How Michigan Lost $1 Million of Liquor
It’s been a rough couple of years for government-controlled liquor systems. In 2022, news broke of an inside job at the Virginia Alcoholic Beverage Control Authority (ABC), in which a former state employee tipped off private collectors about which state-run liquor stores were expecting deliveries of rare and sought-after bourbons. Last year, Oregon Liquor and Cannabis Commission officials were busted for siphoning off hard-to-obtain bourbons for their personal use.
Now, Michigan is writing the latest chapter in the government’s century-long saga of alcohol control embarrassments. According to a just-released audit of the Michigan Liquor Control Commission (MLCC), the state’s complete inability to properly track its spirits inventory resulted in nearly a million dollars of liquor disappearing without a trace.
Michigan is one of 17 states that still operates as a control state. MLCC is the sole wholesaler of distilled spirits, meaning all liquor sold and distributed in the state must be originally purchased by the agency. Michigan law requires MLCC to exercise “complete control over alcoholic beverage traffic,” but it turns out that the agency lacks control over pretty much everything.
Since the 1990s, MLCC has outsourced the actual storage and warehousing of liquor to three “authorized distribution agents” (ADAs), who in turn use 11 warehouses to house the booze. The ADAs, which essentially act as a government-sanctioned oligopoly, are supposed to be operating as agents of the state. But the state code is silent about what the actual responsibilities of the ADAs entail, which results in a situation where everyone and no one is in charge at the same time.
Perhaps the most significant finding of the audit is that $961,000 of MLCC’s liquor inventory—totaling 62,294 bottles, housed in ADA warehouses—mysteriously vanished between January and February 2022. To put this in context, the missing liquor constituted 20 percent of the state’s entire inventory. While the state is supposed to conduct physical inventory counts at the ADA warehouses, zero inventory checks took place from October 2019 to July 2022 (which, naturally, MLCC blamed on COVID-19, despite the pandemic not starting in earnest until the spring of
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