MI Liquor Distributor Slapped With Historic $3-M Fine for Liquor Control Violations

If you had trouble finding your favorite vodka back at Christmas time, you finally have an answer as to why today. A major liquor distributor operating in Michigan is accused of contributing to liquor supply shortages across the state during the 2019 holiday season, and the firm has been hit with an unprecedented and historic fine of $3-million for 88 violations of the Michigan Liquor Control Code.

That’s the word today from Michigan Attorney General Dana Nessel and the Chairman of the Board of the Michigan Liquor Control Commission Pat Gagliardi who secured the fine following an audit against NWS Michigan, LLC., one of the state’s authorized spirits distributors.

The violations by NWS Michigan LLC – which does business as Republic National Distributing Co. (RNDC) – contributed to the holiday season shortages experienced by much of Michigan last Christmas.

Attorney General Nessel says, “I appreciate the work of my assistant attorneys general and the Michigan Liquor Control Commission in reaching this significant settlement, which should serve as a strong reminder of accountability in the state’s liquor inventory and delivery system,” adding, “The State will not tolerate vendor mismanagement that results in financial hardship which impacts the livelihood of liquor retailers across Michigan.”

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The order approving the settlement was signed today by Hearings Commissioner Ed Clemente at the Michigan Liquor Control Commission, and is believed to be unprecedented in the liquor regulatory industry. RNDC operates in multiple markets across the nation including distribution centers in Grand Rapids and South Bend.

In the historic settlement, RNDC acknowledged all 88 violations of the Michigan Liquor Control Code that included:

  • Failure to deliver liquor orders
  • Failure to maintain an adequate physical plant
  • Failure to provide records requested by the MLCC

In addition to the $3 million fine, the order stipulates an independent audit of RNDC’s distributing business, with MLCC approving the auditor; places RNDC on probation for one year; and requires RNDC to submit monthly compliance reports to Liquor Control during that time.

Chairman Gagliardi says, “Distributors must abide by the rules or be subject to a fine.” Gagliardi adds he looks forward to a stronger liquor distribution system, and to a better and more productive relationship with RNDC, noting, “I am deeply appreciative of the assistance from the Attorney General’s office and all of the hard work of the MLCC staff in negotiating this agreement.”

RNDC’s logistical failures began in the spring of 2019 and contributed to liquor shortages at Michigan liquor stores that extended through the 2019 Christmas holiday season. During that time the MLCC received hundreds of complaints from liquor retailers who could not obtain products from RNDC to stock their shelves. Retailers reported that RNDC delayed or missed deliveries completely, or did not deliver the products ordered. They also complained of RNDC’s lack of customer service, failure to return phone calls and of having to drive to RNDC’s warehouse to pick up their products.

Any downturn in retail spirit sales due to unstocked shelves also impacts the state’s bottom line as the sole wholesaler of spirits products in the state. Last year, distilled spirit sales in Michigan topped nearly $1.5 billion.