In the height of the 2008 Presidential campaign, Michelle Obama made a comment regarding Hillary Clinton that “if you can’t run your own house, you certainly can’t run the White House.”

What brought me back to 2008 was the news of another great debacle with Michigan’s liquor system.

A recent article in Crains Business Grand Rapids reports that Michigan can’t account for $1.6 billion in liquor sales.

The unaccounted-for sales were discovered through two audits performed by the Michigan Auditor General.

For a state that beats its chest about going after DTC shippers and spending so much time and resources on this issue, one must wonder if Michigan ignored the obvious mess in their own backyard.

Michigan is a control state and is the wholesaler for spirits sales. A retailer ordering spirits needs to order through Michigan’s online system or through one of three authorized distribution agents (ADAs), which are Great Lakes Wine and Spirits, Republic National Distributing Co. (RNDC) and Imperial Beverage Co.

Problematically, Michigan had no process to track orders made through an ADA, which means they could not ensure orders were fulfilled and taxes were paid for years 2022 and 2023. Michigan decided to delegate these activities to the ADA, which are liquor wholesalers, without providing a process for requisite oversight. From February 2021 through August 2022, retailers submitted $1.1 billion in sales through the ADAs and the following fiscal year the amount stood at $499 million.

Michigan feigning some type of outrage claims it will take corrective action and will work to implement a new system. This statement reminds me of a friend who was pissed off that the people movers were not working in Chicago’s Midway Airport and complained all the way to the Mayor’s Office. He received a call from a faceless Midway bureaucrat, who responded that “the systems are in place to fix it.”

The Michigan system in place was supposed to be launched in 2024 has yet to operate, and now the state claims the audit concerns will be addressed by January 31, 2026.

What makes this more inexcusable is the problems with the liquor distribution systems are nothing new in Michigan. In 2019 the largest Michigan ADA, RNDC, opened a new facility that resulted in software snafus that threw the Michigan system into upheaval. RNDC which controls over 2/3rds of the market had to go offline for three days. As the only source from which retailers can purchase many large brands like Jamesons and Jack Daniels this becomes a major problem. Especially when some retailers are not getting named brands for the Thanksgiving and Christmas season.

Pam Hamilton, Director of the Michigan Liquor Control Commission’s (MLCC) Financial Management Division, stated that because of RNDC’s screw ups the state has lost $58 in gross sales and $7 million in tax revenue, and the numbers could reach in $100 million in lost sales.

It’s a disturbing trend in Michigan for taxpayers and consumers; wholesalers are not only not held accountable; they are favored by the state. The taxpayers suffer through loss of tax revenue which is earmarked to funding education, tourism, and general funds. Every time funds are unaccounted for or sales disappear there is no revenue going towards funding these causes. The Michigan consumer suffers when they can’t get access to products because the government sponsored wholesalers can’t or refuses to provide products in the marketplace.

What makes the auditor’s findings even more disturbing is they took place 2 to 3 years after the RNDC debacle. The state knowing the incompetence of the Michigan wholesale tier delegated crucial activities to a business whose competence can’t be trusted.

Ironically, there is a method where expanded consumer choice and efficient tax collection can happen rather easily and that is the DTC shipping market. Instead of expanding and licensing out-of-state shippers, Michigan has a history of limiting DTC shipment. A state which used to allow out-of-state wine retailer shipping without problems, passed a law banning it.

Michigan also is a state that advertises that 1/3rd of the alcohol shipments coming into the state are unlicensed. Instead of recognizing that the in-state wholesaler tier can’t meet the demand of customers who go out-of-state to purchase products. The state chooses to lose revenue by not expanding licensing to out-of-state entities.

The state that fought Granholm is the same state that has a hyperfocus on out-of-state DTC shipping.

If Michigan spent half the time focusing on incompetent wholesalers as they do DTC shipping, they would have their house in order and taxes effectively and efficiently collected.

But Michigan seems to serve the wholesaler interest and not the Michigan consumer and taxpayer.

Michigan’s house is not in order, but it not too late to fix it, all Michigan has to do is pivot towards the state’s best interest and not towards the wholesaler’s best interest, who often times works to the detriment of the state.