15 PROPOSED ADMINISTRATIVE RULES  

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    ORR # 2003-035

     

    DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES LIQUOR CONTROL COMMISSION

    LICENSING QUALIFICATIONS

     

    Filed with the Secretary of State on

    These rules take effect 7 days after filing with the Secretary of State

     

    (By authority conferred on the liquor control commission by section 215(1) of 1998 PA 58, MCL 436.1215(1))

     

    R 436.1105, R 436.1107, R 436.1109, R 436.1110, R 436.1117, R 436.1123, R 436.1129, R 436.1133, R

    436.1135, R 436.1143, and R 436.1149 of the Michigan Administrative Code are amended as follows:

     

    R 436.1105 Application for license; denial; grounds.

    Rule 5. (1) An applicant for a license shall provide evidence in the application of, or demonstrate at a hearing, all of the following:

    (a)    Any of the following:

    (ii)     If a partnership, that all partners are the legal age for the consumption of alcoholic liquor in this  state;.

    (iii)      If a privately held corporation, that all stockholders are the legal age for the consumption of alcoholic liquor in this state, unless the stock of the stockholders is held in a fiduciary relationship; or.

    (iv)     If a limited liability company, that all members are the legal age for the consumption of alcoholic liquor in this state.

    (b)      The existence of adequate legitimate and verifiable financial resources for the establishment and operation of the proposed licensed business in proportion to the type and size of the proposed licensed business.

    (c)     The existence of an adequate physical plant or plans for an adequate physical plant appropriate for the type and size of the proposed licensed business.

    (d)    That the location of the proposed licensed business shall adequately service the public.

    (2)   The commission shall consider all of the following factors in determining whether an applicant may be issued a license or permit:

    (a)    The applicant's management experience in the alcoholic liquor business.

    (b)    The applicant's general management experience.

    (c)    The applicant's general business reputation.

    (d)     The opinions of the local residents, local legislative body, or local law enforcement agency with regard to the proposed business.

    (e)    The applicant's moral character.

     

     

    (f)      The order  in which  the competing initial application forms are submitted to the commission; however, this subdivision shall not apply to an application for a resort license authorized by section 531 of 1998 P.A. PA 58, MCL 436.1531 Act No. 58 of the public acts of 1998, as amended, being

    §436.1531 of the Michigan Compiled Laws.

    (g)       Past  criminal  convictions  of  the  applicant  for  crimes  involving  moral  turpitude,  violence,  or  alcoholic liquor. Past convictions of the applicant for any of the following:

    (i)    A felony.

    (ii)    A crime involving the excessive use of alcoholic liquor.

    (iii)    A crime involving any of the following:

    (a)   Gambling.

    (b)   Prostitution.

    (c)   Weapons.

    (d)   Violence.

    (e)   Tax evasion.

    (g)   Fraudulent activity.

    (h)   Controlled substances.

    (iv)     A misdemeanor of such a nature that it may impair the ability of the applicant to operate a licensed business in a safe and competent manner.

    (v)    Sentencing for any of the offenses specified in this subrule after a plea of nolo contendere.

    (h)   The applicant's excessive use of alcoholic liquor.

    (i)   The effects that the issuance of a license would have on the economic development of the area.

    (j)   The effects that the issuance of a license would have on the health, welfare, and safety of the general public.

    (3)   An application for a new license, an application for any transfer of

    interest in an existing license, or an application for a transfer of location of an existing license shall be denied if the commission is notified, in writing, that the application does not meet all appropriate state and local building, plumbing, zoning, fire, sanitation, and health laws and ordinances as certified to the commission by the appropriate law enforcement officials. The commission may accept a temporary or permanent certificate of occupancy for public accommodation issued by the appropriate officials as evidence of compliance with this subrule.

    (4) The commission shall not issue a license to a municipally owned facility, except if the municipality is a co-licensee or if the license is issued to a concessionaire of the municipality.

     

    R 436.1107     Renewal of license.

    (2)   A licensee shall have only 1 year 5 licensing years after the expiration date of the escrowed license to renew the license and put the license into active operation, except upon written order of the commission after a showing of good cause. If the licensee fails to renew put the license into active operation within 1 year 5 licensing years after its expiration, and the commission does not extend the length of time for renewal, then all rights to the license shall terminate unless the commission has received written verification of either of the following:

    (a)   That the license or an interest in the license is the subject of litigation or estate or bankruptcy proceedings in a court of competent jurisdiction.

     

     

    (b) That the license was placed into escrow as a result of damage to the licensed premises by fire, flood, tornado or other natural event that makes the licensed premises unsuitable for the operation of the business and unsafe for public accommodation.

    (3)   If the commission extends the length of time for which a licensee may

    renew the license during the pendency of litigation or estate or bankruptcy proceedings or as a result of damage to the licensed premises for the reasons as stated in subrule (2) of this rule, then the licensee shall pay the required license fee for each elapsed licensing year prior to before placing the license in active operation.

    (4)    A licensee shall pay the required license fee prior to the commission's renewal of the license. Except as provided in subrule (3) of this rule, a license held in escrow with the commission shall be renewed in the same manner as an active license, including payment of all required license fees, each year by April 30.

    (5)     A licensee who places a license in escrow with the commission shall be responsible for providing the commission with current contact information, in writing, for all correspondence, which includes the name, mailing address, and telephone number.

    (6)    Not later than 90 days after the effective date of this rule, the commission shall provide or attempt to provide each licensee whose license is in escrow with a copy of this rule.

    (7)   A license that is held in escrow with the commission on the effective date of this rule begins the 5-year period allowed by subrule (2) of this rule for a license to be held in escrow on the effective date of this rule.

     

    R 436.1109 Application for license by corporation; requirements.

    Rule 9. (1) A corporation applying for a license shall file with the commission all of the following, as applicable:

    (a)      If incorporated outside of this state,  a copy of its current articles of incorporation, a current certificate of good standing from the state of incorporation, and a copy of the authorization to do business in this state issued by the Michigan department of consumer and industry services.

    (b)      If a Michigan corporation, a copy of the current articles of incorporation as approved by the corporation and securities bureau Michigan department of consumer and industry services.

    (c)     A certified copy of the minutes of a meeting of its board of directors or an affidavit a statement signed by an officer of the corporation naming the persons authorized by corporate resolution to sign the application and other documents required by the commission.

    (d)    An affidavit stating A signed statement providing the identity of its current corporate officers and the members of the board of directors.

    (e)    An affidavit stating A signed statement indicating whether or not the corporation is a privately held corporation. If the corporation is a privately held corporation, then it shall also file, with the commission, an affidavit stating a signed statement that includes all of the following information:

    (i)    The number of shares of stock that it has issued.

    (ii)    To whom the stock was issued.

    (iii)    The amount of stock issued to each stockholder.

    (iv)    The date of the issuance of the stock.

    (v)      The individual certificate numbers of the stock issued.

    (2)   The commission shall not renew a license of a corporation unless the corporate charter is current.

    (3)    The commission shall suspend the license of a corporation whose corporate charter is not current.

    (3)   (4) A corporate licensee applying for another license is required to meet the provisions of this rule only once if the licensee amends its filing to keep it current under this rule.

     

     

     

    R 436.1110 Application for license by limited liability company; receipt of distributions by assignee of membership interest in company; approval for reorganization or realignment of company; transfer fee; notification of changes in managers, members, assignees, articles of organization, or operating agreement; investigation of company; company authorization to do business in state required.

    Rule 10. (1) A limited liability company applying for a license shall file all of the following items with the commission, as applicable:

    (a)    If a foreign limited liability company, a copy of the certificate of authority issued by the Michigan department of consumer and industry services.

    (b)    If a domestic limited liability company, a copy of the articles of organization filed with the Michigan department of consumer and industry services.

    (c)     A copy of the operating agreement or agreements or bylaws entered into by the members under Act  No. 23 of the Public Acts of 1993, being §450.4101 et seq. of the Michigan Compiled Laws 1993 P.A. 23, MCL 450.4101 et seq.

    (d)    A copy of any amendments to its articles of organization.

    (e)    A copy of the most recent annual statement, if any, filed with the Michigan department of consumer and industry services.

    (f)      An affidavit stating A signed statement that includes the full name and address names and addresses of its current members, managers, and assignees of membership interest.

    (g)     An affidavit A statement signed by a manager of the limited liability company or by at least 1 member if management is reserved to the members naming the person authorized to sign the application and other documents required by the commission. If a foreign limited liability company, a person who has the authority to sign under the laws of the jurisdiction of its organization shall sign the affidavit statement and shall indicate the capacity in which the person signs the affidavit statement.

    (2)   An assignee of any membership interest in a licensed limited liability company shall not receive the distributions to which the assignor would be entitled, unless the assignee has received the prior written approval of the commission.

    (3)   Any reorganization or realignment of a limited liability company within a single licensing year that results in a transfer of more than 10% of the total interest in the limited liability company is considered a transfer requiring prior approval of the commission under section 529 of Act No. 58 of the Public Acts of 1998, as amended, being §436.1529 of the Michigan Compiled Laws 1998 P.A. 58, MCL 436.1529.

    (4)   A transfer, in the aggregate, of 50% or more of the total interest in a

    limited liability company during any licensing year shall, upon approval by the commission, require the payment of a transfer fee in accordance with section 529 of Act No. 58 of the Public Acts of 1998, as  amended, being §436.1529 of the Michigan Compiled Laws 1998 P.A. 58, MCL 436.1529.

    (5)    A licensed limited liability company shall immediately notify the commission, in writing, of any change in any of the following:

    (a)    Managers.

    (b)    Members.

    (c)    Assignees of membership interest.

    (d)    Articles of organization.

    (e)    Operating agreement.

    (6)    The commission may investigate any transfer of interest in a limited liability company or any proposed member, manager, or assignee of membership interest in a limited liability company.

    (7)   A licensed limited liability company shall be authorized to do business under the laws of this state. R 436.1117 Retail license; participating agreement.

     

     

    Rule 17. (1) An applicant for a retail license or a retail licensee shall not enter into a participating agreement, except in either of the following situations:

    (a)      If the commission approves the participating agreement after a showing of good cause by the applicant.

    (b)    If the nonlicensee receives not more than 10% of the gross sales of the licensed business.

    (2) The compensation included in a participating agreement may shall not be computed on the gross or net profits of the licensed business.

    (3)   The participating agreement shall be in writing and available for review by the commission.

     

    R 436.1123    Resort license; minimum qualifications.

    Rule 23. (1) An applicant for a resort license or a resort economic development license which that allows the consumption of alcoholic liquor on the premises shall meet both 1 of the following minimum qualifications:

    (a)    The proposed licensed establishment shall serve food and have dining

    facilities to seat not less than 100 persons. be in compliance with all of the following provisions:

    (i)    Be a full service restaurant that is open to the public and prepares food on the premises.

    (ii)    Have dining facilities to seat not less than 100 patrons unless exempted under section 531(3) of 1998 P.A. 58, MCL 436.1531(3).

    (iii)    Be open for food service not less than 5 hours per day, 5 days per week.

    (iv)     Not less than 50% of the gross receipts of the business are derived from the sale of food and beverages for consumption on the premises, not including the sale of alcoholic liquor.

    (b)    The proposed licensed establishment shall offer 1 of the following:

    (i) Some type of recreational or entertainment activity on the premises or, in the alternative, some type  of recreational or entertainment activity which is available to the public in close proximity to the  proposed licensed establishment.

    (ii) Sleeping facilities, meeting or conference rooms, or convention facilities. has sleeping facilities with a minimum of 25 bedrooms, meeting or conference rooms capable of accommodating not less than 200 patrons, or convention facilities capable of accommodating not less than 200 persons.

    (c)    The proposed licensed establishment is a sports/entertainment venue.

    (d)    The proposed licensed establishment is located on a golf course which is open to the public and which has not less than 18 holes that, in total, measure not less than 5000 yards.

    (2) An applicant for a resort license or resort economic development license shall submit 2 pictures, measuring 5 inches by 7 inches, to the commission if the application is for a completed building. One picture shall show the interior of the proposed licensed establishment and 1 picture shall show the exterior of the proposed licensed establishment. If the application is made for a proposed licensed establishment which is still to be constructed, then the applicant shall submit 1 copy of the floor plan of the proposed licensed establishment.

     

    R  436.1129  Specially  designated  merchant  license;  issuance  and  transfer;  limitation;  waiver; applicability.

    Rule 29. (1) For the issuance of a new, or the transfer of location of an existing, specially designated merchant license, all of the following are approved types of businesses:

    (a)    A grocery store.

    (b)    A party store.

    (c)    A food specialty store.

    (d)    A meat market.

    (e)    A delicatessen.

     

     

    (f)    A drugstore.

    (g)    A patent medicine store.

    (h)    A tobacconist.

    (i)    A florist.

    (j)     A department store that includes 1 or more of the stores listed in subdivisions (a) to (i) of this subrule.

    (k)    A specially designated distributor.

    (l)    A class C.

    (m)    ) A class B hotel.

    (n)    A club.

    (o)    A tavern.

    (p)    A class A hotel licensed establishment.

    (2)    The commission shall not issue a new, or transfer location of an existing, specially designated merchant license to an applicant operating an approved type of business who also holds, or a partner or stockholder of an applicant who holds, an interest, directly or indirectly, in a nonapproved type of business on, or contiguous to, the proposed licensed premises, unless 50% or more of the combined monthly gross sales of the approved and nonapproved businesses are of goods and services customarily marketed by the approved type of business. For the purposes of this subrule, combined monthly gross sales are sales exclusive of all taxes collected by a retailer on sales and are computed for an accounting period of not less than 180 consecutive days. The commission may approve an application under this rule subject to the condition that the applicant shall demonstrate compliance with this subrule at the end of the 180-day accounting period. The commission shall cancel the license if the licensee has failed to comply with the provisions of this subrule at the end of the 180-day accounting period.

    (3)    The commission shall not issue a specially designated merchant license to any of the following entities and shall not allow any of the following entities to change the nature of an existing business that has a specially designated merchant license:

    (a)     An applicant who owns gasoline pumps which are at the same location as, which are operated in conjunction with, or which are a part of, the proposed licensed business.

    (b)      An applicant who holds any financial interest, directly or indirectly, in gasoline pumps in the establishment, maintenance, operation, or promotion of the sale of gasoline at the proposed location of, in conjunction with, or as a part of, the proposed licensed business.

    (c)    An applicant who holds any interest, directly or indirectly, by ownership in fee, leasehold, mortgage, or otherwise, in the establishment, maintenance, operation, or promotion of the sale of gasoline at the proposed location of, in conjunction with, or as a part of, the proposed licensed business.

    (d)    An applicant who holds any interest, directly or indirectly, through interlocking stock ownership in a corporation or through interlocking directors in a corporation engaged in the establishment, maintenance, operation, or promotion of the sale of gasoline at the proposed location of, in conjunction with, or as a part of, the proposed licensed business.

    (e)     An applicant at any location at which gasoline is sold or offered for sale by any person, whether or not the applicant has any interest or derives any profit

    from the sale.

    (4)    In a city, incorporated village, or township that has a population of 3,000 or fewer people, the commission may, in its discretion, waive the provisions of subrules (1), (2), and (3) of this rule if the applicant for a license has and maintains a minimum inventory on the premises, excluding alcoholic liquor, of not less than $10,000.00, at cost, of the goods and services customarily marketed by approved types of businesses. The commission shall accept the means prescribed in R 436.1141(1) as a method for determining the population of a city, incorporated village, or township.

     

     

    (5)   In a township which is comprised of 72 square miles or more and which has a population of 7,000 7,500 or fewer people, the commission may, in its discretion, waive the provisions of subrule (3) of this rule if the applicant for a license has and maintains a minimum inventory on the premises, excluding alcoholic liquor, of not less than $10,000.00, at cost, of the goods and services customarily marketed by approved types of businesses.

    (6)   The commission shall not issue a specially designated merchant license to an applicant who operates a drive-in or drive-through establishment and shall not allow an applicant who operates a drive-in or drive-through establishment to change the nature of an existing business that has a specially designated merchant license.

    (7) The commission shall not issue a specially designated merchant license to an applicant who operates a drive-up or walk-up window for the sale of alcoholic liquor at the proposed location and shall not allow a person who holds a specially designated merchant license to change the nature of the existing licensed business to include a drive-up or walk-up window which permits the sale of alcoholic liquor through the drive-up or walk-up window.

    (7)   (8) This rule does not apply to the renewal of an existing specially designated merchant license that is in operation before the effective date of this rule and does not apply to a new specially designated merchant license or the transfer of location of a specially designated merchant license conditionally approved by the commission before the effective date of this rule.

     

    R 436.1133     SDD license; prohibited issuance or transfer.

    Rule 33. An application for a new specially designated distributor license or for the transfer of location of an existing specially designated distributor license shall not be approved by the commission if there is an existing specially designated distributor license located within 2,640 feet of the proposed site. The method of measurement shall be as prescribed in section 17a of Act No. 8 of the Public Acts of the Extra  Session of 1933as amended, being §436.17a of the Michigan Compiled Laws 503 of 1998 PA 58, MCL 436.1503. This rule may be waived by the commission for any of the following reasons:

    (a)    If the existing specially designated distributor has purchased less than $10,000.00 in spirits from the commission during the last full calendar year.

    (b)    If the existing specially designated distributor has a B-hotel or A-hotel license.

    (c)    If the proposed location and the existing specially designated distributor's licensed establishment are separated by a major thoroughfare of not less than 4 lanes of traffic.

    (d)    If the proposed licensed establishment is located in a neighborhood shopping center which does not have an existing specially designated distributor's licensed establishment and if the proposed licensed establishment is located not less than 1,000 feet from any existing specially designated distributor's licensed establishment. The method of measurement shall be as prescribed in section 17a of Act No. 8 of  the Public Acts of the Extra Session of 1933, as amended, being §436.17a of the Michigan Compiled  Laws 503 of 1998 PA 58, MCL 436.1503.

    (e)      If an existing specially designated distributor licensee is located within 2,640 feet of 1 or more existing specially designated distributor licensees and requests a transfer of location, which location is within 2,640 feet of the same existing specially designated distributor licensee or licensees, upon a showing of good cause by the licensee who is requesting the transfer of location.

     

    R 436.1135 Specially designated distributor license; limitations upon issuance or transfer; waiver; applicability.

    Rule 35. (1) For the issuance of a new, or the transfer of location of an existing, specially designated distributor license, all of the following are approved types of businesses:

    (a)    A grocery store.

     

     

    (b)    A party store.

    (c)    A food specialty store.

    (d)    A meat market.

    (e)    A delicatessen.

    (f)    A drugstore.

    (g)    A patent medicine store.

    (h)    A tobacconist.

    (i)    A florist.

    (j)     A department store that includes 1 or more of the stores listed in subdivisions (a) to (i) of this subrule.

    (k)    A hotel.

    (2)    The commission shall not issue a new, or transfer location of an existing, specially designated distributor license to an applicant operating an approved type of business who also holds, or a partner or stockholder of the applicant who holds, an interest, directly or indirectly, in a nonapproved type of business on, or contiguous to, the proposed licensed premises, unless 60% or more of the combined monthly gross sales of the approved and nonapproved businesses are of goods and services customarily marketed by the approved type of business. For the purposes of this subrule, combined monthly gross sales are exclusive of all taxes collected by a retailer on sales and are computed for an accounting period of not less than 180 consecutive days. The commission may approve an application under this rule subject to the condition that the applicant shall demonstrate compliance with this subrule at the end of the 180-day accounting period. The commission shall cancel the license if the licensee has failed to comply with the provisions of this subrule at the end of the 180-day accounting period.

    (3)    The commission shall not issue a specially designated distributor license to any of the following entities and shall not allow any of the following entities to change the nature of an existing business that has a specially designated distributor license:

    (a)     An applicant who owns gasoline pumps which are at the same location as, which are operated in conjunction with, or which are a part of, the proposed licensed business.

    (b)       An applicant who holds any financial interest, directly or indirectly, in the establishment, maintenance, operation, or promotion of the sale of gasoline at the proposed location of, in conjunction with, or as a part of, the proposed licensed business.

    (c)    An applicant who holds any interest, directly or indirectly, by ownership in fee, leasehold, mortgage, or otherwise, in the establishment, maintenance, operation, or promotion of the sale of gasoline at the proposed location of, or in conjunction with, or as a part of, the proposed licensed business.

    (d)    An applicant who holds any interest, directly or indirectly, through interlocking stock ownership in a corporation or through interlocking directors in a corporation engaged in the establishment, maintenance, operation, or promotion of the sale of gasoline at the proposed location of, in conjunction with, or as a part of, the proposed licensed business.

    (e)     An applicant at any location at which gasoline is sold or offered for sale by any person, whether or not the applicant has any interest or derives any profit from the sale.

    (4)    In a city, incorporated village, or township that has a population of 3,000 or fewer people, the commission may, in its discretion, waive the provisions of subrules (1), (2) and (3) of this rule if the applicant for a license has and maintains a minimum inventory on the premises, excluding alcoholic liquor, of not less than $12,500.00, at cost, of the goods and services customarily marketed by approved types of businesses. The commission shall accept the means prescribed in R 436.1141(1) as a method for determining the population of a city, incorporated village, or township.

    (5) In a township which is comprised of 72 square miles or more and which has a population of 7,500 or fewer people, the commission may waive the provisions of subrule (3) of this rule if the

     

     

    applicant for a license has and maintains a minimum inventory on the premises, excluding alcoholic liquor, of not less than $12,500.00, at cost, of the goods and services customarily marketed by approved types of businesses. The commission shall accept the means prescribed in R 436.1141(1) as the method for determining the population of a township.

    (6) Subrules (1), (2), (3), and (4) (4), (5), and (10) of this rule do not apply to the renewal of an existing specially designated distributor license in operation before the effective date of this rule and do not apply to a new specially designated distributor license or the transfer of location of a specially designated distributor license conditionally approved by the commission before the effective date of this rule.

    (6)   (7) The commission shall not approve the transfer of location of a specially designated distributor license outside the governmental unit for which it was issued, except upon a showing of good cause by the applicant.

    (7)   (8) Upon a showing of good cause by the applicant, the commission may, in its discretion, waive the quota restrictions of R 436.1141 if all of the following conditions are met:

    (a)     The applicant is in a city, incorporated village, or township that has a population of 3,000 or fewer people. The commission shall accept the means prescribed in R 436.1141(1) as a method for determining the population of a city, incorporated village, or township.

    (b)     The only existing specially designated distributor license is held in conjunction with a class A or class B hotel license.

    (c)     The commission may grant only 1 waiver of quota restrictions in a city, incorporated village, or township.

    (8)    (9) The commission shall not issue a specially designated distributor license to an applicant who operates a drive-in or drive-through establishment and shall not allow the applicant to change the nature of an existing business that has a specially designated distributor license.

    (10) The commission shall not issue a specially designated distributor license to an applicant who operates a drive-up or walk-up window for the sale of alcoholic liquor at the proposed location and shall not allow a person who holds a specially designated distributor license to change the nature of the existing licensed business to include a drive-up or walk-up window which permits the sale of alcoholic liquor through the drive-up or walk-up window.

     

    R 436.1143     SDD license; transfer of location.

    Rule 43. An applicant who requests a transfer of location of an existing specially designated distributor license into an area in which there are applications for new specially designated distributor licenses on file with the commission shall not be given priority if the proposed transfer of location is within 2,640 feet of the location of the establishments proposed by the new applicants. The method of measurement shall be as prescribed in section 17a of the act 503 of 1998 PA 58, MCL 436.1503.

     

    R 436.1149     Class C or SDD license; hardship transfer.

    Rule 49. (1) The commission shall not consent to a hardship transfer of class C or specially designated distributor licenses under section 17 of the act 501(2) of 1998 PA 58, MCL 436.1501(2) if the hardship shown by the licensee existed when the license was issued, except upon a showing of good cause.

    (2) A person who has been granted approval for a hardship transfer of class C or specially designated distributor licenses under section 17 of the act 501(2) of 1998 PA 58, MCL 436.1501(2) shall be prohibited from holding such classes of licenses for a period of 5 years thereafter, as either  an individual, partner, or stockholder, except upon a showing of good cause.