Open Letter to the Marijuana Industry from the Wine Industry: BEWARE THE WHOLESALER!

dontdoDEAR MARIJUANA INDUSTRY:

Whatever you do, don’t allow America’s alcohol wholesalers anywhere near your growing and soon-to-be-legal industry.

As someone who has worked in the wine industry for over a quarter of a century, I can tell you with some assurance that the middlemen wholesalers who are today actively attempting to squirm their way between Marijuana growers and Marijuana retailers do not have your burgeoning industry’s interests at heart. Nor do they have any concern for the interests of marijuana consumers. To put it bluntly, their interest lies in attempting to control the growing marijuana marketplace.

As I write, and as you likely have already discovered, America’s largest alcohol middlemen and their national and local trade associations are attempting to convince lawmakers to institute the same sales and distribution system for marijuana sales that is in place for alcohol.The so-called “Three Tier System” wholesalers are pushing REQUIRES producers to sell to wholesaler who in turn sell to retailers.

America’s booze middle men are currently telling state and national lawmakers that without a LEGALLY MANDATED USE of a middleman wholesaler, the states will not be able to collect taxes and the marijuana industry will be dominated by nefarious crooks. This is the exact message they’ve told lawmakers across the country since 1933 when Alcohol Prohibition was ended. It was a con job then and it’s a con job now.

For eighty years now wholesalers have been successful in convincing lawmakers in nearly every state that without the state mandated use of their services, all hell will break loose in the alcohol marketplace. This despite the fact that no other industry in American includes a state requirement for the use of a middleman wholesaler.

The consequences of this eight decade long submission to middlemen in the alcohol industry has been considerable:

-Alcohol middlemen wholesalers have enormous power in legislative and regulatory matters, and significantly more than either alcohol producers or retailers. Lawmakers consistently respond well to the millions and millions of dollars of political donations they receive from wholesalers annually.

-Alcohol wholesalers have consistently opposed any reform of laws that make access to wine, beer and spirits easier for consumers or retailers.

-The middleman’s control of the legislative and regulatory apparatus has significantly slowed the growth of online wine and beer sales.

-The middleman’s control of the state legislative and regulatory apparatus has significantly slowed the growth of craft beer and spirits.

The Wine & Spirits Wholesalers Association (WSWA), the national trade representatives of America’s alcohol middlemen, is now actively lobbying state governments to put in place the same kind of “three-tier” distribution system for marijuana sales and distribution that currently keeps them the dominating power in the wine industry.

On its website, WSWA tell us:

“Without a similarly robust (three-tier) system, the marijuana market could present the potential for illicit and unregulated activity akin to that which occurred with alcohol prior to and during Prohibition.  Accordingly, WSWA stands ready to serve as a resource for states in explaining the merits of the three-tier system as a  systematic and effective regulatory framework.

Don’t believe the alcohol wholesalers for a second. Don’t let them anywhere near your growing industry if you imagine preserving any flexibility in how you structure your business, whether you are a grower or retailer or plan to be either. If wholesalers do for marijuana anything like what they have done to the wine and beer industry, you will end up with absolutely no flexibility and you’ll end up having to pay kickbacks to wholesalers for the privilege of working in this new industry..

If you are not convinced, consider this. The WSWA and every large booze wholesaler in America supports something called “Franchise Laws”.

Franchise laws makes it impossible and illegal for all intents and purposes for a producer of beer or wine to change wholesalers once it signs up with one in a state. No matter how shitty a job the wholesaler has done, no matter what promise they break, the Franchise Law in place means producers have no recourse in the face of incompetence.

Wholesalers claim Franchise laws are necessary to protect them from big producers who might pull their business away from them after they helped build it in a market. Franchise laws, which exist in about half the states, allow wholesalers to kill brands at their leisure and the producer who sees their brand dead can do nothing about it.

That is exactly what you are looking at if you decide to get in bed with wholesalers and the state mandated three-tier system of marijuana regulation they are promoting.

As I said, I’ve been in the wine business for 25 years as a marketer and publicist. Over and over I’ve seen small and medium-sized producers struggle not because their product wasn’t any good, but because the three-tier system enforced by legislators and the powerful booze wholesalers is nothing more than a hinderance and often a job and business killer.

Finally, think about your end customer. The three-tier system that would require growers to sell their leaf and flowers to middlemen, who then would be the only sellers to the retailer, will end up restricting what consumers can buy.

Don’t make the mistake the wine and beer industry made when it was recreated 80 years ago under the thumb of a three-tier system of distribution. Don’t give your flexibility away to groups that don’t have your interests in mind. And don’t let your burgeoning industry come under the thumb of a consortium of companies that will use their power to insure you live according to their rules.

 

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4 Responses

  1. Dan - August 3, 2016

    Spot On! Thank you Tom for the words of wisdom!

  2. retired97 - August 10, 2016

    Agree! After over thirty years of working around the three tier system in the liquor industry, I came to the conclusion that their only goal was discouraging competition and driving up prices. The criminal justice system will ferret out bad guys better than an extra layer of corporate greed.

  3. Raksha Bandhan 2016 - August 12, 2016

    This was a great and interesting article to read. I have really enjoyed all of this very cool information

  4. Happy Valentines Day 2017 - August 15, 2016

    Hello.
    Nice article. Thanks for sharing it wth us.


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