How Big Alcohol May Move into Marijuana

Alcohol

When there is money to be made, the bitterest of adversaries can discover common ground. So it is with the alcohol and marijuana industries, and the place to watch all this play out is Nevada.

Nevada voters will likely see recreational legalization on the 2016 ballot, as more than enough signatures have now been submitted to qualify the petition, according to Joe Brezny, a spokesman for the Coalition to Regulate Marijuana Like Alcohol.

In substance, the provisions of the initiative are much like those just approved by voters in Colorado, Alaska and Oregon, all backed by the Marijuana Policy Project. There is something different this time around, though. The law would permit the Nevada Department of Taxation to issue licenses to distributors, as well as growers, retailers, suppliers and testing facilities.

Licensing distributors is a new wrinkle, and according to Rob Kampia, Executive Director of MPP, the intent is to garner support from the alcohol industry, which with an existing distributorship network, would be a well-positioned move into the that segment of the marijuana business.

 

How Big is Big?

Nationwide, according to the Wine & Spirits Wholesalers of America, 1.51 million people in the United States, or .97 percent of the working population, depend on the production, distribution, and sale of wine and spirits products for their livelihood. The industry claims to contribute $34.15 billion in taxes to state and local governments. In addition, it contributes $6.45 billion in excise taxes and $15.89 billion in business related taxes to the federal government. In Nevada alone, according to the same source, the wine and spirits industry supports 8,750 direct jobs with a total economic impact of $1.4 billion.

In addition to lobbying activities, WSWA’s political action committee advocates for candidates who support the interests of wholesalers.

How big are we talking about? The answer is, “Very big.”

 

A History of Opposition

The legalization of recreational marijuana is widely expected to reduce alcohol consumption. That is the assumption at the root of various pro-legalization campaigns and Big Alcohol’s public opposition. It is a zero sum game, according to this equation. If marijuana wins, alcohol loses.

That formula may be too simple. In Colorado, alcohol consumption has reportedly actually risen thanks to the boost in marijuana tourism. That might not be the general effect, but if tourism is the key, recreational legalization in Nevada might actually benefit the liquor industry there, as well. The basic theory that one recreational substance is a substitute for the other may also prove to be wrong. Some consumers will certainly approach them as complementary intoxicants.

The liquor industry is not one dimensional, either, and includes far more than retail and wholesale operations. A distribution network is an easily adaptable tool in which the alcohol and marijuana industries may, in fact, have a shared interest.

Although the industry’s public stance is to oppose recreational legalization, privately alcohol industry executives may view it as something of a foregone conclusion and may be searching for ways to participate in a changing landscape. Sin industries are nothing if not adaptable.

 

Distributorship Licensing in 2016

Legalization advocates are gearing up for 2016 ballot initiatives in many states. Big Alcohol is too big to ignore, and where there is a shared interest there may be room to negotiate. With Big Alcohol, as with Big Tobacco the public face may be the screen behind which the deals are made. Legal analysts everywhere will be digging deeply into the specific language of the new crop of initiatives. It may be telling to see where provisions for distributorship licensing appear.

Anne Wallace is a New York lawyer who writes extensively on legal and business issues. She also teaches law and business writing at the college and professional level. Anne graduated from Fordham Law School and Wellesley College.

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