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MLCC Rule Prevents Transfer of Certain Licenses for 3 Years

The Michigan Liquor Control Code (MLCC) provides that certain licensees must prove “unusual hardship” to transfer a newly issued liquor license within 3 years after obtaining it.

Section 1501 of the MLCC states that “a class C or specially designated distributor license obtained in a manner other than by transfer shall not be transferred within 3 years after its issuance except under circumstances where the licensee clearly and convincingly demonstrates that unusual hardship will result if the transfer does not receive the consent of the commission.”

This rule is written into the code as a means to prevent persons from “flipping,” or purchasing and profiting from the transfer of certain types of licenses. Although the rule is infrequently used, it is important for all licensees – especially those holding a class C or a specially designated distributor (SDD) license – to be aware of the rules affecting their businesses.

Under Michigan law, the “clear and convincing” standard of proof is one that requires evidence to be more highly probable to be true than not. It is a harder burden of proof to meet than a mere preponderance of the evidence. If the Liquor Control Commission denies a transfer or refuses to waive the requirement under this provision, a licensee must either wait out the statutory period or follow the appeals process.

For more information about obtaining and transferring liquor licenses, and the commission’s guide for licensees, visit

http://www.michigan.gov/documents/dleg/FINAL-_Retail_Guide_2009_WEB_304923_7.pdf

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