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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



Opinion No. 6051

April 6, 1982


Alcoholic liquor, beer and wine--brand advertising


First Amendment guarantee of free speech--advertising restrictions of Liquor Control Commission


Prohibition against brand advertising


Prohibition against brand advertising

Administrative Code 1979, R 436.1309(2) and (3), R 436.1315(2) and R 436.1327(1), which prohibit advertising of alcoholic liquor, violate the First Amendment to the Constitution of the United States.

Thomas F. Schweigert


Liquor Control Commission

7150 Harris Drive

Lansing, Michigan 48909

You have requested my opinion as to whether the following administrative rules promulgated by the Liquor Control Commission, all of which affect advertising, are legally valid:

Administrative Code 1979, R 436.1309(2):

'Advertising in newspapers and periodicals, by all licensees except retail licensees, shall be limited to those published not less than quarterly and having a second class mailing permit, except upon written order of the commission.'

Administrative Code 1979, R 436.1309(3):

'Alcoholic liquor shall not be advertised in a publication or program for a special occasion, except upon written order of the commission 30 days in advance of the event.'

Administrative Code 1979, R 436.1315(2):

'Alcoholic liquor shall not be advertised on the licensed premises by placing the alcoholic liquor or an advertisement of alcoholic liquor in a window facing outside the licensed premises.'

Administrative Code 1979, R 436.1327(1):

'Advertising of a brand of alcoholic liquor shall not be placed or erected on the outside of the licensed premises of a retail licensee.'

OAG 1981-1982, No 6033, p 561 (February 4, 1982, considered the constitutionality of Administrative Code 1979, R 436.1333, an administrative rule of the Liquor Control Commission which prohibited licensees of the Commission from advertising the price of alcoholic liquor off the licensed premises. The opinion concluded that the advertising ban contained in said administrative rule was invalid on two separate and distinct grounds. First, it held that the Commission's absolute ban on price advertising by its licensees was invalid as an improper exercise of the police power vested in the Commission by Const 1963, art 4, Sec. 40 and by 1933 Ex Sess PA 8, as amended; MCLA 436.1 et seq; MSA 18.971 et seq. Secondly, the Commission's ban on price advertising was also determined to be invalid as an unconstitutional restraint upon the freedom of commercial speech guaranteed by the First and Fourteenth Amendments to the United States Constitution and by Const 1963, art 1, Sec. 5.

The bases for these two holdings were similar. In order for a regulation to be sustained under the police power, there must be a 'real and substantial relationship's between the regulation and the public purpose which it is to share. Grocers Dairy Co. v Department of Agriculture Director 377 Mich 71, 75-76; 138 NW2d 767 (1966). A substantially similar requirement is found in the test established by Central Hudson Gas & Electric Corp v Public Service Commission of New York, 447 US 557, 566; 100 S Ct 2343, 2351; 65 L Ed 2d 341, 351 (1980), for determining the validity of restrictions upon commercial speech. That test requires a four-part analysis in such cases:

'[1] At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. [2] Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine [3] where the regulation directly advances the governmental interest asserted, and [4] whether it is not more extensive than is necessary to serve that interest.' [Emphasis supplied.]

The primary public purpose or governmental interest which could be asserted in support of the Commission's ban on advertising was the promotion of temperance. Because the Commission's ban on advertising not only failed to effectuate this purpose, but actually ran contrary to another express policy of this State, that of fostering commercial competition, it was concluded that Administrative Code 1979, R 436.1333 failed to satisfy the foregoing standards for either the exercise of the police power or the regulation of commercial speech.

This is not to say that the Liquor Control Commission is totally without authority to regulate advertising by its licensees. Although the United States Supreme Court has repeatedly rejected absolute bans upon price advertising, see, e.g., Virginia State Board of Pharmacy v Virginia Citizens Consumer Council, Inc., 425 US 748; 96 S Ct 1817; 48 L Ed 2d 346 (1976) and Bates v State Bar of Arizona, 433 US 350; 97 S Ct 2691; 53 L Ed 2d 810 (1977), the Court has made it equally clear that reasonable regulations upon commercial speech, if consistent with the four-part test established by Central Hudson, supra, may be sustained. This point was most recently reaffirmed in In re RMJ ---- US ----; 102 S Ct 929, 939; 71 L Ed 2d 64, 76-77 (1982), a case involving state imposed restrictions upon the form and content of advertising by attorneys. Although rejecting the regulations involved in that case on the ground that they were unduly restrictive, the Court stated:

'We emphasize . . . that the States retain the authority to regulate advertising that is inherently misleading or that has proven to be misleading in practice. There may be other substantial state interests as well that will support carefully drawn restrictions. But although the states may regulate commercial speech, the First and Fourteenth Amendments require that they do so with care and in a manner no more extensive than reasonably necessary to further substantial interests. . . .'

Turning to the questions of whether the four administrative rules you have cited comply with the foregoing standards for the exercise of the police power and the regulation of commercial speech, the central factor to be considered must be the public purpose or governmental interest which is served by those rules. In order to be sustained under the Commission's police power, there must be a 'real and substantial' relationship between each of these rules and that public purpose. Similarly, because each of the cited rules restricts truthful commercial speech, each rule may be sustained, under the test set forth in Central Hudson, supra, only if the governmental interest is substantial and is directly advanced by the rule and, finally, if the rule is no more extensive than is necessary to serve the governmental interest.

Your staff indicates that the purpose of the four administrative rules here in question is identical to that of Administrative Code 1979, R 436.1333 and that the primary purpose of these four rules was simply to implement the general ban on price advertising contained in Administrative Code 1979, R 436.1333. A review of the hearing transcripts and other documents compiled during the promulgation of these rules confirms this conclusion. Inasmuch as OAG, 1981-1982, No 6033, supra, has concluded that the latter rule is deficient, it must follow that these four additional rules, intended to implement and to serve the same public purpose as Administrative Code 1979, R 436.1333, are also invalid.

It is my opinion, therefore, that Administrative Code 1979, R 436.1309(2) and (3), R 436.1315(2), and R 436.1327(1) are invalid as an improper exercise of the Commission's police power and as an unconstitutional infringement upon the freedom of commercial speech.

Frank J. Kelley

Attorney General

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