Michigan liquor commission reported nearly a million dollars in missing booze, audit finds

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LANSING, Mich. (FOX 2) - Incorrect inventory records, improper liquor licenses, and tens of thousands of bottles of alcohol reported as missing are among the deluge of problems found at the Michigan Liquor Control Commission, an audit found.

Among the details in a report evaluating the commission's practices was a finding that close to a million dollars was reported missing from warehouses that distributors use to deliver bottles of liquor in early 2022.

The 59-page review from the Office of the Auditor General found the MLCC lacking in its oversight over the purchase and sale of spirits in Michigan. At one point, the MLCC's inventory showed a negative inventory of nearly 900,000 bottles.

In another instance, the state was left with more than 20,000 bottles of booze it could not sell or distribute to retailers.

Many of those issues can be attributed to improper record keeping. The audit does not attribute theft to the missing liquor or funds.

To explain some of the gaps, the MLCC said the pandemic was partly to blame. Vacancies in job positions that track negative inventory were another reason that magnified discrepancies found in the MLCC's reports.

However, the MLCC also didn't provide the appropriate amount of oversight of the three distributors that deliver liquor orders to retailers around Michigan.

For the most part, the Department of Licensing and Regulatory Affairs (LARA) which the MLCC is housed under agreed with the findings of the OAG. Among those conclusions include:

MLCC didn't provide adequate oversight of distributors to ensure all state-owned spirits were reflected accurately in their records when spirits were distributed and received
MLCC didn't monitor and manage its spirit inventory, leading to excessive and negative balances
MLCC didn't manage its spirit inventory housed at warehouses, potentially leading to refunds from vendors that had already been distributed
MLCC didn't monitor its inventory to ensure any inventory that couldn't be sold was returned to the vendor.

Michigan is a controlled liquor state, which means the government oversees all alcoholic beverage traffic within its borders.

The MLCC acts as wholesaler for spirits only. It then sells those spirit products to retailers around Michigan with the help of three authorized distribution agents, which use 11 warehouses to assemble and deliver liquor orders on behalf of the MLCC.

It's within this supply chain that the OAG uncovered several inefficiencies and discrepancies.

Approximately 29,500 retail businesses ranging from bars and grocery stores to restaurants and convenience stores have at least one active alcohol license.