Nick Fede Jr., Executive Director, Rhode Island Liquor Operators Collaborative.
By Nick Fede, Jr., Director, Rhode Island Liquor Operators Collaborative
The three-tier system does three things extremely well. The highly regulated beverage alcohol industry is fantastic at collecting taxes on behalf of the state and federal government. With so many touchpoints and oversight throughout the entire alcohol sales process, approximately $20 billion in alcohol tax was collected by state and federal governments nationwide in 2023.
Beverage alcohol product integrity and confidence is of the utmost priority in the United States. So much so that we sometimes take it for granted. In January, 124 people in Turkey perished from consuming counterfeit alcohol. Last year, a similar issue arose in Southeast Asia, with six tourists perishing in Laos, including one American. Because of the three-tier system’s regulatory guardrails, we do not have those worries in the United States.
Alcohol servers, both on- and off-premise, have to go through rigorous training to ensure that alcohol is delivered to consumers in a safe, responsible manner. Training includes modules that emphasize age-gating, which instruct servers on how to positively identify consumers and, most importantly, how to detect fake identification. Alcohol server training also focuses on detecting if an individual is intoxicated and fit to be served beverage alcohol. It should never be forgotten that we sell a controlled, intoxicating substance that needs to be served with the utmost caution.
Over the last handful of years, hemp-infused delta-9 THC beverages have been an ever-expanding category in the intoxicating beverage space. However, with marijuana (cannabis) remaining a Federal Schedule 1 narcotic, there is little federal oversight in this new, emerging beverage category. This is exactly where the three-tier system needs to come in and do what we do best. Make sure these intoxicating substances get to the public in a safe manner, ensure that the product is authentic and is exactly what it says it is, and, last but not least, collect taxes on behalf of the government.
This year, Gov. Dan McKee’s budget spun the Cannabis Control Commission (CCC) out of the Department of Business Regulation and into its own separate entity. This, paired with a directive from the General Assembly asking the CCC to submit recommendations on how to better regulate hemp-derived THC beverages, resulted in the CCC pausing license approvals for on-premise hemp retail applicants.
Late July and early August found me traveling to two separate conferences that had some focus on hemp-derived THC regulation. The American Beverage Licensees Annual Meeting in San Antonio, co-hosted by the Texas Package Stores Association, featured an impassioned presentation by Diana Eberlein, Chair of the Coalition for Adult Beverage Alternatives. She focused on the need for common-sense regulation that emphasizes age-gating, product testing and integrity, and safe serving, all cornerstones of the three-tier beverage alcohol industry.
In early August, Boston hosted the 50th annual Legislative Summit for the National Conference of State Legislatures. This four-day immersive event covered almost any legislative topic imaginable, including a forum on, you guessed it, hemp-derived THC beverages. The panel stressed the importance of regulation, a point that was especially driven home by Michael Bronstein, President of the American Trade Association for Cannabis and Hemp. Mr. Bronstein emphasized the need for these products to be sold in age-gated environments, further adding that they should not be served in gas stations.
He pointed to newly passed Tennessee legislation, which puts these intoxicating beverages solely in liquor stores, as being a step in the right direction. John Hudak, Director of Maine’s Office of Cannabis Regulation (OCR), does not support prohibition. Recently passed LD1983 brought hemp products under the umbrella of Maine’s OCR and established standards for homogeneity, potency and foreign substances. Even a conservative state like Utah, represented on the panel by State Senator and Pharmacist Evan Vickers, promoted a standard serving size of 5mg per serving.
Hemp-derived THC is a major player in the intoxicating beverage space and will prove to be a significant contributor to the tax base if regulated properly. Just like with alcohol, incorporating hemp-derived THC into the three-tier system is the wisest choice when wishing to accomplish the goals of product integrity, public safety and tax collection. It just needs to be legislated!
Nick Fede Jr. serves as RILOC’s Executive Director, American Beverage Licensees’ Vice President (Off-Premise) and is a third-generation liquor retailer.
