Massachusetts Tobacco Wholesalers Want a Piece of the Cannabis Pie

The tobacco industry in Massachusetts is trying to get a piece of what’s expected to be a lucrative state  cannabis market, with cigarette wholesalers now lobbying state officials to get in on the action.

The tobacco wholesalers want to transfer to the cannabis industry a system they already use to track, deliver, and tax all cigarettes sold in Massachusetts. They’re reportedly asking state officials to require that cannabis producers to sell all their products through them—much like how alcohol goes through a wholesaler on its way to bars and retail stores.

“Rather than reinvent the wheel, let’s use the most successful, proven encrypted tax stamp program we have: the one assigned to cigarettes,” Paul Caron, a former state legislator who now serves as executive director of tobacco trade group the Northeast Association of Wholesale Distributors, told the Boston Globe.

“My members are willing to collect all the taxes on behalf of the state and stamp any marijuana product being distributed for sale,” he said.

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This idea has drawn criticism, however, including from some cannabis legalization advocates. Jim Borghesani, the communications director for the Yes on 4 coalition that led the adult-use cannabis ballot effort, worries the structure could end up raising the retail price of cannabis.“The last thing this state needs is another three-tiered commerce system that gouges consumers and enriches middlemen,” Borghesani said.

Borghesani added that marijuana-specific distribution systems in other states work effectively enough that Massachusetts lacks a good reason to grant a monopoly to a group of tobacco wholesalers.

Other opponents have accused tobacco wholesalers of trying to replicate the alcohol industry’s fairly controversial distribution scheme, which locks retailers into long-term business relationships with wholesalers.

The group of tobacco wholesalers, the Globe reports, made its pitch to both Massachusetts legislators and state Treasurer Deborah Goldberg, who will oversee the new Cannabis Control Commission under the current set of laws.

It’s certainly not the first time companies in other so-called vice industries have taken a stance on the cannabis market. During election season last year, the company behind Sam Adams beer stated in an SEC filing that cannabis legalization in Massachusetts could cause alcohol sales to slide.

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In Nevada, no stranger vice industries, cannabis was initially required to be distributed by alcohol wholesalers when voters passed a legalization measure in November. When the Nevada Tax Commission adopted temporary rules allowing other entities to become licensed distributors, alcohol wholesalers sued. Late last month, a state judge granted their request to freeze the rollout of adult-use cannabis—a move that could delay the state’s planned July 1 launch of its adult-use cannabis market.

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