision would
       expand the potential for violations. This change could increase revenue from collected
       violation fines, but the amount of revenue would depend on the number of dishonored
       payments and whether the Michigan Liquor Control Commission opts to assess penalties
       provided for under section 903 of the code. Revenue collected from these violation penalties
       would be deposited into the state’s general fund. The bill would also allow licensed wholesalers
       to assess administrative fees in accordance with a schedule established in the bill, though this
       revenue would be retained by the wholesaler and would therefore not impact the state.
        Senate Bill 732 would require the MLCC to suspend a retailer’s license if the retailer makes
        six or more dishonored payments. Examined jointly, the bills may result in additional
        administrative and enforcement costs for the MLCC, though the costs are likely to be modest.
        The bills would not have a fiscal impact on any other units of state or local government.
POSITIONS:
       A representative of the Michigan Beer & Wine Wholesalers Association testified in support of
       the bills. (12-3-24)
       The following entities indicated support for the bills:
          • Anheuser-Busch (12-3-24)
          • Great Lakes Wine & Spirits (12-10-24)
       The following entities indicated a neutral position on the bills (12-3-24):
          • Michigan Liquor Control Commission
          • Department of Licensing and Regulatory Affairs
       Michigan Alcohol Policy Promoting Health & Safety indicated opposition to the bills.
       (12-10-24)
                                                            Legislative Analyst: Alex Stegbauer
                                                                 Fiscal Analyst: Una Jakupovic
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency                         SBs 731 (S-2) and 732 (S-2) as passed by the Senate   Page 2 of 2
Statutes affected: 
Substitute (S-2): 436.1101, 436.2303
Senate Introduced Bill: 436.1101, 436.2303
As Passed by the Senate: 436.1101, 436.2303