What is Mixed Spirit Drink?

What is mixed spirit drink?  What is it not?  In this episode we explore which kinds of products are considered mixed spirit drink under Michigan law and which ones are not.  We also delve into which types of licenses are necessary to manufacture, import, distribute, and sell mixed spirit drink in Michigan.

As referenced in this episode, mixed spirit drink containers must meet the federal standards of fill sizes listed in 27 CFR 5.203.  Please check out the two-page mixed spirit drink informational sheet on the MLCC website for examples of products that are mixed spirit drink and those that are not.

Hosts: Sara Weber and David Marvin

The MLCC On The Road podcast is brought to you by the Michigan Liquor Control Commission (MLCC). For more information on the MLCC, please visit our website at www.michigan.gov/lcc. To submit a question or idea for a podcast topic, please email mlccinfo2@michigan.gov.

The mission of the Michigan Liquor Control Commission is to make alcoholic beverages available for consumption while protecting the consumer and the general public through regulation of those involved in the sale and distribution of these alcohol beverage products.

Transcript

Speaker 00: 0:00

You're listening to the MLCC On The Road Podcast, brought to you by the Michigan Liquor Control Commission, with hosts Sara Weber and David Marvin. Hello, Sara. Welcome back to the MLCC On The Road Podcast. I hope you're doing well today.

Speaker 01: 0:15

Doing great.

Speaker 00: 0:17

Okay. We are going to talk today about a product called Mixed Spirit Drink. It's a product that a lot of people have questions about because of the title, Mixed Spirit Drink. And so we're going to break that down to tell you what Mixed Spirit Drink is and what Mixed Spirit Drink isn't, kind of is where we got to start with this conversation. And then what can be done? Who can sell Mixed Spirit Drink and things along that line?

Speaker 01: 0:44

All right. I think one of my first questions for you, we talk about Mixed Spirit Drink and we'll get into what it actually is. is in a minute, but this is a Michigan term that we're talking about for mixed spirit drink. So other states technically call them ready to drink or RTDs. For us Michiganders, we call them mixed spirit drink products. So what is that exactly?

Speaker 00: 1:05

Okay. So mixed spirit drink products or mixed spirit drink as it is called, in the Michigan Liquor Control Code is a very specific definition. It can be a couple different products depending on the alcohol content. It is always going to be a product that has distilled spirits in it, but they're going to be low alcohol content, so low ABV or alcohol by volume. When you hear the term ABV, that's what that refers to. Up until a couple years ago, mixed spirit drink was only 10% ABV or lower. So if you had a product that had, let's say, fruit juice and some vodka in it and the content was less than 10%, that would be a mixed spirit drink. So it was something that was not sold by the commission. We sell spirits that are above 10%. So you could have a similar product. You could have something that had 15% and had the exact same ingredients, but that would be a spirit product that we would sell.

Speaker 01: 2:00

So a good example of that would be like the Jose Cuervo. Jose Cuervo, yes. It's a distilled spirit. Some Jose Cuervo, yes. Yes, some of it. is a distilled spirit on its own. But as a mixed spirit drink, they lower the ABV, is what you're saying, and mix it with some other ingredients to make a canned cocktail.

Speaker 00: 2:21

Correct. Canned cocktails are actually a little bit more popular now than they were prior to the law change. And I want to say that law change was in 2021, if I recall correctly. Up until 2021, anything that was 10% ABV or lower and had distilled spirits in it, and it would include the other things that it could include would be obviously the spirit product, water, fruit juice, sugar, carbon dioxide, other preservatives. That's what the law says it could contain. So as long as it had that spirit product and that it was lower than 10% or 10% or lower, it was one of these products. And it could come in any approved, federally approved bottle size. And I say federally approved bottle sizes, there is a federal law that talks about the, it's called standards of fill. It's this long list of all the approved sizes for spirits containers, which was recently changed and a whole bunch of new containers were added. Container sizes were added. We'll discuss that a little bit later when we talk about sizes. But ultimately, it could be any material. It could be glass, plastic, a metal can.

Speaker 01: 3:25

Pouch.

Speaker 00: 3:25

It could be a pouch. So that's what it was up until 2021. In 2021, the law changed and said, yes, all that other stuff still is there. But if the ABV, the alcohol by volume, was 10% to 13.5%, no higher than 13.5%, and that same product came in a non-receivable metal can, so a can that you think of like a pop can or a beer can where you pop the top and the tab goes down and you can't close it, you could have those products that could be a higher alcohol content. And that's what you see a lot of our canned cocktails or our ready-to-drink cocktails today are. And those had to be They could not be any larger than a 24-ounce can under Michigan law. Until January 10th of 2025, there were only four sizes of these cans that were allowable. They were a 50-milliliter, 100-milliliter, 200 milliliter and a 355 milliliter, which is your common 12 ounce can. Those were the four approved sizes for these non resealable metal cans that the federal government had. They changed their rule on January 10th and they listed a whole bunch of other bottle and container sizes and they did away with the specific differentiation between metal cans and everything else. So now any metal can that is non resealable up to 24 ounces or 710 mil liters can be sold as a mixed spirit drink product in Michigan under the new federal regulations. The state law. puts that cap at 24 ounces.

Speaker 01: 5:01

Do we know why they decided to make this change, David?

Speaker 00: 5:04

Yes, we do. The Alcohol and Tobacco Tax and Trade Bureau, which we refer to as TTB, which is the federal agency that regulates alcohol of all sorts, they promulgated a rule that went into effect January 10th of 2025 that made this change because there was industry input. They said that we would like to see a larger range of bottle sizes, both for wine and spirits. There is no comparable regulations for beer. Beer is kind of whatever size you want to have, you could have. And so they said, we want this larger range. There were three options. There was one that dealt with essentially leaving it as it was, making some small changes. There was one that said, do away with all bottle sizes. It's the Wild West and any size would work, similar to what we have for beer. And then there was this version that which was had, oh, there was maybe 10 or 15 additional sizes that were added and get rid of that designation between non-receivable metal cans and regular other containers. The one thing that a lot of folks in the industry were pushing for that did not happen was that they did not want to have an upward limit on the spirit size containers. Because especially for these lower alcohol content mixed spirit drink, what we call mixed spirit drink, others just call ready to drink cocktails in other states, they wanted to be able to put them in kegs so that you could sell them through kegs so they could just be on tap. The law doesn't allow that. The largest container size that the federal government allows for anything that has distilled spirits in it now is one gallon.

Speaker 01: 6:41

And is the one gallon for just the products that are 10% alcohol by volume or lower? No. Or is it any of them both? Up to 13.5%

Speaker 00: 6:52

may be. That is correct. And that goes all the way up to you could have 80 proof vodka in a one gallon container now. What I will say is We in Michigan have not yet, at least as of our taping today, have not changed our allowable bottle sizes for spirits products that the commission is selling. So there are certain things that the commission will sell that are spirits that we would have to adopt an administrative order to say, yes, we're going to allow now for the sale of a gallon container. I am not aware that we're planning on changing that right now, but that Obviously, this is a relatively new thing. And I know that our finance division is looking at that. And I think we've even had some inquiries from vendors that said, hey, do we want to do that? If you had a gallon-sized container, of something that is 13.5%, that would not be a mixed spirit drink because the maximum size you can have for the up to 13.5% is that 24 ounce. So then it would be a spirit product. And currently we don't sell gallon size containers from the commission. I will put in our description of this podcast, I will put a link to the federal standards of fill so people can see that and they can see what those container sizes are.

Speaker 01: 8:09

Okay. Um, One other question I know that we get quite frequently, and I know that you touched on it a little bit, is at a retail level, if I'm a restaurant, can I mix up a mixed spirit drink product to sell at my establishment to my customers? And am I restricted in any way with size requirements of what I'm making in my restaurant for that day?

Speaker 00: 8:34

Right. So if you are a retailer, you're a Class C license that has a license to sell beer, wine, and spirits. What you are actually making is not a mixed spirit drink. You're just making a mixed drink. And that is one of the things that mixed spirit drink is not. It is not a cocktail. It is not a drink that a bartender or a server is making up. Even if it's something like, I'm going to make a batch of margaritas because it's margarita night and we're going to be selling a lot. That's not a mixed spirit drink. And then the law specifically says that. If you're mixing a drink, you're not manufacturing the product. If you're a retailer and you want to make up a batch of margaritas or whatever it is that you're using spirits as the alcohol base, and then you're going to serve that to your customers, you are not making a mixed spirit drink. You're just making a mixed drink, a cocktail. And that's a big differentiation from what this is.

Speaker 01: 9:25

As a retailer, the distinction also needs to be made, or if we could clarify for people, the difference between the spirit-based cocktails and then our malt-based cocktails. Because that can be confusing as a consumer. If I'm at the grocery store or if I'm in a restaurant and I'm looking at different, what I'm going to call canned cocktails or ready-to-drink type things, How do I know what I'm getting?

Speaker 00: 9:52

Right. Yeah. And that's very important. You could walk in and you could see a product that was in a 16-ounce can that had the word margarita on it. Typically, people are thinking that that's going to be a spirits-based drink. You flip it over and you can see that it was a malt beverage-based drink and then added flavoring in to make it taste like a margarita. And that's where... there could be some confusion there.

Speaker 01: 10:16

So as a consumer, when you're going out and you're looking, look for those buzzwords or keywords on the cans. So when you're looking to buy something specific and it may not taste like what you used to, it could be because you got a malt-based product and not a spirit-based product. So I just want to provide that distinction just because those are things that people, when they're looking to try new items, want to watch out for a little bit because it can be a little confusing.

Speaker 00: 10:41

Well, there's also wine cans out there and some wine products that are mixed with certain flavoring. And the wine is the alcohol base. And it's a wine that doesn't have a strong taste, but it has that alcohol in it that is mixed with other items to come up with a product that is called a common term for a cocktail, but there's no spirits in it. So we you've seen those out there also. A lot of times you'll see on the bottle or If you're looking them up online, something that will be called orange wine or dessert wine. Generally, those are things that are mixed with wine that's being used that's going into other products. At least from my experience, that's what I've seen on a lot of registrations for stuff like that. That's interesting. Both of those types of products can come in a keg. You can get large quantities of a malt-based canned cocktail or a malt-based ready-to-drink cocktail. Let's put it that way. It's not technically canned. That can come in a keg. because there are no, for beer, which malt-based stuff would be, There is no upward size. Now, wine can come in kegs as long as it's an even number of liters. Anything over four liters has to come in even liters. So five liters, six liters, seven liters, 10 liters, 30 liters, something like that. So whatever the comparable number of liters are to get you to a normal size keg is what that would be.

Speaker 01: 12:00

And you can see why everyone gets confused at this point, because you've got spirits that cannot come in kegs. Spirit-based products cannot come in kegs, but malt beverage-based products. can. And malt beverage, does that include anything that's like a sugar-based

Speaker 00: 12:17

alcohol? Yes. So we're talking seltzers that are brewed from the brewing of sugar fit in the beer category. So those could come in kegs. When we say malt-based... It's neutral malt base that goes into these products, so it doesn't have a distinct flavor of its own, but it has the alcohol content. Anything that has been brewed, though, falls into that beer category under Michigan law and also the federal law, and therefore is something that ends up not having those bottle sizes, but could be a product that looks a lot like a distilled spirits product.

Speaker 01: 12:56

Okay, so I think that we've covered the types of... drinks and alcohol bases and sizes and everything else. So let's move over to the manufacturing side a little bit and let's talk about who makes these types of products and what type of licenses they need. And we're going to focus exclusively on the state of Michigan because obviously that's who we are. So David, can you kind of talk about that a little bit? If

Speaker 00: 13:22

You want to make one of these products, what we call mixed spirit drink or a canned cocktail or a ready to drink cocktail that is spirit based in Michigan. You have this great idea. You've got a footprint. You've got a building where you can do it. You've got the equipment. You're going to make this product. What you need to have is a mixed spirit drink manufacturer license. And that mixed spirit drink manufacturer license is similar to what we call a small distiller license. Most, if not all, of our mixed spirit drink manufacturer licensees also have a small distiller license. They generally got the small distiller license first. So that when they're making spirits, they're making their own. They can use it for... higher ABV products that go through the commission or they can self-distribute to a certain extent or sell in a tasting room, then they can also use that same spirits for their mixed spirit drink product. They would take that product. They would bottle it. They would have to have a, what we call a COLA. That's the federal designation of the, it's a certificate of label approval. That's the acronym COLA. That COLA would say, here's how much alcohol is in it. Here's, we've verified the formula. Here's the label that's going to appear on it. the different sizes and so on. And then they would register that product with the commission through the Michigan Wholesaler Program. product registry, or MWPR is the acronym on our website. And they would register that label with us. They would select any wholesalers that they are having distribute this product for them. Even if they are self-distributing the product and they don't have a wholesaler that's distributing it for them, they would still register it there. If they are going to sell it in a tasting room, they need to have it registered. So anywhere across the board, essentially what you're hearing me say is they need to register the product. Now, if it was a product that they are making and selling online, exclusively in another state and it's never going to be sold in Michigan. They don't have to register it here because they're never going to sell it here. They can self-distribute up to 31,000 gallons a year. That's a fairly large number. I don't know why that number was set, especially given that most of the other self-distribution is a much lower number. So they can self-distribute Probably that's impractical. They're probably going to go through wholesalers to get that product out to retailers.

Speaker 01: 15:42

And self-distribution is an interesting concept, and we will dedicate a full podcast to the... practice of self-distribution and what that means. We're going to do that later because that's a big, a general question that we receive a lot of, especially from people who are making products in the state of Michigan, whether it's beer, it's wine, or this mixed spirit drink product that we're focusing on exclusively today.

Speaker 00: 16:06

Let's talk a little bit about tasting rooms. If a mixed spirit drink manufacturer has a tasting room on their premises where they want to sell this to customers coming in, it's treated like any other tasting room, whether it's beer, wine, spirit, They have to have Sunday sales permits if they plan on selling on Sundays. If they're going to sell in the morning, they need to have that Sunday sales AM permit. Because it is a distilled spirits product, the law also requires a Sunday sales PM permit if they're selling anything 12 noon all the way to 2 AM Monday morning. They also have to understand that if the local government unit where they have their tasting room is dry for the sale of spirits on the premises, they are not going to be able... to sell this product in a tasting room. They would be able to manufacture it. They can self-distribute it. They can do all of that type of stuff, but they're not going to be able to sell it for on-premises consumption.

Speaker 01: 16:59

And again, a dry LGU is something that we will discuss later and dedicate to it because that is another interesting topic that you have raised, David, is that we have some places in the state of Michigan yet that don't allow the sale of spirits for on-premise consumption. So we'll talk about that in more detail at a later date as well. So we've talked about the products that are made in the state of Michigan. If I live and I have a business outside the state of Michigan and I have a product that I want to import in, what do I need to do? Or what can I do? Am I allowed to ship my product into the state of Michigan? And where does I have to go if I do it? Because I'm assuming I can't sell it directly to houses and send it there. It has to go through some proper channels. So can you go over that for me?

Speaker 00: 17:43

Correct. Yeah, you are correct, Sara. There is no direct shipment of spirits products in Michigan, whether it's mixed spirit drink or products that the commission would sell as spirit products. But there are ample products that you can see that are mixed spirit drink products that are here in Michigan that are not made by Michigan manufacturers that come from out of state or even out of the country. What you would need is an out-state seller of mixed spirit drink license. That license is going to allow you to import mixed spirit drink products that were made anywhere in the stuff that's coming in from out of the country into Michigan. Those products, you're not selling them directly to the retailers. You're not selling them directly to you and me as customers. You would sell those products to licensed wholesalers. And those licensed wholesalers then would distribute those products to the retailers. And then the retailers would sell them just normally. And those retailers could be bars, restaurants, grocery stores, liquor stores. So that's how that comes in. Those products come in. They also, you would register their products just like we talked earlier. You would have to have certificates of label approval for those and you would register them and you would select the wholesalers that you want to distribute those products. And those products, the taxes ultimately are all paid through the wholesalers. The way the law works is they get the products, they collect the taxes and remit those to the state. So that's one thing that you wouldn't have to worry about is the tax aspect of it. But all those products have to be registered with us so that we know what's coming in. And first and foremost, you have to have the license to do that. Now that's for somebody who is out of state. Let's say you're a business in Michigan that says, I want to bring these products in. I'm not manufacturing them, but I know somebody who makes a product in another state and I really think it would be a great product to come into Michigan and I want to promote that here. You too can get an out-state seller of mixed spirit drink. You're just in-state. The mixed-beer drink at that point in time is the out-state portion of it. That is a slightly different process. We would go through the normal inspection process. We would have to come and look at your proposed license premises because we don't know if you're bringing product in and it's going to be stored at your location temporarily. If it is something that's in Michigan and you're applying for this license, we would go through the normal license process. the license itself still operates the same thing. You are not going to be distributing the products. You would be importing them and getting them to the wholesalers and the wholesalers would be selling them.

Speaker 01: 20:22

So can you go over what type of retailers can have this type of product?

Speaker 00: 20:28

Prior to 2021, when we talked about the changes where the canned cocktails came in, there was also a change that was made at that same time in the legislation. Prior to 2021, you had to have a specially designated distributor license or an SDD license to sell mixed spirit drink to go. So like a grocery store or a liquor store or a convenience store, they would have to have an SDD license to sell that. Same went with the on-premises sales. You had to have a Class C license or a B hotel license or a G1 license. And at that point in time, those were the only folks that that could sell that stuff on the retail side, the only licensees. So when the 2021 changes came along, not only did they change what products that were allowable and the canned cocktails that were a little bit higher alcohol content, they also changed which licensees could get these products and could sell these products. So now... SDM licenses, specially designated merchant licenses, which could only sell beer and wine to go prior to this, to the 2021 change, now are the licensee that sells mixed beer drink to go. You can sell beer, wine, and mixed beer drink now under an SDM license. Your Class C licenses on-premises, your B hotel licenses on-premises, your G1 license on-premises, all still can sell mixed beer drink. But taverns and A hotel licensees now can sell mixed spirit drink along with beer and wine. So we really now have a differentiation of beer, wine, mixed spirit drink are pretty much any of our retailer licenses can sell. And then the spirits, anything that's over 10% in a regular bottle or over 13.5% in a can of distilled spirits, those all have to go through either an SDD license or for off-premises sales or a Class C or a B hotel for on-premises sales. So it really did open up a much larger number on the off-premises sales. It opened up a lot larger number of licensees. We went from having about 4,800 SDD licenses that could sell mixed spirit drink to now you had about, I think there was like 15,000 SDM licenses. So that's a fairly large change. On the on-premises side, it wasn't that big of a change because we have the vast majority of our on-premises licenses, our Class C licenses, and there's only a handful. There's about 400 tavern licenses versus 8,500 Class C licenses. We have one lowly A hotel license. So you can tell that there wasn't that big of a change on the on-premises side. But the off-premises side, there's a lot more places you can get it to go. It just

Speaker 01: 23:15

kind of levels the playing field for these ready-to-drink canned cocktails that have a alcohol volume in them or distilled spirit in them versus your malt beverages. So it kind of gave them a more even playing field among all of the distribution and selection in the state of Michigan to allow for your beer and wine stores to be able to sell these products in addition.

Speaker 00: 23:37

And with the ABV limits that we have on them, they actually, in many cases, are a lower alcohol content overall than some beer and wine products that are being sold. So it wasn't a situation where all these products were coming out and it was a much higher alcohol content. It wasn't saying more locations could sell what we consider spirits. But they are now selling these mixed spirit drink products that are comparable and often have a lower ABV than a malt-based beverage or a wine or things like that. I mean, wine can be up to 21% alcohol content or right under 20, 20.99999% before it ends up being considered a spirit. compared to the highest that you could have in a canned cocktail with distilled spirits being 13.5%. There's a number of craft beers out there that are fairly high ABV. And so it did put those products in more of a parity with similar products.

Speaker 01: 24:44

Well, this has been really interesting, and I appreciate you talking about this today. It's a very interesting topic. topic for everyone. It can be very confusing, you know, especially when we start throwing around terms like ready to drink, canned cocktails, mixed spirit drink. At the end of the day, these are the canned items or, you know, bottled products that are coming into the state or being manufactured here. They are not your mixed drinks that you get in your bar. Correct. So

Speaker 00: 25:10

I think that's if anyone has the takeaway.

Speaker 01: 25:13

That's

Speaker 00: 25:13

the simplest. That's the one. This is not a cocktail. That's the simplest way. Yeah. There's information on our website that has a breakdown of these kind of products. I'll also put a link in the description of this podcast so you can have easy access to that. I've got a color sheet, a couple pages that... has some examples of these products. And so you can see that breakdown. And again, if you ever have any questions, you can call us or email us and we'd be happy to discuss and work through what these products are if you have questions on it.

Speaker 01: 25:43

And if you have any other ideas for future podcast topics, please reach out to us. We are more than happy to get feedback from you or any ideas on what you'd like to have for future podcasts. I think in the meantime, I think we're done for today on this one.

Speaker 00: 25:57

I think we are definitely done for today. Thank you, Sara. And we'll look forward to Talking again here soon. All right. Thank you. Thanks. Bye. The MLCC On the Road podcast is brought to you by the Michigan Liquor Control Commission. For more information on the Michigan Liquor Control Commission, please visit our website at www.michigan.gov. Thank you for listening.