A new Politico story this week indicates that major alcohol industry players want to corner the market on legal pot. But what the story does not make clear is that voting for California legalization Proposition 64 helps stop Big Alcohol.
Voters who approve Prop 64 will set back liquor industry goals to control legal pot, sources say. The Nov. 8 vote in California would keep marijuana distribution in the hands of the existing industry, and roll back a sweetheart deal from 2015 that puts police, unions and Big Alcohol in the driver’s seat of legalization, it would appear.
It all comes down to who gets to distribute cannabis.
Last year, California made history by regulating its billion-dollar medical marijuana industry for the first time. Part of those regulations included a “mandatory distribution” layer of licensed independent drivers, who were billed as being a check on other parts of the industry.
The model was copied from the California alcohol industry, where brewers are not allowed to distribute directly to retail stores. Alcohol distributors wield enormous power to make or break a brewer.
Since those medical regulations passed, news has emerged that some of the biggest players in Big Alcohol were making moves to become marijuana’s main distributors. California’s biggest newly licensed pot distributor, RVR, is run by a liquor millionaire from the nation’s biggest booze company.
Critics have warned that there is a long-standing nexus of power between police, unions, big alcohol and government officials. Now, it seems the group thinks they can muscle in on legal pot — an industry mostly made up of small farmers and stores.
Barry Broad, legislative director of the California Teamsters Public Affairs Council, told Politico, “I’m not hiding our self interest. This is a growing industry and we’d like it to grow unionized,” he says. “To have local government, organized labor and law enforcement all together is a pretty potent alliance. What’s on the other side? A couple marijuana people with illusions of grandeur?”
RVR chief Ted Simpkins is the retired CEO of Southern Wine & Spirits, and at the center of the coalition with the Teamsters, police, cities and counties, and the California Growers Association (CGA). Simpkins was a senior manager of Florida-based Southern Wine & Spirits, the country’s largest liquor distributor with $12 billion in revenues. Simpkins earned $7.8 million a year in salary and bonus compensations, Politico reports.
During the 2015-16 state legislative session, Simpkins’ company paid $134,500 to lobby for the distribution rules the CGA helped negotiate, Politico reports.
This power nexus already serves Big Alcohol in California, where gun-toting Alcoholic Beverage Control officers supervise unionized alcohol distributors. Many in this group donate money to public officials to protect their interests.
People like Harborside Health Center’s Stephen DeAngelo fear what the liquor-ization of cannabis could mean. For one — vastly decreased patient choices and increased costs, as the distributors take their cut, he said.
It took decades for craft brewers to break Budweiser’s stranglehold on regulations and distribution, historians note. Today craft brewers face renewed threats from alcohol distributor consolidation. Mega-distributors often refuse to carry boutique brands, who cannot afford Budweiser-sized marketing budgets to ensure massive sales.
By contrast, the California cannabis industry is almost entirely made up of what amounts to small-batch craft growers who distribute directly to their choice of over one thousand stores.
If the mandatory distribution layer sticks, DeAngelo predicts, “growers won’t have more than five groups they can sell to and [patients] are going to be paying three times as much for weed.”
There will be no farm to table options. No bud and breakfasts. No cannabis wineries, he said.
“Big distribution is not interested in new, obscure strains, or catering to small niches of the market,” he said. “They’re not interested in veganics, or gluten-free edibles.”
CGA director Hezekiah Allen disputes DeAngelo’s predictions, stating that, “mandatory distribution is not the same as Budweiser. Thankfully the legislation includes a cap on the size of grows and effectively prohibits companies from establishing the market dominance brands like Budweiser and Coors have achieved. ”
Still, when the text of Proposition 64 came out, it was immediately opposed by the alcohol-police-union nexus. The Teamsters and law enforcement publicly denounced it. Nationally, big alcohol lobbyists hyped the threat of legalization to Washington DC lawmakers, wikileaks reports.
That’s because Prop 64 removes the mandatory distribution later from recreational pot for all but the biggest farms.
“That came about in response to pressure from myself and [WeedMaps founder] Justin Hartfield,” said DeAngelo. “We had to fight hard with the Adult Use of Marijuana Act folks.”
“I support #Prop64 but oppose MMRSA mandatory distribution,” DeAngelo tweeted.
By contrast, legalizers in Nevada earned the support of big alcohol by giving liquor distributors sole rights to distribute marijuana for the first 18 months of legalization.
Marijuana Policy Project Rob Kampia director admitted as much to Politico, saying legalization is pay to play, and alcohol is paying while “the retailers are writing themselves out of the game, because they’re not showing us any love.”
DeAngelo said Nevada legalization and California’s medical regulations are “the opening salvo of a takeover of the entire cannabis industry by the alcohol industry.”
But what’s so bad about having Big Alcohol run legal cannabis, I ask DeAngelo? The powerful alcohol lobby has for almost a century kept booze taxes low, made beer cheap and widely available, and fought off regulatory attacks on alcohol users. Consumers can walk into almost any corner store in America and spend just an hour’s wages to buy enough ethanol to put a person in a coma.
“We don’t need the alcohol industry to lobby for us. We call our own shots,” DeAngelo told me.
“Alcohol companies don’t understand cannabis as a wellness product,” he said. “They’re going to market it as another intoxicant. That’s the wrong way to present cannabis to the world. It will deter the progress of reform. Intoxication is not so popular. Wellness is more popular. If the alcohol industry alcohol-izes cannabis — it could lead to re-prohibition.”
It’s a war for the soul of pot, DeAngelo said, and alcohol is winning.
Even if Prop 64 passes, Big Liquor along — with unions and police — plan to use their pull in Sacramento to insert mandatory distribution back into legalization, multiple reports indicate.
All they need is 50 percent of lawmakers to vote on it, which is why DeAngelo is raising as much, “holy f*cking hell as I can. Even if I lose, I cost them. They feel some pain when AUMA passes and it comes times to start messing with it. You cannot breach the will of the voters.”
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