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New Executive Order Shuts Down Significant Indoor Bar, Tavern and Nightclub Services in Michigan

Governor Whitmer has again invoked the Emergency Powers of the Governor Act under the theory that bars in Michigan are "often crowded, indoors, and poorly ventilated…[and] are noisy, requiring raised voices." The governor issued Executive Order 2020-143 which declared that bars and nightclubs in identified regions of the state of Michigan (essentially, the Lower Peninsula other than the northwest section of the state) must cease all indoor service, effective July 2,2020. Restaurants may remain open for indoor service, but all patrons, whether indoors or outdoors, must be seated in socially distanced tables.  This most recent executive order will be highly problematic for food and liquor establishments, their patrons and the agencies delegated with the obligation to enforce the terms.

First, the order discriminates against a vast number of establishments, as it targets those taverns, bars and gathering places that happen to operate in regions of the state other than regions 6 and 8 (northwest Michigan and the Upper Peninsula).  Food and liquor establishments that are impacted in the balance of the state are forced to shut down interior service, despite any individual efforts or policies to successfully operate safely. Furthermore, despite evidence that the level of COVID-19 cases in some of the impacted counties is no greater than those experienced by the two excepted regions of the state, any establishment deemed a bar or nightclub is presently forced to limit service, simply by virtue of their location.

Second, establishment owners who are presently operating under strict state, county and local guidelines are now imposed with greater requirements and restrictions. In accordance with the order, operators must:

  1. require patrons to wear a face covering except when seated at their particular table or bar top (unless the patron is unable medically to tolerate a face covering);
  2. require patrons to remain seated at their tables or bar tops except to enter or exit the premises, order food or use the restroom;
  3. sell alcohol and beverage only via table service, not via orders at the bars except to the patrons seated at the bar; and,
  4. prohibit access to common areas in which people can congregate, dance or otherwise mingle.

Finally, the enforcement community will find the order challenging. Neither the Liquor Control Code of 1998 nor the state's Administrative Code defines a "bar or nightclub." While Executive Order 2020-143 targets bars and nightclubs, there is a lack of any standard that can be applied to accurately identify those establishments that must comply and that are subject to a misdemeanor if they fail to comply. No police officer, deputy or code enforcement agent will possess the capacity to accurately determine whether an establishment can or cannot remain open. The order relies upon a financial test. Those on-premises establishments (not micro brewers, brewers, wineries or distillers operating a taproom) whose gross receipts from the sale of alcohol exceed 70 percent of all sources of revenue, based upon their 2019 tax returns, and those new enterprises that only commenced business in 2020  whose first quarter statements reflect more than 70 percent of sales from alcohol, are considered a bar or nightclub for purposes of the order.  Absent the posting of tax returns on their entrance, any establishment that does not fall within the criteria will not be able to defend a claim that their location is a bar or a nightclub, and could be subjected to an enforcement action. As a result, many establishments that are attempting to rebound from the recently-lifted state restrictions will suffer yet another setback as a result of this executive order.

© 2020 Varnum LLPNational Law Review, Volume X, Number 185

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About this Author

Christopher P. Baker, Varnum Law, Ann Arbor, Real Estate Attorney, Beverage Control Lawyer
Counsel

Chris is a member of the firm’s Real Estate Practice Team. He has significant experience representing retail license holders, including resorts, hotels, restaurants and retail developers. Chris also works with licensed suppliers, including brewers, distillers and wineries in all areas of alcoholic beverage regulatory matters, including licensing, enforcement and trade practice issues. He is well versed with the wholesale, distributor and importer provisions of the Michigan Liquor Control Code and regularly represents clients before the Michigan Liquor Control Commission...

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