Improve Michigan’s Economy with Alcohol Sales at Farmers Markets

Michigan farmers are on the cutting edge of the buy local trend, a movement that could provide a great boon for businesses and the state’s overall economy.

To give them a bigger boost, lawmakers should allow Michigan businesses to sell more of their products at more locations. One way lawmakers can accomplish this is by legalizing the sale of beer and wine at farmers markets.

As the nation’s 13th biggest producer of wine, Michigan wineries make more than a million gallons annually, generating around $300 million in sales, and reportedly drawing 800,000 tourists each year. Additionally, Michigan’s craft beer scene is increasingly picking up steam. The state’s 85 breweries employ hundreds of workers and have devotees across the nation.

Yet, fans of the booming local wine and beer scene are often frustrated with the lack of availability of their favorite beverages.

Currently, alcohol producers are required by law to sell their products to wholesalers to get them on store shelves and in bars and restaurants. This mandatory utilization of a middle man increases the cost of the wine and beer and also means that the availability for consumers is limited to the locations that wholesalers choose.

Giving producers more opportunities to interact with customers at farmers markets would allow them to sell more as well as advertise their products and increase demand. Other states that have legalized alcohol sales at farmers markets have seen in an increase in sales in the following years. For example, wine sales in Massachusetts have reportedly increased by 66 percent since the state legalized wine sales at farmers markets in 2011.  

In addition, allowing alcohol sales at farmers markets would give struggling farmers an additional source of revenue. Many farmers already produce small amounts of wine or beer with ingredients from their fields. If they could sell their beer or wine directly to consumers at farmers markets, it would incentivize them to make more, increasing their bottom line. This new source of revenue could help some farms stay in business and may encourage them to hire more workers.

The state already trumpets farmers markets on its Pure Michigan travel and tourism website, so as long as the state insists on being involved in the travel and tourism industry, it should make alcohol retailing easier by expanding the availability of Michigan-made products at these locations.

Some argue that allowing the sale of alcohol at farmers markets would result in increased negative outcomes such as alcohol-related traffic accidents. However, research shows that alcohol retail density — or the number of stores in a given area — does not necessarily affect traffic accident rates negatively. 

In a 2003 study, economist Patrick McCarthy looked at 111 California cities and found that a higher number of take-away general spirits stores actually correlated with decreases in fatal and nonfatal alcohol-related auto accidents. When it came to the density of stores selling take-away beer and wine, again he found that higher numbers of outlets did not increase fatal crashes and was in fact associated with decreases in nonfatal crashes and total crashes overall.

Similarly, a 2010 study examining retail density in Michigan, conducted by Tenaya Marie Sunbury, a Ph.D. candidate at the University of Michigan, came to similar conclusions. She found that higher density of alcohol outlets correlated to lower alcohol consumption, lower rates of binge drinking, and fewer rates of drunken driving. She hypothesized that when people have to travel greater distances to buy their alcohol, the chance of them driving while intoxicated and crashing increases.

While correlation does not equal causation, both studies demonstrate that an increase in the number of most types of alcohol outlets does not increase traffic fatality rates. It’s even less likely that allowing farmers market alcohol sales would result in increased traffic fatalities since a large percentage their customers, if not most, live within walking distance.

The most likely opponent to farmers market alcohol sales, beer and wine wholesalers, often claim to be concerned with public safety, but it’s more likely that they fear losing the ability to markup and resell a portion of beer and wine being sold in the state of Michigan.

As Gov. Rick Snyder considers suggestions from his Liquor Control Advisory Rules Committee on updating Michigan’s alcohol regulations, he should ignore the protectionist demands of wholesalers and focus on the benefits that allowing producers to sell and advertise locally produced alcohol would have for Michigan’s businesses, consumers and economy.

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Michelle Minton is director of insurance studies at the Competitive Enterprise Institute. The Mackinac Center for Public Policy is a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.