02.19.2025

For businesses looking to obtain a liquor license in Michigan, understanding the state’s quota system and its implications is crucial.

The Michigan Liquor License Quota System is a regulatory framework that limits the number of liquor licenses issued within specific geographic areas based on population. This system is designed to control the availability of alcohol and ensure that licenses are distributed fairly across municipalities.

This article outlines the key aspects of the quota system and provides guidance on how to navigate the process.

What is the Quota System?

Michigan’s quota system allocates liquor licenses based on the population of a municipality. Specifically, one on-premises liquor license can be issued for every 1,500 residents or a major fraction thereof. This means that the number of available licenses in a given area is directly tied to its population size, as determined by the most recent federal census data.

Types of Licenses Affected

• Class C License: Allows restaurants and bars to sell and serve beer, wine, mixed spirit drinks and spirits for on-premises consumption
• B-Hotel License: Permits hotels to sell and serve beer, wine and spirits for on-premises consumption
• Tavern License: Allows the sale of only beer and wine for on-premises consumption
• A-Hotel License: Similar to the Tavern License but specific to hotels

Steps to Obtain a Quota Liquor License

1. Determine License Availability

Before applying for a liquor license, businesses should first check to see if a quota license is available in their municipality. This can be done by contacting local government officials or the Michigan Liquor Control Commission (MLCC). The MLCC maintains records of available licenses and can provide information on the current status of quota licenses in a specific area.

2. Application Preparation and Submission

Once availability is confirmed, the next step is to prepare and submit an application to the MLCC. The application process includes:

• Application Form: Complete the appropriate application form for the type of license sought.
• Supporting Documents: Gather necessary documents, such as personal identification, business financial and organizational documents, as well as proof of financial responsibility.
• Fees: Pay the required application fees, which include an inspection fee and a license fee

3. Local Government Approval

For new licenses, approval from the local government or city commission is required. This step often involves:

• Public Hearing: A public hearing where local authorities review the application, and the public can voice their opinions
• Compliance Review: Ensuring compliance with local laws and ordinances

4. Public Notification

Michigan law requires public notification of a business’ intent to obtain a liquor license.

This may include:

• Posting Notices: Posting a notice at the proposed location and possibly in a local newspaper
• Public Hearing: Notification may also occur during the public hearing process

5. Background Checks and Investigation

The MLCC will conduct background checks and investigate the applicant’s qualifications. This includes:

• Background Checks: Comprehensive checks on all individuals involved in the business
• Site Inspection: An inspection of the premises to ensure it meets all regulatory requirements

Alternative Options if No Quota Licenses are Available

If no new quota licenses are available, businesses have alternative options:

Purchase an Existing License

• Escrowed Licenses: Businesses can purchase a license from a previous holder whose license is in escrow with the MLCC. These licenses are transferable within the county in which they were originally issued.
• Transfer of Location: This involves transferring the location of an existing license to the new business premises.

Special Licenses

• Resort Licenses: Available for businesses in designated resort areas, allowing them to serve alcohol to registered guests and members
• Development District Licenses: Issued in certain development districts to encourage economic growth

Challenges and Considerations

The application process can be lengthy and complex, often taking several months to complete. Businesses should start the process well in advance of their planned opening date.

Municipal Preferences

Municipalities may have preferences for granting licenses. Some may prioritize large developments over small businesses, while others may support small businesses to foster local economic growth.

Conclusion

Navigating Michigan’s Liquor License Quota System requires a thorough understanding of the process and potential challenges. Businesses should carefully assess license availability, prepare comprehensive applications and engage with local authorities to ensure compliance.

Consulting with legal professionals specializing in liquor licensing can also help streamline the process and increase the likelihood of obtaining a license. By understanding and effectively navigating the quota system, businesses can successfully secure the necessary licenses to serve alcohol and thrive in Michigan's competitive market.