The Blunt Truth® has long covered the intersection of alcohol and cannabis. For example, just last month we explored the potential for regulatory confusion that might ensue if states begin allowing the sale of cannabis in liquor stores. We also commented on the potential casual use of cannabis in the workplace, with some co-working environments expanding access to alcohol and more.
As more and more states legalize cannabis, regulators seem to be turning to a friendly source for guidance––the alcoholic beverage industry. While some remain cautiously optimistic as to the impact that regulation of cannabis might have on the alcoholic beverage industry, many industry leaders welcome the marriage of pot and potent potables, and are even exploring a whole new marketplace of cannabis-infused products, such as weed wine, beer, and spirits. Nevertheless, the overarching concern that the alcoholic beverage industry has from entering into the cannabis industry is that cannabis remains illegal at the federal level.
Repeal and Regulate: Post-Prohibition Regulation of Alcoholic Beverages
Taking a step back into history, it is important to review post-prohibition alcohol regulation in the United States. This will help us understand the current state of cannabis regulation and see where many are turning to structure the use and proliferation of cannabis products.
As the National Alcohol Beverage Control Association (“NABCA”) details, alcohol has been the only commodity in United States’ history that is the subject of two Constitutional amendments––the 18th Amendment which prohibited the “manufacture, sale, or transportation of intoxicating liquors,” and the 21st Amendment, which repealed the 18th. Much, if not all, of today’s regulation addressing the production, distribution, and sale of alcohol now stems from this post-Prohibition era. The three-tier regulatory system that governs how most grains and grapes transform into alcoholic beverages and arrive in our glass originated at that time.
In the 90 years since the United States repealed its nationwide prohibition on alcohol, the country has overcome a wide variety of regulatory hurdles and hiccups to establish the robust alcoholic beverage industry we have today. Indeed, it is no surprise that those in the cannabis industry are turning to the alcoholic beverage industry to answer the regulatory questions that exist today.
Regulating Cannabis Without The 21st Amendment
Turning to the cannabis industry, one need not scroll much further than a current version of The Week in Weed by The Blunt Truth ® in order to see the state of legalized cannabis in this country. Just recently we reported that Minnesota is on the eve of passing a legalization bill, whereas other states such as New Hampshire may not be too far off. Indeed, as quoted in The Week in Weed, New Hampshire’s Governor Chris Sununu seems to recognize the parallels between alcohol and cannabis regulation: “I stand ready to sign a legalization bill that puts the State of NH in the driver’s seat, focusing on harm reduction—not profits. Similar to our liquor sales, this path helps to keep substances away from kids by ensuring the State of New Hampshire retains control of marketing, sales, and distribution.”
So, as cannabis becomes legal in more and more states, those in the space are turning to the alcoholic beverage industry for guidance moving forward. A post in The Spirits Business recently detailed a push by the Wine and Spirits Wholesalers of America (“WSWA”) for federal regulation of cannabis, noting that it is the first major trade body to do so. Indeed, the WSWA recently announced its commitment to the cause in a letter urging Congress to apply alcohol-like regulations to the future legalization and regulation of cannabis nation-wide.
WSWA’s letter to Congress details four pillars of oversight for federal legalization which it argues are drawn from long-established federal laws in the alcohol industry:
- The federal permitting of cannabis producers, importers, testing facilities and distributors.
- The federal approval and regulation of “cannabis products and product labels.”
- The efficient and effective collection of federal excise tax.
- Effective federal measures to ensure public safety.
These four pillars, borrowed from the alcoholic beverage industry, echo some of the key points lawmakers turn to when advocating for state and federal regulation of cannabis. Accordingly, WSWA is actively meeting with members of Congress regarding these pillars and pushing for a strong regulatory structure of cannabis using the template laid out by the alcoholic beverage industry over the next decade. Indeed, on May 23, 2023, WSWA hosted a panel on the subject, where lawmakers reportedly urged bipartisan cooperation on the issue.
Cannabis: Alcohol’s New Partner in Regulation
These developments, and the recent push from the alcoholic beverage industry, has those in the cannabis space excited for growth and regulation across the country. The push for uniform regulation in the cannabis space is a long and careful process but necessary both for the cannabis industry itself, and broader acceptance across the country. It is hopeful that a push from the alcoholic beverage industry to regulate the cannabis space might be the light at the end of the tunnel many are hoping for. With cannabis still illegal at the federal level, however, that light could be the light of an oncoming train.
Some do remain skeptical, arguing that further regulation and legalization of the cannabis industry could negatively disrupt the alcoholic beverage sector by causing consumers to substitute cannabis for alcohol. Others, however, see it as an opportunity for the merger of the two industries and the growth of products such as cannabis infused wine, beer, and spirits which remain prohibited, even in places where both alcohol and cannabis sales are legal individually. For example, California still prohibits “alcoholic beverage licensees . . . from manufacturing, selling, or offering for sale any alcoholic beverages that contain tetrahydrocannabinol or cannabinoids, regardless of source.” This remains the case despite California’s Assembly Bill No. 45, passed in late October 2021, which legalized the manufacture and sale of some hemp-derivative products. Alcohol is notably excluded from this list.
So, again we arrive at the intersection of alcoholic beverages and cannabis. The former has been legal, but heavily regulated, for a century; the latter is just now becoming legal at the state level, and in the infancy of regulation. As the cannabis industry turns to the alcoholic beverage industry for guidance, the alcoholic beverage industry is welcoming the push and using it to sway lawmakers into regulating the space, seeing the opportunity for growth and new products. We will closely monitor these developments and report back with any news. Should you have any questions regarding these issues or the cannabis space in general, please contact a member of Seyfarth’s cannabis team.