Have cannabis leaders, working hard on federal legalization, found a powerful ally?  Is alcohol helping marijuana industry?  On March 22, 2023, the Wine & Spirits Wholesalers of America (WSWA) sent a letter to Congress stating that “[t]he time has come for Congress to legalize and regulate adult-use cannabis at the federal level” and that the inconsistency between federal and state cannabis policy “undermine[s] the rule of law and weakens public health and safety, while leaving states unsupported in their efforts to create safe, regulated markets and eliminate dangerous black-market activity.”  
 
Support for cannabis legalization on Capitol Hill has been lacking from mainstream, non-cannabis organizations. So this move by the WSWA is a welcome step, but it also begs the question: is the WSWA’s support for cannabis legalization too good to be true?

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The alcohol lobby may view cannabis as the next big growth engine for its business.  Alcohol consumption has been declining in recent years as U.S. consumers are becoming increasingly health conscious.  Couple that with the cannabis industry’s expected growth, and you can see why alcohol companies may suddenly be so keen on federal cannabis legalization. In recent years, there has been a significant increase in the number of alcohol companies entering the cannabis market through investments and THC-infused beverages. And on August 7, 2023, Canadian-based cannabis company Tilray Brands announced its acquisition of eight beer and beverage brands from Anheuser-Busch.

The alcohol lobby may view cannabis as the next big growth engine for its business.  Alcohol consumption has been declining in recent years as U.S. consumers are becoming increasingly health conscious.  Couple that with the cannabis industry’s expected growth, and you can see why alcohol companies may suddenly be so keen on federal cannabis legalization. In recent years, there has been a significant increase in the number of alcohol companies entering the cannabis market through investments and THC-infused beverages. And on August 7, 2023, Canadian-based cannabis company Tilray Brands announced its acquisition of eight beer and beverage brands from Anheuser-Busch.
 
The entry of alcohol companies into the cannabis industry, however, presents a number of significant questions. In a potential sign of things to come, the WSWA notes that “the current federal system for the regulation of alcohol serves as a strong model for the structure that should be enacted for cannabis” and federal legalization should be “accompanied by the creation of a robust regulatory structure that licenses producers, testing facilities, and distributors.”  But should the same conglomerates that control the alcohol industry be permitted to dominate the cannabis beverage industry?

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The alcohol industry is known for its high degree of consolidation, with a few large companies dominating the market. So, how would a federal legal cannabis industry modeled after the “federal system for the regulation of alcohol services” work?  At a minimum, a shift towards a regulatory structure that more closely resembles the alcohol industry would change the paradigm for a cannabis industry that has developed in a decentralized manner (out of necessity) over the past several decades.
 
The support of an industry group with influence on Capitol Hill may be a welcome development for a cannabis industry eager for relief from federal laws and regulations that are stifling its growth.  So the cannabis industry may not want to look a gift horse in the mouth.  But operators may also be wary of a trojan horse outside their gates. (For more information contact akahari@dfmklaw.com.) 🪴

This article originally appeared in Feuerstein Kulick’s monthly cannabis newsletter, The Leaflet, which you can subscribe to here.  For more information you can contact Rich at rich@dfmklaw.com or (201) 410-4737, or email The Leaflet at theleaflet@dfmklaw.com.

The good news is soon when you can kick back and consume marijuana you can still be supporting your favorite beer company.  The trend of alcohol companies jumping into the marijuana industry continues (with one major exception) and makes sense.  Legal cannabis sales (recreational and medical) were roughly $11 billion in 2022, roughly falling between the sales of Starbucks ($13 billion) and Subway ($10 billion).  Recent study shows it is about a 10th of size of the beer market and less than half the size of the craft beer industry.

Like Coca Cola saw bottled water as a revenue expansion, alcohol sees the same for marijuana.  While for cannabis start ups and some existing brands this might be seen as a threat, for the consumer – this only has upsides.

As the cannabis industry strives toward federal legalization, they are struggling to convince Congress.  But major booze companies now having a bigger stake in tapping the potential cannabis market, they can use their massive influence in Congress way more and way quicker than a stand-alone weed companies.

Marijuana legalization is associated with increased use of alcohol, a new study published in JAMA Health Forum revealed. The startling new evidence contradicts prior research that showed that cannabis legalization did lead to more marijuana consumption, but also decreased the use of alcohol. This only helps alcohol increase profit margins.

Heineken, Molson Coors, Pabst and Constellation Brands have all invested heavily and for good reason.  Beverage companies know how to sell directly to consumers (grocery, convince stores, etc), know how distribute to bigger sites (concerts, hotels, events, sports). and they know how to reach millions of people every hour (restaurants).  They have walked hand in hand with politicians and produced billions in profits spread across a variety of partners.

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Another upside is consumer trust alcohol for a steady same taste and effect experience no matter the location or time of year.  There is a reason Bud Light is the number one selling booze brand in the US, customers expect uniformity from Key West, Florida to Mountlake Terrence, Washington.

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Currently, one major exception is the failed experiment between juggernaut Anheuser-Busch InBev and Tilray.  Tilray and it’s founders desperately want to be the leader in the cannabis industry but continues to struggle with product delivery and more.