28 CHALDEAN NEWS
28 CHALDEAN NEWS AUGUST 2008
a fill-up and a six-pack Retailers cry foul over gas station loophole BY KEN MARTEN Due to high fuel prices, some gas stations have added “fuel” of a different sort to their shelves to maintain profits. Michigan Liquor Control Commission records reveal that over the past two years, more than 150 gas stations have received licenses to sell alcohol. Traditionally, state law prohibited gas stations in large metropolitan areas from selling beer, wine and liquor, while small town and rural gas stations have been allowed to do so. But enterprising big-city business owners have taken advantage of what some call a legitimate practice and others call an end-run around the law. It’s also pitted some community business owners against one another, since many Metro Detroit convenience stores and gas stations are owned by Chaldeans. Tom Giachino, a senior partner at Southfieldbased Sullivan, Ward, Asher & Patton, P.C., retired after 30 years as an assistant attorney general for the state assigned to the Michigan Liquor Control Commission. “There were myriad regulations to prevent gas pump operators from selling beer and wine,” Giachino said. “The [state] legislature created an exception to allow big box operators to put in gas pumps.” Enacted in 1998 and known as the “Meijer exception” for the big box retailer that now boasts a gas station in out-lots at many locations, the law requires: • The “site of payment” – the cash register – and the alcohol on display must be located at least 50 feet away from the gas pumps; • The store must maintain a minimum inventory of at least 0,000 at cost, not including alcohol and gas. “However, two Chaldean businessmen got the idea that they could carry 0,000 worth of merchandise,” said Giachino, who declined to provide names. “Their inventory started off with pre-paid telephone cards. That opened up the floodgates to gas stations wanting to be licensed.” Some entrepreneurs built new gas stations with the required distance between gas pumps and sales counters and enough square footage to house the merchandise. Others simply moved existing sales counters further away to meet the requirement. Initially, the Associated Food Dealers of Michigan (AFD), a trade organization that represented grocery retailers, lobbied the state’s Liquor ILLUSTRATION BY SCOTT MICK Control Commission for greater restrictions, Giachino said. But in 2006, the AFD merged with the Great Lakes Petroleum Retailers and Allied Trades Association, bringing grocery retailers and gas stations into the same group. Organized opposition faded. Dan Reeves is the executive vice president of food and beverage for the merged Associated Food and Petroleum Dealers, Inc., which has a membership of approximately 3,900 in Michigan and Ohio. (The latter doesn’t restrict gas stations from selling alcohol.) “It has always been, and continues to be since 1933 when they repealed Prohibition, that gas stations sell gasoline and party stores sell beer, wine and liquor,” Reeves said. “Since the Meijer rule, they’ve taken it a little further than intended. Frankly, I question how [gas stations] come up with 0,000 worth of merchandise. I’ve heard that there are gas stations loading up with cigarettes and Red Bull.” Reeves noted that from the possibility of expanding an existing business, gas stations have a definite edge. “All they have to do is put in the coolers,” Reeves said of beer-selling gas stations. “A party store can’t go the other way. A lot of them are landlocked, and they just can’t put in gas pumps. Personally, I don’t like mixing alcohol and gasoline.” Mike Sarafa, president of the Bank of Michigan, doesn’t like it either. “The Meijer exception was designed to allow Meijer to sell gas, not to allow gas stations to sell alcohol,” Sarafa said. “Somehow or another, a combination of people are allowing these things to go through in violation of the law. I think it’s bad for traditional convenience and party stores. It’s illegal competition as far as I’m concerned.” Nida Samona, chair of the Michigan Liquor Control Commission and a former Southfield city councilwoman, has a different opinion. “Gas stations have changed from their traditional perspective,” said Samona, who is also an attorney. “Many people have understood the convenience of a one-stop shop. I don’t know how different [a gas station] is from a convenience store.” Samona acknowledged that the granting of licenses has increased competition for convenience stores. But, she noted, convenience stores have always faced competition in the form of big box stores, supermarkets and other outlets. “We want every business to thrive,” Samona said. “We see and understand that it’s a constant balance and a constant struggle.” If communities oppose the idea of gas stations selling alcohol, their governing bodies can put a stop to the practice. “The local governments should have a bigger say,” Samona said. “The city of Southfield is one of them. They have an ordinance that says gas stations can’t sell beer and wine.” AUGUST 2008 CHALDEAN NEWS 29
