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Michigan State Taxes

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Apologies for the "repost".

I'm wondering if someone can help me better understand the following for Michigan.

Let's say the COGS is $10.00. Let's say the Wholesale Price is $15.54. If I understand the math right, the Base Price is $25.64. For bottle sales from the tasting room, I'd owe 12% on the Base Price ($3.08). The Minimum Retail Price is $30.00. So my profit per bottle is $30 - $3.08 - $10.00.

Is this correct?

If I use a bottle of mine for mixed drinks from the tasting room do I just owe the federal ($2.14) and state taxes ($3.08) on it?

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I know this seems like an easy question, but I just want to confirm that the state taxes in the above cases are calculated from the Michigan "Base Price" which includes a 65% markup from the wholesale price you actually sell it to them for. If so, it would seem that if your volume is low one could set a base price for the product at a lowish number and not actually sell many bottles for wholesale thereby paying lower taxes on tasting room sales which would be marked up from the minimum retail selling price. Is this the way its supposed to work?

All the examples and documentation that Michigan provides assume that you're a retailer not a manufacturer/distiller.

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You could simply not sell to the state at all and make all sales from your tasting room and set the price at what ever you want, the mi state minimum is set based on the whe sale price to the state if you don't sell to the state they can't set a minimum. There are plenty of distilleries that sell some products to the state but also have exclusive products that can only be purchased directly so that's something you could also consider.

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You could simply not sell to the state at all and make all sales from your tasting room and set the price at what ever you want, the mi state minimum is set based on the whe sale price to the state if you don't sell to the state they can't set a minimum. There are plenty of distilleries that sell some products to the state but also have exclusive products that can only be purchased directly so that's something you could also consider.

If you sell from your tasting room, would you not need a retailers licences and then would still have to be through the State,I know Mich which I live in is or was trying to get out of the controlled situation,have they done this yet?

And as i under stand you can not charge for the tastings you have to charge for a tour and then offer a FREE 1/2 oz shot of Liqour or 1 oz beer,been working out these little bugs, wife works for the second largest beer distributor in Our great state, but is trained and certifed on rules and regs, through the liqour commision,just trying to get the jist of things!

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You do not need a retailer's license. You are able to sell out of your tasting room under your Michigan manufacture license, Basically you can run a full bar and charge whatever you want for drinks as long as you are using your spirits or beer. You can bring in cider/wine and sell that too ( or make it and sell it).

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I'm checking to see if I understand this correctly:

Let's say, I want my product to be on the shelves at state minimum price at $39.99.

That means the acquisition price needs to be around $259.60 / case of 12 or $21.63.

If I sell from my tasting room, I could charge the same price as the liquor store and make $18.36 more?

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If you sell to the state they use the the wholesale price to determine the minimum retail price and you have to sell it from your tasting room for at least that price and you will keep the mark up. As the producer you can charge for samples or give them for free. You can also charge for tours or give them for free. In the state of Mi. a regular bar is required to charge for samples of any type of alcohol.

In Mi you can sell some products to the state and have others that are only sold at your premises if you don't sell to the state they can't set a minimum and you can sell those products for any price you want.

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In Mi you can sell some products to the state and have others that are only sold at your premises if you don't sell to the state they can't set a minimum and you can sell those products for any price you want.

This is not true. Every product sold in Michigan needs approval through e-quote. If you choose not to distribute and sell through your tasting room only, you still need an approved e-quote. This includes a federal COLA ID# and an acquisition price, from which the commission sets their base price and therefore your tax rate. Your product will then have a state minimum price which you cannot sell below. There is nothing stopping you from setting a low quote and therefore a low state minimum then selling for 29.99 or 39.99, since you control the market for your product. However, you can't just go and sell a friend a bottle for $5 or anything to anyone below your state minimum price.

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On 7/16/2015 at 11:27 AM, Griffin Claw said:

This is not true. Every product sold in Michigan needs approval through e-quote. If you choose not to distribute and sell through your tasting room only, you still need an approved e-quote. This includes a federal COLA ID# and an acquisition price, from which the commission sets their base price and therefore your tax rate. Your product will then have a state minimum price which you cannot sell below. There is nothing stopping you from setting a low quote and therefore a low state minimum then selling for 29.99 or 39.99, since you control the market for your product. However, you can't just go and sell a friend a bottle for $5 or anything to anyone below your state minimum price.

I don't think that is quite correct. A normal retailer is allowed to charge more than the state minimum price, if they think their market will tolerate it. The way I read the laws, and the answer that I got from the State when I asked, is that bottles from a tasting room will have to be sold AT that price. You could, however, make a product that you only intend for consumption in your tasting room, set the minimum retail price low, and then charge more for the drink, like a bar would. Obviously, there are limitations to how useful that strategy is.

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