It’s been a tough couple of years for government-controlled liquor systems. In 2022, the news arrived of an inside job at the Virginia Alcoholic Beverage Control Authority (ABC), in which a former state employee tipped off private collectors which state-run liquor stores were expecting deliveries of rare and sought-after bourbons. Oregon Liquor and Cannabis Commission officials were last year broken for stealing hard-to-obtain bourbons for personal use.
Now, Michigan is write the last chapter in the government’s century-old saga of alcohol control embarrassments. According to a just released verify of the Michigan Liquor Control Commission (MLCC), the state’s total failure to properly monitor its alcohol inventory has resulted in nearly a million dollars’ worth of liquor disappearing without a trace.
Michigan is one of 17 states which still functions as a control state. MLCC is the sole wholesaler of distilled spirits, meaning that all liquor sold and distributed in the state must be originally purchased by the agency. Michigan law requires MLCC to do so exercise “complete control over the trafficking of alcoholic beverages,” but it turns out that the agency does not have control over virtually everything.
Since the 1990s, MLCC has outsourced the actual storage and deposit of the liquor at three “authorized distribution agents” (ADA), who in turn use it 11 warehouses to accommodate alcohol. The ADAs, which essentially act as a government-sanctioned oligopoly, are supposed to operate as agents of the state. But state code is silent on what ADAs’ actual responsibilities are, which results in a situation where everyone and no one is responsible at the same time.
Perhaps the most significant find of the audit is that $961,000 of MLCC’s liquor inventory – a total of 62,294 bottles, housed in ADA warehouses – mysteriously disappeared between January and February 2022. To put that into context, the missing liquor made up 20% of the entire inventory. While the state is supposed to conduct physical inventory counts at ADA warehouses, zero inventory checks were conducted from October 2019 to July 2022 (which, of course, MLCC blamed on COVID-19, despite the pandemic not starting on serious until spring 2020) and Michigan has lifted its lockdown orders June 2021).
“The MLCC was unable to provide documentation regarding the whereabouts of the missing inventory,” the audit notes dryly. While one should never attribute to malice what can be explained by incompetence, it is worth noting that state responsibility inventory includes liquor fetching up to $45,000 a bottle, which creates enormous opportunities for wrongdoing given the MLCC’s shoddy tracking protocols.
If this Agatha Christie-Ayn Rand meeting mystery wasn’t enough, the audit goes on to explain how the MLCC is completely incapable of ordering rational quantities of every type of alcohol it stores. THE relationship says the agency purchased 12,204 bottles of a particular liquor in a week in which only 1,104 bottles of that liquor were sold. The agency then kept over 11,000 bottles of liquor on hand for the next 48 weeks, the last 19 of which saw zero sales. MLCC also purchased 780 bottles of another liquor over the course of 77 weeks, with no corresponding sales in any of the weeks in which those purchases were made.
The MLCC’s problems extended beyond stockpile ineptitude, and in some ways affected the agency as well emission numerous liquor licenses to establishments located in dry jurisdictions, which it will now be forced to revoke. These establishments had been selling alcohol in dry premises since 2018 without anyone noticing, until the auditor intervened.
Perhaps with the understatement of the century – and in language that only a lawyer or government accountant could appreciate – the audit rates the MLCC’s overall performance as “not sufficient.” The agency’s preliminary response is that it “agrees” with all of the audit’s findings, as the report’s mountain of evidence is apparently too much for even a bureaucracy to ignore.
Lost among the 65 pages of the boozy bean count report — and the million-dollar liquor scandal sucked into thin air — lies a deeper question: Why, in 2024, is the Michigan government still trying to operate as a wholesaler of distilled spirits? It doesn’t do the same for beer and wine, and already goes so far as to outsource warehousing and logistics to its distribution agents.
Unfortunately, the most predictable answer is probably also the most accurate: the MLCC has generated a few $2 billion for the state’s general fund over the past ten years. Maybe a million dollars in missing liquor is a small price to pay, after all.