One of the largest state-authorized liquor distributors that faced logistic issues in June after switching facilities may face fines and other disciplinary measures after backing up business deliveries across Michigan.
The Michigan Liquor Control Commission (MLCC) filed on November 15 an 88-count complaint against NSW Michigan, which operates under the name Republican National Distributing Company (RNDC), over delivery delays that lead to liquor shortages.
Michigan is one of 18 “control states” in which the MLCC, enacted post-Prohibition, regulates all alcohol sales through a three-tier distribution system.
That means three authorized distribution agents (ADA) supply liquor to businesses across the state: General Wine & Liquor Company Inc, NSW Michigan, LLC, and Imperial Beverage Company.
Eighty-five counts in the complaint allege a failure “to deliver an order that satisfied the minimum requirements” to companies across Michigan ranging from June 23 to October 27, violating Section 205(4) of the Michigan Liquor Control Code.
One count said RNDC “failed to maintain an adequate physical plant and proper equipment” to perform distribution, ”having kept callers on hold for multiple hours, disconnected calls after a lengthy hold, failed to answer multiple calls, and failed to return multiple messages,” the complaint stated.
The next count said the company “failed to maintain adequate computer software” to handle liquor load orders and state inventory, which is about “$35 million higher than the expected amount.”
The final charge states the company failed to provide delivery records requested by the MLCC on November 8.
Each count carries a $300 fine, if confirmed by a hearing officer, which could total $26,400.
The complaint requests the RNDC be placed on probation, during which it pays for an independent audit for its logistics and accountability and fully comply with the MLCC’s document requests.
The company would receive $0.50 cents less per case of spirits during the probationary period lasting until the audit is completed and corrective measures are taken.
That audit must be approved by the commission and completed within three months of the Hearing Officer’s order.
"The commission may, by separate order, require the ADA to take corrective action based on the audit's results by a date set in the separate order," the complaint said.
“The holidays are coming and with that comes lots of time spent with family,” Nessel posted Monday on Facebook. “This cannot stand.”
RNDC didn’t respond to a request for comment. A company spokesperson said at a Friday MLCC meeting the company had hired additional workers to mediate the problems caused by switching facilities, machinery, and internet technology, which overloaded their systems.
Crain’s reported the state is short roughly $58 million in gross sales, pooling to $7 million of unaccounted for liquor tax revenue.
Michigan acts as the sole spirit wholesaler that contracts with the distributors, with RNDC as the largest, serving around 13,000 customers.
Last year, distilled spirit sales in Michigan reached near $1.5 billion, according to a previous Licensing and Regulatory Affairs press release.