Major Alcohol Industry Association Calls For Federal Marijuana Legalization, Recommending Regulatory Framework

March 22, 2023 · marijuanamoment.net

A major alcohol industry association is officially backing federal marijuana legalization, sending a letter to congressional leadership on Wednesday that implores lawmakers to “regulate adult-use cannabis at the federal level.”

The Wine & Spirits Wholesalers of America (WSWA) said that “the current conflict between state and federal law is not only causing adverse consequences for consumers and non-consumers of cannabis but will also have long-term public health and safety costs that are too great to ignore.”

The association made two main points in its letter: 1) the current system for the regulation of alcohol “serves as a strong model” for cannabis and 2) a “piecemeal” approach to marijuana reform is untenable, so lawmakers should “comprehensively” address the issue.

“The fact is cannabis legalization at the state level is here to stay, as evidenced by nearly a decade  of new legalization efforts and no meaningful effort to undo them. Rather, the states that have legalized are expanding their markets and even discussing ways to begin interstate commerce of the product. Yet they receive no support from the federal government in determining how to ensure that products are safe or that the market is fair—especially as that market becomes increasingly national in scope.”

The letter, which was noted earlier by Politico, also emphasizes that states should be able to “maintain the flexibility to legalize—or not legalize—cannabis within their borders.”

“Addressing cannabis federally in a piecemeal manner amounts to de facto federal legalization without protecting consumers and non-consumers alike,” WSWA wrote in the letter to Senate Majority Leader Chuck Schumer (D-NY), House Speaker Kevin McCarthy (R-CA), Senate Minority Leader Mitch McConnell (R-KY) and House Minority Leader Hakeem Jeffries (D-NY). “The current fragmentary approach widens the door for the negative impacts of cannabis legalization without additional safeguards for public health and public safety. By not taking action, the federal government is also losing out on tax revenue.”

It also makes a point to endorse the idea of having the federal government open the doors to interstate cannabis commerce—a position widely embraced by industry stakeholders and lawmakers in a growing number of states.

WSWA pointed to a policy brief it first drafted in 2021 that lays out regulatory priorities that the association says lawmakers should keep in mind as members work to replace prohibition with a legalization framework.

The brief says that policymakers should draw from the experience of alcohol regulations to develop a model for marijuana that promotes industry competition, innovation and public safety.

The transition from alcohol prohibition to legalization represents “an American success story” that should be replicated with cannabis, it said.

Again, the association isn’t suggesting that federal regulations should totally supplant those that have been established in states across the U.S., but some level of regulatory oversight and taxation could support those programs and help normalize the cannabis sector.

WSWA detailed four key principles for federal oversight of an adult-use marijuana supply chain: 

1. The federal permitting of cannabis producers, importers, testing facilities and distributors.

The association said states should manage licensing for marijuana retailers, but it recommended that the federal government require permits for cannabis producers, importers, testing facilities and distributors through the Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB).

2. The approval and regulation of cannabis products.

New cannabis products should be subject to pre-market approval and federal registration, also through TTB, the association said. That would support existing quality control policies that are in place at the state level.

A standardized label should be included on all marijuana items, too. They should feature information, at a minimum, about the product name, THC potency, net content, producer name and address, a government health warning and the country of origin (for imports).

3. The efficient and effective collection of federal excise tax.

WSWA advised that a federal excise tax should be imposed for cannabis products at the producer or importer level, and it should be based on potency just as beverages are taxed based on alcohol concentration. The taxes should be payable to TTB on a semimonthly basis.

4. Effective measures to ensure public safety.

With respect to public safety, the association focused on deterring impaired driving, and it said that lawmakers should prioritize collaborative partnerships with law enforcement and researchers to develop technology that can identify active impairment from cannabis while also funding training for drug recognition experts on the roads.

WSWA, which came out in support of states rights to legalize cannabis in 2018, ended its policy brief by explaining why it’s taking this step to advise on federal reform. Since the end of alcohol prohibition, a “safe and economically vibrant marketplace has developed—one that serves the dual needs of regulators and consumers,” it said.

“While individual regulations have been modified over time, the basic federal regulatory structure of permitting and tax collection has stood the test of time,” WSWA’s paper says. “As policymakers consider the future of adult-use cannabis, we believe it is important to share the learnings of our industry. America’s wine and spirits wholesalers are a proud part of this system and believe that the principles outlined here can be extended to a national adult-use cannabis system.”

The House has twice passed bills to federally legalize and regulate marijuana, but comprehensive reform hasn’t advanced in the Senate, despite leadership having introduced much-anticipated legislation to end prohibition last session.

A key difference between that bill from Senate Majority Leader Chuck Schumer (D-NY) and the alcohol association concerns the distribution of regulatory responsibility. Advocates have worried about the Senate measure’s deference to the Food and Drug Administration (FDA), and it’s likely that WSWA’s position on having basic oversight managed by TTB would prove more acceptable to many stakeholders.

An earlier WSWA press release on the policy brief contains strong language about the need to lower barriers to entry for those who’ve been “victimized by the federal government’s failed war on drugs,” as well as its support for “efforts of experts who advocate for other social equity measures to alleviate the damage done to these communities.”

However, the brief itself is light on recommendations to that end, simply including a note that people with “non-violent cannabis-related offenses that occurred prior to federal legalization/descheduling” should not be disqualified from receiving federal permits to operate marijuana businesses. The proposal does not provide for any prioritization in permitting for people from communities damaged by the drug war.

Legalization advocates say WSWA’s involvement could bolster efforts to get lawmakers to look more seriously at the issue.

“It’s with a nervous excitement that we welcome WSWA into the lobbying efforts to end federal marijuana prohibition,” Justin Strekal, founder of BOWL PAC, told Marijuana Moment. “With WSWA’s footprint of members in nearly every state and congressional district, there is no better time than now to engage lawmakers both in D.C. and at home about the need to remove marijuana from the Controlled Substances Act and implement a regulatory structure that fosters an environment for small and medium-sized businesses.”

But Strekal also said he would like to see more of an equity focus in the group’s recommendations.

“Pointed policy suggestions regarding criminal justice reform that align with groups like the Marijuana Justice Coalition would be very welcome in their second draft,” he said.

(Disclosure: Strekal supports Marijuana Moment’s work through a monthly pledge on Patreon.)

After coming out in support of states’ rights to legalize cannabis in 2018, WSWA held a briefing on Capitol Hill to inform lawmakers and congressional staffers about its position.

In 2021, the association also endorsed a Senate bill to allow hemp derivatives such as CBD to be used in consumable products like foods, drinks and dietary supplements. (Full Story)

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