I caught up this week with Robert Mellion, who in February became the executive director of the Massachusetts Package Store Association, or MassPack. (For our out-of-state readers: package stores, or packies, are liquor stores.) He had just returned from a trip to Washington, D.C., where he met with the staff of Senator Elizabeth Warren.
Mellion wasn’t there to lobby on federal alcohol policies. He was there to talk about the STATES Act, proposed legislation co-sponsored by Warren that would end the federal prohibition of marijuana (easing banking woes, sky-high tax burdens, and other anchors around the neck of the cannabis industry) and let states set their own policies on the drug.
Why? Because Mellion’s group and others like it are now resigned to the fact that the marijuana industry will keep expanding — and siphoning consumer dollars away from the alcohol industry. So instead of waiting for the losses to come, they’re pulling a chair up to the legalization table and fighting for a piece of the pot-infused pie.
“There’s been a recognition that recreational cannabis is not just here to stay in Massachusetts, but it’s probably going to be nationalized within the next couple years,” Mellion said. “It’s important for the alcohol industry to accept and learn to coexist. There’s been an acceptance and an evolution, amongst retailers in particular.”
In addition to leading the Massachusetts Package Store Association, Mellion also sits on the board of the national trade group representing liquor stores, American Beverage Licensees (ABL). He let slip that the ABL is on the verge of publicly endorsing the STATES Act, or at least a similar approach to national legalization.
Another powerful national trade group, the Wine & Spirits Wholesalers of America, is also likely to endorse legalizing marijuana nationally, Mellion said, and has similarly engaged with Warren’s office.
The aim of the liquor groups, according to Mellion, is mostly to ensure that companies with state alcohol licenses and their owners aren’t barred from also applying for marijuana licenses. Even if booze and pot can’t be sold at the same store (which so far has been the rule in all the states with legal cannabis sales), those companies see themselves as experienced at navigating regulated industries and want the opportunity to open their own marijuana retail stores or distribution firms.
Also on the wish list: more uniform potency and packaging standards, and a requirement that the marijuana industry adopt the alcohol industry’s “three-tier” system, in which product cannot be sold directly from producers to retailers (or consumers) without first passing through a state-licensed distributor.
And yes, Mellion said, that would raise costs — which is the point. Consumption of intoxicants, after all, is to be discouraged. And he argued there are other benefits to the three-tier system, which prohibits producers, distributors, and retailers from owning or controlling one another.
“Some people say the three tier system is archaic and artificially raises costs,” Mellion said. “My rebuttal is that it’s been in play for almost 80 years and the system has consistently been able to prevent adulterated product from getting to the marketplace, made a lot of money for states, and allowed people to purchase a previously illegal product.”
Another reason liquor companies want the three tier system replicated in marijuana is to protect themselves from having to compete vertically and horizontally at the same time.
For example, alcohol retailers and distributors have long fought against laws allowing breweries to open tasting rooms and sell their beer directly to consumers at what is essentially a one-brand-only bar. They argue these arrangements bypass the other tiers of the industry and are unfair — why should a producer be allowed to run a retail operation while distributors cannot?
I promise I’ll dissect the details for you if this plan gets any real traction, but for now, suffice it to say that a three-tier-style requirement would implode the US marijuana industry as we know it.
To state the obvious: The alcohol industry’s push into pot isn’t about freeing the plant or social justice or anything feel-good. This is about money. If you want your heart to feel warm, booze executives would probably suggest whisky.
Indeed, Mellion acknowledged that some of the pressure for alcohol retailers and wholesalers to jump on the weed wagon is coming from those companies’ own suppliers — alcohol manufacturers and importers such as Constellation Brands that are already investing heavily in Canadian marijuana firms or even developing their own non-alcoholic, THC-infused drinks to stock the rapidly growing number of retail marijuana shops.
Back in Massachusetts, MassPack is also lobbying the state Legislature to clarify the liability of a liquor store when someone impaired by both marijuana and alcohol they purchased at the store causes a motor vehicle crash. (Liquor stores are banned from selling alcohol to “intoxicated” people, but the law doesn’t specify the substance causing the intoxication, and liquor store clerks aren’t trained to identify dangerously stoned people.)
“We want to know what we’re on the hook for,” Mellion explained.
MassPack didn’t formally oppose or endorse the 2016 ballot measure that legalized marijuana in Massachusetts. In retrospect, Mellion said, the group should have pressured state lawmakers to legalize marijuana and give them a piece of the business before the ballot measure came up.
Now that cannabis legalization is on the menu in Washington, Mellion is determined not to repeat that mistake.
“We’re not going to be followers in this,” Mellion said. “We’re going to get ahead of it and find a way to coexist, and at same time, have an opportunity for our members to get licenses.”