There’s an important lesson for states and marijuana legalization advocates in the pay-to-play allegations now rippling through the Massachusetts beer industry. After Prohibition, the Commonwealth and other states legalized alcohol in the wrong way, setting up a complicated distribution system that places sharp limits on where and from whom consumers can buy alcohol. These rules practically invited mischief by brewers, restaurants, wholesalers, and liquor stores. If states legalize marijuana — as Colorado has done, and others, including Massachusetts, are considering — legalization should happen in a way that avoids the stifled market like the one that now exists for beer.
Alcohol, unlike almost every other legal product, can only be purchased in licensed bars and restaurants, liquor stores, a handful of grocery stores, and at breweries themselves. In Boston, state law also caps the number of restaurants that can serve alcohol. Consumers can’t readily order alcohol from a catalogue, or, heaven forbid, the Internet. Brewers also can’t shop around for a wholesaler to handle their products; state law requires them to stick with the same one. Since brewers of beer have only a few heavily regulated avenues to get their product to consumers, it’s no wonder they may feel pressured to pay off restaurants to carry their products, and that restaurants may be tempted to demand such payments.
According to a report in the Globe, investigators from the state Alcoholic Beverages Control Commission have issued subpoenas to several brewers, distributors, and retailers amid allegations of pay-to-play. That problem has been hiding in plain sight for years, but the commission says in the past it has put a higher priority on investigating illegal sales to minors. In a normal market, pay-to-play deals wouldn’t matter as much; consumers could just go elsewhere if a store or restaurant didn’t have the products they want. But since the law limits their buying options, sellers keep the upper hand. And ultimately, consumers pay the cost of the extra enticements brewers may offer to restaurants.
Unfortunately, the medical marijuana law approved by Massachusetts voters in 2012 repeated some of the same problems. That law set up a system of middlemen, so that marijuana will be distributed differently than any other medicine. Only a few dispensaries are supposed to operate statewide. The nascent marijuana industry immediately saw the profit opportunity in such a protected marketplace; witness the stampede for dispensary licenses, and the deceit and political influence-peddling involved in the process. Once those dispensaries have their hard-won licenses, can anyone imagine they’d want to see the corner store start carrying recreational marijuana? It’s reasonable to fear that the dispensaries will start to acquire the same kind of political clout that has allowed liquor stores and distributors to keep competition-stifling rules on beer distribution in place.
Should Massachusetts eventually legalize marijuana completely, it shouldn’t spawn another regulatory monster in the process. (Memo to the Campaign to Regulate Marijuana Like Alcohol in Massachusetts, the group trying to organize a pot legalization referendum in 2016: change your name.) Anyone should be able to grow or sell legalized marijuana, subject to whatever taxes and age requirements the state enacts. Business shouldn’t be forced to use middlemen, unless they choose to. Of course, Massachusetts should also continue the baby steps it has taken to liberalize its liquor laws. But it should also avoid creating another morass that limits consumer choices, enriches special interests, and invites misconduct.