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Interview, Part 1: WSWA Leadership on Supporting Cannabis Legalization

May 9, 2023

The Wine & Spirits Wholesalers of America have officially supported federal cannabis legalization for years but have turned up the volume of late, with chairman Tom Cole calling on the drinks industry to join the cause during remarks at WSWA’s Access Live in April. SNDC associate editor Danny Sullivan spoke with president and CEO Francis Creighton, executive vice president of government affairs Dawson Hobbs, general counsel Jake Hegeman, and executive vice president of communications Michael Bilello for an update on their work toward reform and the lessons we can take from beverage alcohol.

SNDC: Your plan for legalization is based on four pillars–where did those come from?

Dawson Hobbs: When we first got involved in cannabis, we came at it from the standpoint that states should have the right to legalize and the federal government should support that. Following that, we developed the pillars that we think the federal government should use. None of this can be done unless you legalize cannabis. Half the country, depending on how you count it–nearly half the states, more than half the population–roughly half the country has legalized adult-use cannabis. It is irresponsible for the federal government to just pretend that hasn’t happened. So the federal government needs to protect communities, protect consumers, protect non-consumers, and protect the roads but they can only do that if they legalize the product.

Jake Hegeman: At a high level, it’s about permitting. Both the production tier and distribution tiers need a federal permit. Tax collection, unsurprisingly, is the hole in the equation today. There is no federal excise tax on cannabis because it’s illegal. Should it become so, it’s important to properly tax it. At a basic level, you need to have a tax collection mechanism for federal excise tax. There’s also the question of product integrity, where we think that the TTB is a real pillar of regulatory efficiency, and also a very effective mechanism for allowing new products to enter the market, but doing so in a safe and transparent way. We say it all the time, we all take it for granted, but when we look at a bottle of wine or spirits and we see 13.5% abv, we all know what that means.

SNDC: What lessons does the transition from Prohibition to the regulated beverage alcohol market have for cannabis legalization?

Hegeman: Talking about the transition out of Prohibition, it’s all in reverse in cannabis. We’ve got this experiment that’s been going on for a decade now in the adult-use context of legalizing a product at the state level while it’s federally illegal–the exact reverse of Prohibition, when the 21st Amendment was repealed, and states built new systems on top of a now federally legal system. Because of that reversal, what we’re not talking about here are state laws. We’re talking about the federal superstructure that we enjoy in alcohol. And I think it’s worth reiterating that when we think about what TTB really does in the sense of building that superstructure, it’s an incredibly important but approachable industry. Getting permits is not terribly onerous, but it brings you into a system that provides an amazing amount of accountability and transparency that lets the system work.

Francis Creighton: We have such a good system in the beverage alcohol market. We know how to regulate it. We know how to keep it out of the hands of children. We know how to protect the product. We know how to do this. Beverage alcohol has worked for 90 years because it’s a really good regulatory system for a socially sensitive product. Why wouldn’t we take advantage of that experience, of that evolution, and put it to use here to fix a real problem in our society?

SNDC: How are talks progressing in Washington? Is there movement at the federal level?

Hobbs: We’ve had well over a hundred meetings on the Hill since our announcement. Frankly, we’ve had very little pushback on the conversation about the need for regulation. There may be some disagreement about exactly where the regulations should start and stop, but there is an agreement that there should be regulation. That said, we’re not quite there yet with Congress being willing to say “Legalize.” They understand the need for regulation, but we have work to do on getting members of Congress comfortable with the fact that legalization has to happen for regulation to follow. This is a longterm project. And frankly, given the temperament in Congress these days and the other things that they have on their table or on their plate with the debt ceiling and the normal appropriations process, and then next year being a presidential election year, I’m not going to look in a crystal ball and tell you that anything’s going to happen in the next 18 months. But we are working on this and we will continue to work on this. We will push on it, and we’re going to continue to build the conversation. And we understand that it might not be an overnight process. This may be a multi-year process, and we’re prepared to continue to work on that because we think it’s important. It’s important to our members and it’s important to the communities they operate in.

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