Michigan liquor commission lacked oversight of $499M in alcohol orders, audit finds
LANSING, Mich. (FOX 2) - The group in charge of tracking liquor purchased and sold in Michigan did not properly oversee hundreds of millions of dollars worth of spirit orders between 2022 and 2023.
The state auditor classified the lack of oversight as a "significant deficiency" within the Michigan Liquor Control Commission in its latest review.
Big picture view:
More than a quarter of all liquor orders in Michigan between Oct. 1, 2022 and Sept. 30, 2023 were not submitted through Michigan's online ordering system.
Instead, the $499 million in spirit orders were submitted directly through distributors, who are tasked with storing and delivering orders owned by either vendors or the liquor commission.
Every liquor order in Michigan must be recorded by the MLCC to ensure the state is properly recording the movement of alcoholic beverages.
According to the Michigan Office of the Auditor General, the agency delegated some of this responsibility to distributors without a system in place to track whether the records were accurate.
The backstory:
Michigan has full control over the sale of liquor in the state, which is overseen by the commission. Acting as a wholesaler for spirit products, vendors will sell the items to Michigan, which then resells them to retailers.
Those products are kept in warehouses around Michigan. Authorized distribution agents oversee their delivery.
The OAG reviewed the commission's fiscal year for 2023, finding the MLCC had delegated duties for recording alcoholic beverage traffic within Michigan to these agents.
However, it is the MLCC's responsibility to track the purchase, sale, and distribution of all liquor in Michigan.
But in part of 2022 and 2023, approximately 27% of spirit orders were conducted without oversight from the commission. Those orders were instead overseen by the distributors.
The OAG says the commission did not have a process for tracking and monitoring spirit orders placed directly with distributors.
Michigan liquor commission reported nearly a million dollars in missing booze, audit finds
Improper liquor licenses, incorrect inventories, and at least 62,000 bottles of liquor was reported to be missing, an audit of the Michigan Liquor Control Commission found.
Dig deeper:
The state ordering system does not easily accept large spirit orders, according to the MLCC.
To overcome the issue, large retail chains like Costco and Meijer are allowed to submit their orders directly with distributors using separate files. They can also submit emergency orders directly to the distributors.
This remedy leaves a glaring gap between booze purchased and sold in Michigan, the audit claims, with no mechanisms the commission can use to verify how many were ordered and if they were delivered on time.
The OAG also found insufficient oversight of the inventory at the state's warehouses where spirits are held.
The other side:
Responding to the audit, the commission said it agreed with the audit's recommendation to update their system.
A new purchasing system will be implemented later this year, as well as other corrective actions in 2026.
The Source: The Michigan Office of the Auditor General audit was used to report this story.