The Wine & Spirits Wholesalers of America (WSWA) founded in 1943, has nearly 400 member companies in 50 states and the District of Columbia. It’s members distribute more than 80 percent of all wines and spirits sold at wholesale in the United States. The association made news this week by endorsing the Legalization of Cannabis for States that follow a “Regulate Cannabis as Alcohol approach.”
MJ News Network had the opportunity to speak with WSWA’s Acting EVP for External Affairs | Senior Vice President, Government Affairs, Dawson Hobbs. In his role, Hobbs regularly testifies before legislative and regulatory bodies in dozens of states, and has established extensive relationships with governors, attorneys general, alcohol regulators and industry officials around the country. MJNN asked him what is behind the WSWA’s decision to back the legalization of cannabis, and what lessons the cannabis industry might learn from the nation’s approach to regulating alcohol.
MJNN: The WSWA has just endorsed Cannabis Legalization in States that follow an alcohol model. That’s a sea change for the alcohol industry, isn’t it?
HOBBS: Well, let me just have one little nuance of clarification. Our position is that the federal government should provide a path for States that choose to legalize. That right to legalize should be recognized as long as they follow an alcohol regulatory model, and have appropriate regulations. We’re not telling the individual state that they should or should not legalize, we’re simply saying there should be a path for them to choose to do so, and it should be accompanied with the appropriate regulations.
MJNN: Why the change and why now?
HOBBS: This has been a long, long discussion. We’ve had a lot of conversations, dating back to when Colorado took the step on adult use. What really has driven it is we know that it’s here to stay, and we know that more States are coming. We think that there are 85 years’ worth of lessons of appropriate alcohol regulation that we can take to the cannabis industry, and those lessons are: It’s better off to start with a good regulatory framework rather than having to learn the lessons the hard way by trial and error. And so, it’s more of a recognition that this is here to stay and that more states are coming, and we want to be part of the conversation about how effective state regulation works.
MJNN: Tell me what that looks like in terms of advocacy, in terms of outreach to the cannabis community, and in terms of outreach to the general population. Those of us who have been in the industry for a number of years recognize our biggest challenge has been the normalization, the mainstreaming, of not just cannabis but of cannabis users. So, tell me, how does the WSWA advocacy take shape?
HOBBS: There’s a couple of questions there, right? So I’ll start with the first part which is we’re going to be talking and we have already started talking with members of Congress about what an appropriate regulatory framework would look like, so that they can have some comfort in allowing states to legalize.
We’re going to continue those conversations and we’re realistic about the fact that this is going to be a long conversation. We don’t think that because we took this position, Congress is going to act next week. We know that we will be part of ongoing conversations. We have an effective, and well-established federal advocacy team and that team will be engaged on this. And to your point, we do think that part of what we bring to the table is not only our regulatory knowledge and history and experience, but a mature advocacy organization [vis a vis] the cannabis industry. And you know, we’re going to be having conversations like these with a number of cannabis organizations. We’re going to be reaching out to quite a few, but we also expect we’ll get some phone calls ourselves and we look forward to having those conversations.
You’ll notice that our position is not new in the cannabis world. For a long time, many advocates have said let’s ‘Regulate Cannabis like Alcohol.’ We’re saying yes, but we’re also saying, let’s remember alcohol regulations. The reason alcohol is safe and effective is because it doesn’t just end at having to be 21, which is the thing most people think of. There’s a host of regulations on product testing and labeling and licensing of producers and distributors and retailers — all with penalties for violations of the terms that have created a safe alcohol market. So, alcohol regulation is very effective. We agree, but we just want to make sure we talked about all the regulations.
HOBBS: We think the State’s Act is really a step in the right direction. But, we want to apply a little bit more rigorous regulatory threshold that the states need to meet. It’s the right concept and States are the [best] pathway to legalization. But you know, one of the ways that normalization will occur is if a State chooses to legalize, the folks in the surrounding States need to feel confident that the product’s not going to be diverted to their State. The consumer needs to be confident that the product they’re getting is safe and has the amount of THC or CBD that it says it does. For the people who choose not to consume, [they should be confident] the regulations surrounding the sale and production are going to make sure that there are no problems with diversion. And also that there aren’t problems with people getting a tainted product and possibly getting sick, and that there’s not overconsumption.
The normalization comes with people getting comfortable and, and confident. And we think that the regulatory model helps provide that.
MJNN: One of the differences, however, is that in the legal cannabis world, we’ve got a real Balkanized approach. Meaning: every State has its own regulations, and there is a wide range of not just who can participate, but what products are sold, how they’re packaged and brought to market. What’s your take on that? You’re talking about standards. It’s kind of tough to have standards when you can’t sell it oil in Arizona, and you can’t sell flower in New York.
HOBBS: I think some of those things will equalize over time. I think the lesson from the alcohol space is that every State does alcohol regulation differently, but they have a lot of commonalities. In certain states you can buy alcohol in a grocery store and other states you can’t. Those decisions are made by the state and they’re made for reasons that have to do with the culture of the state and citizens of the state.
As you know from cannabis, folks in New York and folks in Utah have different attitudes towards intoxicating products, and we should respect that because there’s cultural reasons that those differences exist when it comes to the types of products that can be sold. I think you’ve seen in the alcohol space over 85 years, there has been sort of a harmonization. Spirits used to be much less available than other products, and now they’re becoming more equally available with wine and beer. We don’t have a position on whether that should be the case or not, but we do have a strong position that the state should be able to decide and I think you’ll see something similar. We see cannabis as in this experimental phase of folks at looking at what works for their community.
MJNN: Let’s talk a little bit about economic opportunity. A senior executive at Molson recently advised investors that legal cannabis was cutting into their market share, and we’ve seen some pretty significant investments from spirits and alcohol marketers in Canada, Constellation Brands probably being the most visible. We’ve also seen the introduction of a number of cannabis-infused and CBD-infuised beverages, including beers and wine. Tell me, how much of your new position is based upon the realities that our industries are evolving or co-evolving together?
HOBBS: I think that evolution will continue, but I don’t think that’s unique to the alcohol industry. I’ve read quite a bit about folks from other non-alcoholic beverage industry’s looking at the cannabis space. I think some of the food manufacturers might look at being involved with the edibles space. Perhaps not the hugest, but I think some of the smaller ones, for sure.
It’s only natural that folks in [the wine and spirits] industry might look at the same thing, and you know, some of them will choose to get involved in that somehow. That really wasn’t the driving force of our decision. The driving force of our decision was that we have 85 years of experience in dealing with a regulated socially-sensitive product, and it would be silly not to bring that experience to this conversation and talk about appropriate regulation.
MJNN: You talked about how spirits had been mainstreamed over the years. We’re now seeing whiskey ads on tv. Ad restrictions certainly have been one area that’s been plaguing legal cannabis, in terms of our ability to do things like outdoor or for legal cannabis entities to market their product on TV. What’s your position there?
HOBBS: Well, we think that our industry has done a good job, and continues to improve, by making sure that we aren’t marketing products to those who should not have them, particularly those who are under age. Similarly, that our product is marketed in a responsible way that doesn’t make unsubstantiated either health claims or implied health claims that may or may not be true. We just think that there’s a good lesson there for the cannabis industry: to take similar steps to prevent ads from being marketed to those who are underage, or are very careful about — and I understand the medical component, but in this early phase especially– being careful about the health statements they make. That will go a long way to helping people be comfortable with the advertising by the cannabis industry.
You know, we all have to accept that, just like when alcohol ads appear in a new space, there’s a period of adjustment. Organizations in our industry have codes of advertising, ethics and standards, and I think a lot of those same standards can be applied to the cannabis industry pretty effectively.
MJNN: What other lessons do you have for entrepreneurs who are building the legal cannabis industry one grassroots market at a time?
HOBBS: One of the biggest lessons that we’ve learned in our industry is that there’s a difference between effective regulation and excessive regulation. And our alcohol space has lived in the world of effective regulation. So don’t be afraid of it. Don’t be afraid of effective regulation, because it will help your industry thrive the way ours has. We have the safest alcohol industry in the world. It’s also the one that provides the most consumer choice and opportunity. So, we view that as a big success and one that can be copied for other products.
Executive Vice President for External Affairs | Senior Vice President, Government Affairs