ASKED & ANSWERED: John B. Carlin Jr. on 'secondary use' items

By Steve Thorpe

Legal News

Regulators, business owners and trade groups have reviewed Michigan's liquor laws and made recommendations that appeared in an advisory report. The report recommended permitting "secondary use" items provided by suppliers, including glasses, coasters and other items with beer, wine and liquor logos. John B. Carlin Jr. concentrates on business law and regulatory law, with emphasis on representation of members of the food service and hospitality industry. Carlin has practiced for 40 years and hospitality law is the focus of his law firm Carlin Edwards Brown PLLC, which has offices in Troy, Lansing, and Gaylord.

Thorpe: How long have logoed marketing items for alcoholic beverages been prohibited in Michigan?

Carlin: Rule 436.1321, and specifically Sections 3, 4, and 8, dates back to 1975 and has not been changed since then. The rule prohibits the use of an item on licensed premises that displays or bears the name or logo of a beer, wine or spirits product or that has a secondary use -- unless approved by the Michigan Liquor Control Commission. This rule then includes the use of an item, such as an umbrella on a patio, if the umbrella displays the name or logo of an alcoholic beverage, as this item has a secondary use, i.e, shelter from rain. If that umbrella was placed inside the restaurant so the secondary use is eliminated, then it is acceptable, with the approval of the MLCC.

I once had an MLCC violation for a restaurant displaying a lit "Stroh's" sign in its restaurant since it was lit and therefore had a secondary use. We objected to the violation since the restaurant did not sell Stroh's beer but did sell Stroh's ice cream. If the sign had not been lit, then it would have been okay to display it. The MLCC, however, did find the licensee guilty and it paid the fine to avoid further expenses and took down the sign.

Thorpe: Some top government officials appear to favor the change. Why might state government support it?

Carlin: Michigan is the only state that prohibits use of barware, napkins, coasters, ashtrays, menu boards, pencils, shirts, caps, etc. All other states allow the licensee to purchase these products from the manufacturer or wholesaler. In my opinion, the pressure to retain these rules is driven by the wholesalers. The MLCC does occasionally approve use of logoed items if there i no secondary use and the licensee pays for the items at a price not "below their cost by the manufacturer, outstate sellers of beer, outstate sellers of wine, or wholesaler ..."

Thorpe: Opponents of the recommendation claim that it might lead to drinking games and increased underage drinking. Has that happened in other states?

Carlin: I have never heard of any adverse activity or conduct causing any injury or harm to the public from the use of these products displayed in the facility. I cannot imagine that an umbrella or beverage cart, or other logoed items in a restaurant would result in contests, rowdy behavior or over consumption of alcoholic beverages. The existence of these rules benefits only the manufacturers, distributors, or wholesalers of these products. In fact, a 2013 MRG Spring Michigan Poll done March 17-23, determined that 75 percent of Michigan residents support legislation to change these laws and allow restaurant and bar owners to purchase barware printed with the logos of the beverages that they serve.

Thorpe: There are also federal regulations involved. How do those mesh with Michigan's laws?

Carlin: There are no federal regulations prohibiting these products and any that were in place years ago have been rescinded. In fact, Title 27 of the Code of Federal Regulations provides that giving or selling point of sale advertising materials and consumer advertising specialties to a retailer does not constitute a means to induce the retailer and most states follow the federal regulations and allow the sale of these items to operators.

Thorpe: What's the next step in this process?

Carlin: It is up to either the state legislators to adopt the recommendation of the Study Committee that recommended the rescission of these rules or the MLCC can recommend a rule change and the state can accept and simply rescind or modify the rule to allow the sale of these items to the operators. The language to rescind these rules has been recommended by the Liquor Control Advisory Rules Committee, created by Gov. Rick Snyder to conduct a special study of the rules and regulations of the MLCC, and consisting of a large group of experts involved in the food and beverage industry in Michigan, including my partner, Michael Brown, and it is up to the legislators or the MLCC to act, despite the lobbying that will be imposed to prevent any changes to these rules.

Published: Tue, May 21, 2013