Traverse City Record-Eagle

Michigan

February 24, 2013

Smugglers still cashing in on Michigan can refund

(Continued)

Mike Hautala owns Hautala Distributing, which services Gogebic and Ontonagon counties in the western part of the Upper Peninsula near the Wisconsin border. He said for every case of beer his distributorship delivers to a store along the border, it picks up about seven more cases of empty cans.

The state loses $10 million to $13 million a year to fraudulent redemptions, according to most recent 2007 estimates from the Michigan Beer and Wine Wholesalers Association. Angela Madden, the association’s director of governmental affairs, said that number has likely gone down slightly because of changes implemented since, but not by much.

Bill Nichols, store director at Harding’s Friendly Market in Niles about three miles from the Indiana border, said the store takes in about $6,000 worth of cans a week. He said every week he kicks out people for trying to return large garbage bags full of cans from Indiana, a state that offers no refund.

“You can go into the parking lot and look at the license plates and see that it says Indiana,” he said.

Distributors pick up the containers people drop off at stores and pay the store a dime for every container. If the distributor picks up more bottles and cans than it left — the likely result of fraudulent redemption — the distributor is left in the hole, Madden said. If the distributor picks up fewer cans than it dropped off, the money that does not go back to the store is sent to the state. Twenty five percent of that money is sent back to retailers and 75 percent is put in a fund that pays for things like environmental cleanup, she said.

Hautala said he lost about $25,000 last year picking up more returned containers than he delivered. He said his company will recover some of that money from distributors who sell more containers than they pick up.

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