Alcohol Retailers Say Only They Should Be Able To Legally Sell Marijuana Products

A new policy memo from an American alcohol retail industry group argues that marijuana should be regulated more like booze—including by requiring that intoxicating cannabis products be sold only by businesses licensed to sell alcohol.

“States should restrict the sale of intoxicating THC products to businesses licensed to sell beverage alcohol and that are regularly inspected for compliance with laws aimed at preventing sales to individuals under 21,” says the memo, published this month by the American Beverage Licensees (ABL) trade association.

The group contends that alcohol retailers, “with many decades of proven compliance, are best positioned to sell these products.”

Regulators should also treat cannabis similar to alcohol, the two-page policy memo says, such as by establishing licensing requirements, clear labeling standards and restrictions on advertising. “It may also include limits on potency per serving,” the alcohol trade group asserted.

THC products should also be lab tested for safety, purity and potency, the paper says. “Testing should verify the absence of harmful contaminants including but not limited to heavy metals, pesticides, mold and residual solvents, and confirm THC potency to prevent unintentional harmful effects.”

ABL, which represents on-premise sellers of beer, wine and spirits such as bars, taverns, restaurants and casinos, as well as off-premise retailers like package stores, is further calling for a “fair and transparent” tax structure for THC products, with production and retail tax rates “similar to those for beverage alcohol in the state.”

To ensure a working system, the memo also urges enforcement of laws and regulations. “This includes penalties for selling to underage individuals, failure to comply with testing and labeling requirements, and operating without a license,” the document says.

It also advises that states “should work with financial institutions, insurance providers, and regulatory authorities” to ensure that marijuana retailers have access to insurance and financial services.

“Retailers of intoxicating THC products face unique challenges in securing insurance and financial services due to the evolving legal landscape,” the memo says.

The alcohol industry in recent years has been increasingly involved in lobbying on marijuana issues. That’s in part due to expanding marijuana markets that are competing with alcohol sales.

A report from Bloomberg Intelligence (BI) last year called cannabis a “significant threat” to the alcohol industry, citing survey data that suggests more people are using cannabis as a substitute for alcoholic beverages such a beer and wine.

The report projected that slumping sales of wine and spirits “may extend indefinitely,” which will “stem largely” from the increased consumer access to “legal cannabis” and other alternative products.

“The use of cannabis among consumers is on the rise, and we believe it’s being substituted for alcoholic beverages,” BI analysts wrote. “We also anticipate that increasing US consumer access to recreational marijuana will be a significant threat to all alcoholic drinks, particularly beer and wine, given their lower price points relative to liquor.”

Last November, meanwhile, a beer industry trade group put out a statement of guiding principles to address what it called “the proliferation of largely unregulated intoxicating hemp and cannabis products,” warning of risks to consumers and communities resulting from THC consumption.

The Beer Institute advised in the document that lawmakers impose a federal excise tax on both hemp and cannabis products, “with the tax rate set higher than the highest rate for any beverage alcohol product.”

It also urged a “zero tolerance approach” to THC and driving—a policy that could prevent casual cannabis consumers from ever being able to legally drive due to how long the drug’s metabolites stay in the body after use—and recommended keeping in place the federal ban on combining intoxicating cannabinoids and alcohol.

“For decades, America’s brewers and beer importers have demonstrated their commitment to fostering a culture of moderation and the responsible consumption of our products, all within a robust regulatory and and taxation system,” president and CEO Brian Crawford said in a statement at the time. “The current patchwork of intoxicating hemp and cannabis laws and regulations do not meet the same standards to which the beer industry willingly adheres.”

Earlier last year, the Wine and Spirits Wholesalers of America (WSWA) called on Congress to create a regulatory framework for hemp-based intoxicating cannabinoids rather than impose an outright ban, as was being proposed at the time.

“We strongly advocate for clear federal rules and regulations that define intoxicating hemp compounds and to grant states the authority to regulate these products within their borders,” the alcohol trade association said.

Growing evidence suggests that frequent marijuana use is now more common among Americans than regular alcohol use. A recent study found that more Americans consume cannabis every day than drink alcohol on a daily basis. Since 1992 the per capita rate of daily cannabis consumption in the country has increased nearly 15 times over.

A multinational investment bank said in a 2023 report that marijuana has also become a “formidable competitor” to alcohol, projecting that nearly 20 million more people will regularly consume cannabis over the next five years as booze loses a couple million drinkers. Marijuana sales are estimated to reach $37 billion in 2027 in the U.S., it said, as more state markets come online.

A separate study out of Canada, where marijuana is federally legal, found that legalization was “associated with a decline in beer sales,” suggesting a substitution effect.

Data from a Gallup survey published in August of last year also found that Americans consider marijuana to be less harmful than alcohol, cigarettes, vapes and other tobacco products.

As for hemp-derived cannabinoids, a hemp industry expert told congressional lawmakers earlier this week that the market is “begging” for federal regulations around cannabis products.

At the hearing, Rep. James Comer (R-KY) also inquired about the U.S. Food and Drug Administration’s (FDA) inaction around regulations, sarcastically asking if it’d require “a gazillion bureaucrats that work from home” to regulate cannabinoids such as CBD.

In the absence of FDA rules, states from California to Florida have pushed for sweeping changes to their own laws around consumable hemp products. While much of the focus has been on intoxicating products, federally legal CBD businesses have also found themselves increasingly in the crosshairs.

Meanwhile, as lawmakers prepare to once again take up large-scale agriculture legislation this session, congressional researchers in January provided an overview of the policy landscape around hemp—emphasizing the divides around various cannabis-related proposals among legislators, stakeholders and advocates.

Senate Democrats released the long-awaited draft of 2024 Farm Bill last year that contained several proposed changes to federal hemp laws—including provisions to amend how the legal limit of THC is measured and reducing regulatory barriers for farmers who grow the crop for grain or fiber. But certain stakeholders had expressed concern that part of the intent of the legislation was to “eliminate a whole range of products” that are now sold in the market.

For the time being, the hemp industry continues to face unique regulatory hurdles that stakeholders blame for the crop’s value plummeting in the short years since its legalization. Despite the economic conditions, however, a recent report found that the hemp market in 2022 was larger than all state marijuana markets, and it roughly equaled sales for craft beer nationally.

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