Alcohol Industry Bankrolls Fight Against Legal Pot in Battle of the Buzz

The fight against legalized pot is being heavily bankrolled by alcohol and pharmaceutical companies, terrified that they might lose market share.

On the heels of a filing last week that revealed that a synthetic cannabis company is financing the opposition to legal marijuana in Arizona comes a new disclosure this week that a beer industry group made one of the largest donations to an organization set up to defeat legalization in Massachusetts.

The Beer Distributors PAC, an affiliate that represents 16 beer-distribution companies in Massachusetts, gave $25,000 to the Campaign for a Safe and Healthy Massachusetts, tying it for third place among the largest contributors to the anti-pot organization.

William A. Kelley, the president of the Beer Distributors of Massachusetts, did not respond to a request for comment, but his organization’s decision to oppose legalization is hardly unique in the alcohol industry.

In Arizona, one of the five states with marijuana legalization ballot measures this November, the Arizona Wine and Spirits Wholesale Association donated $10,000 to a group opposing legalization. In 2010, the last time California considered marijuana legalization, another alcoholic beverage distribution group provided financing to a law enforcement-backed campaign to defeat legalization.

The alcohol industry is nowhere near unified over pot policy, however, with several craft brewing firm welcoming laws that relax restrictions over pot.

Securities and Exchange Commission filings reveal that heavyweight alcohol companies have disclosed to investors that pot could pose a challenge to their bottom line.

The Boston Beer Company, the parent company of Sam Adams, told investors in its 10-K filing that laws that allow the “sale and distribution of marijuana” could “adversely impact the demand” for beer.

The Brown-Forman Company, maker of Jack Daniel’s Tennessee Whiskey and Finlandia Vodka, similarly warned in its 10-K filing that “consumer preferences and purchases may shift due to a host of factors, many of which are difficult to predict, including … the potential legalization of marijuana use on a more widespread basis within the United States, and changes in travel, leisure, dining, gifting, entertaining, and beverage consumption trends.”

Research about the impact of marijuana legalization on consumer habits is split. Daniel Rees, a professor of economics at the University of Colorado, Denver, has claimed that consumers will substitute marijuana for alcohol when given the chance. But tax revenue in Colorado, which legalized pot in 2012, suggests consumers have continued to purchase alcohol at almost the same rate as before legalization.

Paul Varga, the chief executive of Brown-Forman, told investors during an earnings call in August 2014 that marijuana legalization was emerging as a “big threat.” But four months later, in another discussion with investors, Varga backpedaled a bit. “I wouldn’t say I’m losing sleep over the legalization of marijuana,” he noted. “But I’m paying attention to it.”