Alcohol industry representatives descended on Washington, D.C. earlier this month to urge members of Congress to create a federal regulatory framework for intoxicating hemp-derived products such as cannabinoid-infused beverages—a market segment that’s ballooned since the legalization of hemp through the 2018 Farm Bill.
Members of the Wine & Spirits Wholesalers of America (WSWA) met with lawmakers and staffers to advocate for three key policy priorities that the group says is based on “sound principles of alcohol distribution.” The group is advocating for three key policy priorities, which it says are based on “sound principles of alcohol distribution.”
Ryan Mosses said, “WSWA Members are Committed to Responsible Industry Growth and Consumer Safety,” in a public statement. Mosses is the CEO of Best Brands alcohol wholesalers and a director of WSWA. The legislative fly-ins are a great opportunity for WSWA members to meet directly with their legislators and share insights about the industry. They also allow them to advocate for regulations that have been backed by science and benefit both business and consumers.
Michael Bilello said in a social media post that the message for lawmakers is clear: “Federal regulations of hemp-derived drinks are essential.” Cannabis should be regulated—and enjoyed—responsibly by adult consumers.”
WSWA urges lawmakers to clarify the rules surrounding hemp-derived products that contain cannabinoids in the federal Farm Bill. According to a group press release, “we believe that the Farm Bill of the future should allow the production only of naturally-derived THC from hemp products (specifically Delta-9), and explicitly grant individual state primary authority in order to regulate retail sales including prohibition at the state level to consumers older than 21.
WSWA also called for Congress to adopt a framework of regulation for intoxicating hemp cannabinoids, rather than imposing an outright prohibition as it was proposed at the time.
The trade association stated at that time, “We are strongly in favor of clear federal regulations and rules that clearly define the hemp compounds which cause intoxication and grant the states authority to regulate the products within their own borders.”
In recent years, the alcohol industry has become increasingly active in marijuana lobbying. This is partly due to the growing marijuana market that competes with alcohol sales.
A separate memo by the American Beverage Licensees argued, in conjunction with this lobbying attempt, that hemp products should only be sold to businesses who are licensed to sell alcohol.
In the memo, it is stated that states should only allow the sale intoxicating THC to be made by businesses who have a license to sell alcohol beverages and are regularly checked for compliance to laws to stop sales to persons under 21.
According to the group, alcohol retailers “with decades of compliance” are in the best position to sell such products.
In a two-page document, it is suggested that the regulators treat cannabis similarly to alcohol. For example, they should establish licensing standards, clearly defined labeling requirements and restrict advertising. The alcohol industry group said that this could also mean limiting the potency of each serving.
A report from Bloomberg Intelligence (BI) last year called cannabis a “significant threat” to the alcohol industry, citing survey data that suggests more people are using cannabis as a substitute for alcoholic beverages such a beer and wine.
Reports projected that the slumping of sales in wines and spirits would “continue for a long time” – and “largely stem” from increased consumer accessibility to “legal marijuana” and alternative products.
BI analysts have written that cannabis consumption is increasing and they believe the substance has replaced alcoholic beverages. We also expect that increased US consumer access will pose a serious threat to the alcoholic beverage industry, especially beer and wine.
Last November, meanwhile, a beer industry trade group put out a statement of guiding principles to address what it called “the proliferation of largely unregulated intoxicating hemp and cannabis products,” warning of risks to consumers and communities resulting from THC consumption.
The Beer Institute suggested in its document that Congress imposes an excise federal tax on cannabis and hemp products “at a rate higher than for beverage alcohol.”
It also urged a “zero tolerance approach” to THC and driving—a policy that could prevent casual cannabis consumers from ever being able to legally drive due to how long the drug’s metabolites stay in the body after use—and recommended keeping in place the federal ban on combining intoxicating cannabinoids and alcohol.
In a press release at the time, President and CEO Brian Crawford stated that “American brewers have been promoting a culture of responsible consumption and moderation for decades.” The patchwork of hemp and cannabis legislation and regulations that currently exist do not conform to the standards which are adhered to by the beer sector.
Growing evidence suggests that frequent marijuana use is now more common among Americans than regular alcohol use. In a recent study, it was found that Americans are more likely to consume marijuana every day than they are to drink alcohol. The rate of cannabis consumption per person in America has nearly increased 15-fold since 1992.
A multinational investment bank said in a 2023 report that marijuana has also become a “formidable competitor” to alcohol, projecting that nearly 20 million more people will regularly consume cannabis over the next five years as booze loses a couple million drinkers. It said that marijuana sales in the U.S. are expected to hit $37 billion by 2027, with more states opening up their markets.
A separate study out of Canada, where marijuana is federally legal, found that legalization was “associated with a decline in beer sales,” suggesting a substitution effect.
Data from a Gallup survey published in August of last year also found that Americans consider marijuana to be less harmful than alcohol, cigarettes, vapes and other tobacco products.
As for hemp-derived cannabinoids, a hemp industry expert told congressional lawmakers earlier this week that the market is “begging” for federal regulations around cannabis products.
Rep. James Comer asked sarcastically, “Would it take a gazillion home-based bureaucrats to regulate CBD?”
In the absence of FDA rules, states from California to Florida have pushed for sweeping changes to their own laws around consumable hemp products. The focus of attention has largely been directed at intoxicating hemp products. However, CBD companies that are federally approved have found themselves in greater danger.
Meanwhile, as lawmakers prepare to once again take up large-scale agriculture legislation this session, congressional researchers in January provided an overview of the policy landscape around hemp—emphasizing the divides around various cannabis-related proposals among legislators, stakeholders and advocates.
Senate Democrats released the long-awaited draft of 2024 Farm Bill last year that contained several proposed changes to federal hemp laws—including provisions to amend how the legal limit of THC is measured and reducing regulatory barriers for farmers who grow the crop for grain or fiber. Some stakeholders were concerned that this legislation would “eliminate” a range of current products.
Despite the economic conditions, for the moment the hemp industry is facing unique regulatory obstacles that its stakeholders attribute to the plummeting value of the plant in the few short years following legalization. Despite the economic conditions, however, a recent report found that the hemp market in 2022 was larger than all state marijuana markets, and it roughly equaled sales for craft beer nationally.
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