Tuesday, July 7, 2020

Help with Executive Order 2020-143 and the 70% rule

Dear Post Commanders and Adjutants,

Last week the Governor issued Executive Order 2020-143, and LARA (Licensing and Regulatory Administration clarified that the order pertained to clubs licenses).

The order stated that if 70% of your gross recipients for 2019 are from alcohol sales indoor service must stop.

I wanted to share with you an email from the Michigan Licensed Beverage Association that was sent out. The information might clarify what you need to be below 70%, even if you don't sell much food.

I hope this helps.

There has been some confusion about the 70/30 distinction and what exactly constitutes a food service establishment. The required 30% in gross receipts is not limited to food only. Establishments that make 30% or more of their gross receipts from food, lottery, apparel sales, memberships (e.g. mugs, dues), rentals, glassware and any other form of revenue, are able to remain open. Any non-alcohol revenue counts. 
Per the EO:
1. Food service establishments, as defined in section 1107(t) of the Michigan Food Law, 2000 PA 92, as amended, MCL 289.1107(t), that hold on-premises retailer licenses to sell alcoholic beverages must close for indoor service if they earn more than 70% of their gross receipts from sales of alcoholic beverages.
6. For purposes of calculating its percentage of gross receipts from sales of alcoholic beverages under section 1, a food service establishment must use:
  1. Gross receipts from 2019; or
  2. If the establishment was not in operation in 2019, gross receipts from the date the establishment opened in 2020.
Many have been confused by the term "food service establishment." Food service establishment does not mean a place must sell food. The definition also includes establishments that only prepare drinks for consumption. 
The definition per 1107(t) of the Michigan Food Law, 2000 PA 92: 
(t) "Food service establishment" means a fixed or mobile restaurant, coffee shop, cafeteria, short order cafe, luncheonette, grill, tearoom, sandwich shop, soda fountain, tavern, bar, cocktail lounge, nightclub, drive-in, industrial feeding establishment, private organization serving the public, rental hall, catering kitchen, delicatessen, theater, commissary, food concession, or similar place in which food or drink is prepared for direct consumption through service on the premises or elsewhere, and any other eating or drinking establishment or operation where food is served or provided for the public.
If you are a bar that sells no food but 15% of your gross receipts are generated from lottery, 10% of your gross receipts are generated from renting rooms and 5% of your gross receipts are generated from mug club membership dues, you can remain open. 


Mark Sutton
Public Relations Director
American Legion Department of Michigan