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Michigan Allows Bars and Restaurants to Sell Unused Alcohol Back to the State in Exchange for Cash

Liquor license holders must submit requests for reimbursement before 5 p.m. on Friday, April 17

The back bar at Bumbo’s has a neon “Bar” sign hanging in the window and bottles of liquor lined up on the counter.
Bars that purchased beer, wine, and liquor prior to March 16, 2020 can apply for the spirits buyback program.
Michelle and Chris Gerard

Gov. Gretchen Whitmer signed an executive order on Monday designed to provide financial relief to Michigan bars and restaurants with liquor licenses. The new order places the Michigan Liquor Control Commission in charge of organizing a spirits “buyback” program for alcohol purchased prior to the dine-in closures on March 16.

Under the order, restaurants and bars can essentially sell their unused bottles of beer, wine, and liquor back to the state in exchange for a cash refund for the full cost of the alcohol. Owners can then pay back the refund or return the bottles to the state after state emergency and disaster orders have lifted.

Restaurants and bars holding certain licenses can submit for reimbursement between now and this Friday, April 17 at 5 p.m through the MLCC’s website or email. The Commission is charged with developing a way to submit requests “as soon as reasonably possible.”

Participating bars and restaurants will be required to keep track of and preserve the spirits inventory rather than returning bottles to licensed distributors. Licensees who opt into the program will hold the title to the alcohol until they’ve paid back the full cash advance provided by the MLCC. Licensees who receive approval through the program will then have until 90 days after the after the state’s emergency and disasters declarations are lifted to re-purchase the spirits from the MLCC, according to a release. Holders of Class C, B-Hotel, G-1, Club, Continuing Care Retirement Center, Aircraft, Watercraft, and Train Licenses qualify for the buyback.

Similar to a buyback program rolled out in Ohio in March, the Michigan executive order is designed to help jumpstart Michigan’s food and beverage industry, which has been severely crippled by social distancing measures. According to a recent survey by the Michigan Restaurant and Lodging Association, the state food hospitality industry lost an estimated $491 million in sales and more than 72,000 jobs during the first 22 days of March. One percent of restaurant respondents stated that they closed permanently as a result of the pandemic and another 7 percent predicted they would close permanently within 30 days of taking the survey.

In interviews with Eater, multiple restaurant owners described having submitted dozens of applications to non-profit, private, and government loan and grant programs with little success. Meanwhile, many restaurant employees are still struggling to apply for unemployment assistance weeks after being laid off, as that state program has been overwhelmed with an unprecedented number of applications. While the buyback will provide a cash infusion for those businesses with liquor licenses, some restaurants without alcohol on the premises will still have to find ways to piece together enough capital to build up inventory and reopen.

Michigan Executive Order Authorizing Spirits Buyback.pdf

Eater is tracking the impact of the novel coronavirus on the local food industry. Have a story to share? Reach out at detroit@eater.com.

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