Paul Hletko on How Legal Cannabis and Alcohol Can Coexist

By Kyle Swartz

March 5, 2018

With the current momentum behind cannabis, broad U.S. legalization is no longer a pipe dream. Voters have already approved recreational pot along the entire west coast (plus Nevada). The east coast does not seem far behind.

What’s that mean for the alcohol industry? Will cannabis siphon away sales? Should the same government officials oversee both industries? And why does the cannabis industry continuously depict alcohol as the “unsafe” substance of the two?

For insight into these questions I recently spoke with Paul Hletko. The founder and CEO of Few Spirits, and former lawyer, is also past president of the American Craft Spirits Association.

Kyle Swartz: How do you see the cannabis industry long-term in America, particularly as it relates to alcohol?
Paul Hletko: There’s an awful lot of opportunity for the cannabis industry to grow in the future. And the industry itself could benefit from strong self and external regulation. But there’s a tendency for the cannabis industry to portray alcohol as the bad guy. I don’t think that’s a good or helpful strategy for the cannabis industry, nor does it help further the cannabis cause.

“Trying to paint one side or the other as the bad guy is counterproductive. Cannabis wants it to be us versus them, but I don’t think that’s helpful. I think cannabis should want us to be neutral towards their industry.” — Paul Hletko, founder and co-owner of Few Spirits.

It’s frustrating to be labeled as the bad guy every which way we turn. We’ve been self-regulating responsibly, paying our taxes responsibly, and have been a responsible corporate member for many decades.

The alcohol industry has nothing against the cannabis industry as a whole. Trying to paint one side or the other as the bad guy is counterproductive. Cannabis wants it to be us versus them, but I don’t think that’s helpful. I think cannabis should want us to be neutral towards their industry.

KS: So do you think there’s benefits from the industries working together?
PH: I think there can be. That will continue to develop for the next several years. It’s not going to happen overnight.

The customers for the alcohol industry tend also to be the customers for the cannabis industry — and vice versa. Both industries have the potential to improve the lives of consumers, which is supposed to be the idea.

KS: Will we see a rise in dual consumption, cannabis with alcohol?
PH: I do think one goes with the other.

KS: How will legal cannabis affect sales and volume for alcohol?
PH: I don’t believe that legal cannabis is going to improve or increase overall alcohol volumes, nor do I believe that legal cannabis will decrease alcohol volumes. I see alcohol and cannabis consumption as related and complimentary, but I don’t think cannabis will take away or add to liquor volumes.

KS: The role of regulating cannabis typically falls to officials already overseeing the alcohol industry. Is that wise?
PH: I think there are a lot of advantages to it. The fact that you have this group of people who are used to regulating an industry such as alcohol — there’s a lot of good stuff that can happen there with cannabis. There’s a lot of infrastructure built up already around a highly regulated product. It doesn’t make a lot of sense to throw that out because the subject has changed.

KS: What regulatory issues hold back cannabis?
PH: The cannabis DUI is a major one. Driving under the influence of cannabis isn’t okay, and neither is driving under the influence of alcohol, of course, but to pretend that one is better than the other — just because it’s easier to prove one than the other — is simply not true. It’s a challenge for both industries. Perhaps there’s a way that both industries can cooperate on this.

Think about it. If someone smokes a pound of weed, and then has three drops of alcohol, and then gets pulled over, the alcohol is what the roadside test will prove. There needs to be the same accountability.

I also think that the cannabis industry can do a better job of not marketing towards children. Candies and edibles are fantastic and there’s no reason why an adult shouldn’t enjoy them. But some of the marketing for cannabis edibles makes me question just whom it’s meant for. In the same way that Camel cigarettes experienced growing pains with Joe Camel, I believe the same growing pains are already here and will continue for cannabis.

I do believe the majority of cannabis marketers prefer good practices. But a few bad eggs have a way of hurting the entire industry.

KS: What’s next for cannabis in terms of state and national government?
PH: We’ll see a continued acceptance of legal cannabis across more and more states, both for medicinal and recreational. That cat’s not going to go back into the bag.

I don’t think there’s any reliable way to read what’s coming out of Washington D.C. anymore. If you told me that federal agents would swoop down on all cannabis companies tomorrow and shut down everything, it wouldn’t surprise me. And if you told me that the president will then announce total amnesty for everyone and push for legalization, that wouldn’t surprise me either.

If the Democrats can present a viable presidential candidate in 2020, then that could change an awful lot of things in D.C. But if the Democrats remain in total disarray through 2020, then we’re looking at another four years of more of the same. And then all bets are off.

KS: At the same time, many Republican legislators favor legalization, if only for tax revenue at a time of state and national deficits. 
PH: Republicans overall tend to be in favor of tax revenue that’s not income or corporate tax. Legalizing cannabis is a way for Republicans to be pro-tax and also pro-personal freedom and states’ rights. Of course, there’s always the issue of “but it’s illegal,” and nobody ever wants to appear soft on crime.

At the end of the day, we also know that prohibition doesn’t work. If anyone would know that, it’s the alcohol industry. So why not put in place regulatory framework for legal cannabis? Look at the success of the framework we’ve had for alcohol. There’s no reason that can’t work for cannabis and yield fantastic results.

Kyle Swartz is editor of Cannabis Regulator. Reach him at kswartz@epgmediallc.com or on Twitter @kswartzz. Read his recent piece Is Vermont’s New Law the Future of Cannabis?

1 Comment

  1. Jordan S Zoot CPA Reply

    Very interesting thoughts…glad he didn’t comment on regulation in Evanston or Illinois.

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