Big Weed will have its day. But, right now, Big Pharma and Big Alcohol do their best to keep cannabis in its place.
It takes a lot of numbers to make the case, but if you bear with the analysis, you should agree that Big Alcohol wants to kill marijuana legislations among the states.
Follow the money
Based on numbers through 2014, Park Street’s overview of alcohol markets shows the U.S. volume and trends.
- $211.6 billion in sales split between malt beverages on the one hand and wine and spirits on the other.
- 37% of revenues come from distilled spirits (24% vodka, 24% whiskey, and 12% rum).
- 15% come from wine (71% domestic, 21% imported, and 6% champagnes and sparkling wines).
In all analytic categories, presented for 2016 by CSIMarket.com, Big Alcohol is getting bigger in its industrial category as Consumer Non-Cyclical Goods:*
- Revenues increased 21.17% faster than its Gross Profit increase of 13.44% producing a Gross Margin of 38.87%.
- EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) grew by 146.79% with 27.17% increase in revenue for an EBITDA Margin of 57.94%.
- Pre-tax Income grew 198.58% in the fourth quarter leading to a Pre-tax average of 52.39%.
- Net Profit grew 155.86% for an industry average of 33.54%.
*Analytics for the quarters before and after the 4th quarter support these trends.
Among the largest slices of the U.S. economic pie, it continues to increase across a range of products. Only the growing trends to small labels conflicts with these positive numbers.
What are alcohol’s interests?
In their book, Addiction(Wiley 2016), authors Emily Savell, Gary Fooks, and Anna B. Gilmore, claim:
“The alcohol industry argues against marketing regulation by emphasizing industry responsibility and the effectiveness of self‐regulation, questioning the effectiveness of statutory regulation and by focusing on individual responsibility. Arguments relating to industry responsibility are often reinforced through corporate social responsibility activities. The industry primarily conveys its arguments through manipulating the evidence base and by promoting ineffective voluntary codes and non‐regulatory initiatives.”
It's a broad and damning charge they go on to substantiate in global population markets. As Christopher Ingram pointed out in The Washington Post,
- 30% of Americans do not drink.
- 30% are light drinkers.
- 40% of consumers support basically support the alcohol industry.
- Top 10% (24 million Americans) consume over 74 drinks/week.
Ingram also quotes Duke’s Professor of Public Policy, Phillip Cook, Ph.D. who notes, “One consequence is that the heaviest drinkers are of greatly disproportionate importance to the sales and profitability of the alcoholic-beverage industry… If the top decile somehow could be induced to curb their consumption level to that of the next lower group (the ninth decile), then total ethanol sales would fall by 60 percent.”
The alcohol industry’s primary interest lies in aggressively protecting its position now and into the future.
What does the industry do?
The alcohol industry lobbies hard and richly. Opersource.org reports 2016 campaign contributions:
- Total Contributions = $22,734,176
- Individual Contributions = $11,926,195
- PAC Contributions = $6,671,706
- Outside Contributions = $3,936,275
- To Democratic Candidates = $8,488,994 (45%)
- To Republican Candidates = $10,327,456 (55%)
All major candidates received contributions but the top five recipients were:
- Hillary Clinton $523,896
- Mike Thompson $227, 091
- Charles Schumer $206,900
- Paul Ryan $192,508
- Marco Rubio $153,000
And, the report identifies $26,654,652 as specific to lobbying efforts.
And, why do they spend this money?
In a report published in the Australasian Medical Journal, Laura Bond, Mike Daube, and Tanya Chikritzhs, released confidential documents from “Big Booze.” Those secrets parallel the efforts in the U.S.:
“Key areas of concern for the Miller Brewing Company, the Beer Institute, and more broadly, the alcohol industry include developments of legislative and regulatory controls such as tax increases, advertising restrictions and blood alcohol content lowering and public perceptions of harms relating to drunk driving, binge drinking and underage alcohol consumption. Strategies proposed by the Miller Brewing Company and the Beer Institute to combat these concerns include ally development and maintenance and the promotion of personal responsibility.”
The alcohol strategists worry about even the slightest negative trend or signal. They worry they will lose male drinkers to weed, that cannabis consumers will come out of the black market, and that substance abusers will cloud their attempt to keep their image clean.
- In Massachusetts and California alcohol interests have contributed money to fighting marijuana interests.
- Huddle, a Politico newsletter to U.S. Capitol Hill insiders, carried an ad reading in part: “A message from Wine & Spirits Wholesalers of America: While neutral on the issue of legalization, WSWA believes states that legalize marijuana need to ensure appropriate and effective regulations are enacted to protect the public from the dangers associated with the abuse and misuse of marijuana…Congress should fully fund Section 4008 of the FAST Act (PL 114-94) in the FY 2017 Appropriations process to document the prevalence of marijuana impaired driving, outline impairment standards and determine driving impairment detection methods.”
- The 2015 WSWA Annual Convention hosted the U.S. Beverage Alcoholic Forum (USBAF) with a panel presentation on “Everything You Need to Know About Marijuana Legislation.”
- Currently the WSWA website lists Marijuana as a Regulatory Key Issue: “While WSWA does not have a position on the core question of marijuana legalization, we do have deep expertise in the structure, management and operational challenges of the three-tiered beverage alcohol regulatory structure- a system that has proven remarkably effective at addressing the myriad issues that gave rise to Prohibition.”
The alcohol industry is huge and growing worldwide. But, it feels threatened. There is no evidence that marijuana has taken business away in the states where they have legalized or decriminalized cannabis.
In fact, the evidence suggests trends in the alcohol industry show movements toward small producers and new labels arguing that the larger brewers and distillers lose customers to changing tastes.
The record shows large amounts of money to influence legislation and the attention of legislators. And, their ostensible interest in protecting citizenry from the social evils of marijuana remains shallow and misdirected.
Finally, the alcohol industry is staking out a position where they model behavior and legislation on how the marijuana market should operate.
It’s clear Big Alcohol wants to kill marijuana legislation around the states.