For the first time ever, a major alcohol association has come out in support of ending federal marijuana prohibition so that states can legalize cannabis without interference.
The Wine & Spirits Wholesalers of America (WSWA) announced “an official policy position in favor of a state’s right to establish a legal, well-regulated, adult-use cannabis marketplace,” in a press release on Thursday.
Today, we became the first and only beverage alcohol association to announce our position in favor of a state's right to establish a legal, well-regulated, adult-use #cannabis marketplace. Read our full statement: https://t.co/0rHHN3aEzU
— WSWA (@WSWAMedia) July 13, 2018
The announcement represented a significant departure from the association’s past statements on marijuana reform. Just two years ago, WSWA said in a sponsored advertisement that it was “neutral on the issue of legalization,” going on to caution congressional officials about the “dangers associated with the abuse and misuse of marijuana,” including drug-impaired driving.
Now the alcohol trade group is singing a different tune.
“The legal cannabis market continues to expand in the United States, generating $7.2 billion in economic activity in 2016,” Thursday’s press release reads. “WSWA believes that, similar to alcohol, the federal government should give states the power to legalize cannabis, but should ensure they meet an appropriate regulatory threshold.”
“Eight decades ago, Americans acknowledged that the Prohibition of alcohol was a failed policy. The state-based system of regulation, adopted after Prohibition, created a U.S. beverage alcohol market that is the safest, most competitive and best regulated in the world.” — WSWA Acting Executive Vice President for External Affairs Dawson Hobbs
WSWA went on to outline 13 policies it recommended for states that legalize recreational marijuana.
- A minimum age of 21 for purchase, possession and use, along with penalties for providing cannabis to minors;
- Establishment of Driving Under the Influence impaired driving standards;
- Licensing of producers, processors, distributors and retailers; Policies to prevent vertical monopoly/integration;
- Hours and days of sale parity with beverage alcohol;
- Tax collection and enforcement; Measures to prevent diversion of cannabis to other states;
- Restrictions on sale/common carrier delivery;
- Labeling requirements that include potency and health requirements;
- Testing of formulas to ensure product purity and consistency;
- Advertising restrictions designed to discourage underage access and promote responsible consumption;
- Restrictions on health claims on packaging;
- Establishment of a designated agency overseeing cannabis industry regulation in each state;
- Penalties for licensee violations on par with the state’s alcohol regulations;
- and Regulations that ensure all products in market can be tracked/traced to source processor/producer.
So what changed from two years ago?
While the group’s sudden embrace of local cannabis legalization efforts might strike some as odd given the intrinsic, competitive dynamic that’s developed between alcohol and marijuana interests, one aspect of the press release reveals how the broader booze industry could stand to profit:
“Legalization should include regulations that set age restrictions on buyers, as well as license and regulate the supply chain of cannabis, including growers, distributors, retailers and testing laboratories.” [Emphasis added.]
In other words, marijuana legalization might take a bite out of alcohol sales—as recent studies have shown—but the cannabis industry has diverse roles for various players to fill. Ancillary operators such as distributors now working under the current three-tier model for alcohol could be used in states with legal, regulated marijuana markets.
Hobbs denied that the association was trying to help the alcohol industry cash in on legal cannabis during an interview with Fox Business on Thursday.
“No, what we’re talking about is just creating a pathway for states to have federal recognition of legalization by enacting appropriate regulation that creates a safe and reliable marketplace,” Hobbs argued. He also said that the association wouldn’t be lobbying Attorney General Jeff Sessions to take action on federal marijuana policy, but rather the group’s focus would be on Congress.
Marijuana Moment reached out to WSWA for comment, but a representative was not immediately available.
What remains to be seen is whether other alcohol associations will follow suit. After all, a handful of alcohol interests, including the Arizona Wine and Spirits Wholesale Association and the Boston Beer Company donated to campaigns opposing legalization efforts during the 2016 election.
With this latest development from a major alcohol association, it seems the industry is conceding: If you can’t beat ’em, join ’em.
Another encouraging signal of cannabis becoming ever more established and mainstream. https://t.co/uJtNBiTd9k
— Earl Blumenauer (@repblumenauer) July 14, 2018
Trump Treasury Official Wants Congress To Fix Marijuana Businesses’ Banking Issues
Congress needs to come up with a solution for banking access by the marijuana industry, a top federal Treasury Department official said on Wednesday. And he hopes that will happen by 2020, if not sooner.
Joseph Otting, the comptroller of the currency, told reporters that lawmakers “have to act at the national level to legalize marijuana if they want those entities involved in that business to utilize the U.S. banking system,” according to PoliticoPro.
— POLITICO Pro (@POLITICOPro) January 16, 2019
Cannabis businesses acting in compliance with state law face uncertainty when dealing with federally regulated financial institutions. And banks potentially risk being penalized for servicing those businesses, leading many to avoid the industry altogether.
That said, a steadily growing number of banks are operating accounts for cannabis companies anyway, federal data shows.
“If I’m a betting person, I’m like 25-30 percent maybe next year, but I would hope by 2020 we can get this issue resolved,” said Otting, who was also recently assigned to double duty as acting director of the Federal Housing Finance Agency.
He previously called the existing situation “generally not healthy,” echoing comments made by Federal Reserve Chairman Jerome Powell, who said “it would be great if [the banking issue] could be clarified.”
Similarly, Treasury Secretary Steven Mnuchin has described the banking conflict as untenable. He said last year that his department was “reviewing the existing guidance,” referring to a 2014 Obama-era policy memo meant to provide direction for banks on how to service marijuana businesses.
“We do want to find a solution to make sure that businesses that have large access to cash have a way to get them into a depository institution for it to be safe,” he said.
Sen. Chuck Schumer Welcomes Major Cannabis Company To New York’s Hemp Industry
Canadian marijuana giant Canopy Growth Corporation will enter the nascent U.S. hemp industry by building a massive farming and production center in southern New York, U.S. Senate Minority Leader Chuck Schumer (D-NY) announced on Monday.
Canopy has yet to finalize its plans for an exact location—a contract could be signed as soon as Monday, Schumer said—but the company could eventually support “up to 400 jobs” in hemp cultivation, processing and product manufacturing at what would be a “first of its kind” center for the just-legalized U.S. hemp industry, the senator said.
Once a key American crop—George Washington famously grew hemp at Mount Vernon, and there was a stand of hemp plants in northern Virginia where the Pentagon now stands—the U.S. now lags far behind other countries in hemp production, a result of the country’s broad outlawing of cannabis decades ago.
Eventually, Canopy plans to invest “between $100-$150 million” into a New York State-based industrial hemp farm, Schumer said, with other companies potentially drawn to the sector by such a prominent anchor business.
“Hemp is a very valuable product and a burgeoning crop here” in southern New York, said Schumer, offering a very brief remedial education in the plant for those present at a press conference he convened. “I’m not kidding when I say this, but hemp is everywhere.”
“This is going to be a major shot in the arm” for the area, he added.
“Hemp” is more of a legal than a botanical distinction. Under U.S. law, cannabis sativa with 0.3 percent or more THC is considered “marijuana” and falls under federal drug-control laws. Cannabis with less than 0.3 percent THC is considered industrial hemp.
Hemp has been legal to import and process, but until very recently, hemp cultivation was mostly illegal in the U.S.
That prohibition that ended when President Donald Trump signed the 2018 Farm Bill into law last month. The previous 2014 version of the Farm Bill created a pilot program for states that wished to legalize small-scale hemp cultivation as part of research programs.
Based on that success and on growing support for an end to cannabis prohibition nationwide, the 2018 Farm Bill legalized cultivation of hemp outright. Almost immediately, politicians began touting the crop’s potential as a miracle product and an economic boon with enthusiasm once reserved only for acolytes of hemp evangelist Jack Herer.
Senate Majority Leader Mitch McConnell, who championed the hemp legalization provisions, signed off on the final version of the Farm Bill with a hemp pen—but for now, Schumer, his Democratic counterpart, may have stolen the top Republican’s fire.
“I’ve always believed that states should be the laboratories of democracy,” he said. “I’ve been very eager to have the hemp industry grow in New York and the Southern Tier.”
Photo courtesy of Senate Democrats.
Alcohol Sales Aren’t Impacted By Marijuana Legalization, Trade Association Finds
Marijuana legalization hasn’t hurt alcohol sales in the years since legal markets were established in Colorado, Washington State and Oregon, according to a new study from an alcohol trade association.
The Distilled Spirits Council looked at alcohol tax and shipment data before and after legalization to determine whether cannabis reform impacted sales of spirits, beer or wine in legal states.
“Simply put, the data show there has been no impact on spirits sales from recreational marijuana legalization,” the council’s chief economist, David Ozgo, said in a press release on Thursday.
“We now have four years of retail recreational marijuana sales history in Colorado and Washington state, and three years in Oregon, and each of these markets remain robust for spirits sales,” he said. “We did this study because there is a lot of misinformation circulating about the impact of recreational marijuana legalization on distilled spirits and the wider alcohol market.”
Per capita spirits sales actually increased slightly in post-legalization years, which was consistent with national trends. Sales were up 7.6 percent in Colorado, 5.4 percent in Washington and 3.6 percent in Oregon.
The trade association also analyzed beer and wine sales during the same period. For beer, sales were down marginally, with drops of 3.6 percent in Colorado, 2.3 percent in Washington and 3.6 in Oregon. But again, that’s consistent with national trends, according to the study.
Wine sales were mixed across the three states: Up 3.2 percent in Colorado, down 3.1 percent in Washington and up .7 percent in Oregon.
The Distilled Spirits Council also used their analysis as an opportunity to plug their policy recommendations to lawmakers in states considering marijuana legalization. While the association has declined to take a position on whether to legalize, it shared a list of recommendations ranging from equitable taxes on cannabis and alcohol to THC content disclosure requirements.
There is at least one major alcohol group that is willing to support states’ right to legalize, though. The Wine & Spirits Wholesalers of America (WSWA) called for the end of federal marijuana prohibition last year and, in December, went so far as to host a briefing on cannabis policy for lawmakers and congressional staffers.
Reform advocates have questioned whether legal access to marijuana would adversely impact alcohol sales, with more people opting to consume cannabis over booze. There is some research that indicates the alcohol industry is being interrupted in medical marijuana states, but more data is needed.
Photo courtesy of Pixabay.