WASHINGTON, D.C. – Amid an unprecedented push for federal cannabis legalization, a new group with members representing alcohol, tobacco, and other industries has raised questions about how it plans to influence cannabis policy.
The Coalition for Cannabis Policy, Education, and Regulation (CPEAR), which launched as a 501(c)(4) non-profit organization in March, is based on the premise national legalization is inevitable and it’s in everyone’s interest for the federal government to help standardize aspects of the industry. Currently, licensing and regulations are determined on a state-by-state basis.
Members of the organization include Altria Client Services, a financial division of tobacco giant Altria Group Inc.; The Brink’s Company, a multinational provider of cash-management and private security services; beverage alcohol behemoth Constellation Brands, which owns a 38.6-percent stake in Canadian cannabis operation Canopy Growth; the Convenience Distribution Association, a trade group representing convenience products distributors; the Council of Insurance Agents & Brokers; Molson Coors Beverage Company, which in 2020 partnered with Canadian cannabis consumer packaged goods operation HEXO Corp. to launch infused beverages in the United States; and The Association for Convenience & Fuel Retailing, a trade group representing the global convenience and food retailing industry. CPEAR incorporates a “Center of Excellence” composed of academics, advocates, and experts about various aspects of legalization, including minority representation, impaired driving, and the industry’s environmental footprint.
Corporate members including Altria and Constellation Brands have invested in the fully legal Canadian cannabis industry. All could have a stake in a federally legal U.S. industry. However, since its launch, CPEAR has declined to weigh in on the contentious questions surrounding legalization, including those with significant financial implications for the organization’s members and operators in the existing state-legal cannabis industry.
CPEAR Executive Director Andrew Freedman said the group’s “goal is to make sure [the legal cannabis industry] is an economic system that has opportunity for everybody and does not destroy systems that currently exist.”
Freedman, who served as the first head regulator of Colorado’s cannabis market, said the group plans to publish papers addressing many of the unanswered questions about how legalization will work. Topics will include interstate trade, incorporating existing state regulatory regimes and quality control, and standards. He said the group took shape as he approached founding members with the idea last year.
“States are doing a heroic job,” he said. “But there are certainly areas for improvement.” For example, he noted, state governments are responsible for determining protocols for testing cannabis products for harmful pesticides, a public health issue the federal government is better equipped to address.
Freedman believes tackling such questions now will position the industry for future success while potentially mitigating public-health and -safety concerns associated with legalization.
Consider potency caps, which have been gaining traction in places like Colorado, where some consumer groups and regulators fear ultra-potent concentrates may be dangerous. Freedman said it’s challenging to create good policy when current research is inadequate. In cases like potency caps, he said CPEAR’s goal is to help develop short-term solutions that can be adjusted as the science becomes clearer.
Asked if Colorado’s policy of allowing all products, created during his regulatory tenure, was a mistake, he said, “It was a tough place to be.” He characterized the situation as less a mistake than an illustration of the limitations of a state-by-state system.
So far, reaction within the industry has been muted. In a statement, National Cannabis Industry Association executive director Aaron Smith said the trade group “will work together with groups that promote policies which further social justice, economic fairness, and public health while safeguarding the interests of small businesses and consumers.”
Tim Blake, founder of Northern California artisan cannabis festival The Emerald Cup, said “I’m an advocate for small farmers and legacy people, but I’m also realistic” about where the industry is heading. In many ways, he said, cannabis will benefit from the arrival of big business. The presence of multinational mega-corporations from industries like tobacco and alcohol could accelerate legalization and help the industry expand beyond North America.
While it’s not yet clear what policies CPEAR will promote, Kris Krane, president of multistate operator 4Front Ventures, said the organization could both help and hurt current businesses. “I think [CPEAR’s founding members are] going to be pushing for regulations that are going to allow them to get into the game,” he said.
Krane expects each CPEAR member will favor regulations comparable to those they currently deal with in their respective industries. Friedman allowed there could be some validity to Krane’s expectation. “They all separately interact with different regulators and may have preferences as to what regulatory oversight [they encounter with cannabis],” he said.
The organization’s current composition may carry some benefits for the industry, Krane said. Cannabis companies may discover easier access to insurance, for example, and be able to work with a major security company like Brink’s.
However, Krane also speculated CPEAR’s members could tilt the regulatory process in a way that could hurt the existing industry. To illustrate, he cited a precedent from the nicotine vaping vertical.
In the early years 2010s, hundreds of independent producers of e-cigarettes and nicotine “vape juice” existed. To address public-health concerns, in 2016 the U.S. Food and Drug Administration issued its “deeming rule,” which requires all such products go through a time-consuming and expensive FDA approval process. As a result, the rule essentially ensured a handful of big tobacco companies (and one cannabis vape manufacturer) with the resources to manage the FDA approval process dominated the industry.
Krane said a rule that required every cannabis strain or SKU to obtain regulatory approval could “put the existing cannabis industry at a huge disadvantage.” Even the largest multistate operators are small compared to major alcohol and tobacco companies.
CPEAR’s Freedman responded, “We will be eager to discuss solutions with industry and subject-matter experts that can protect patients and consumers without creating insurmountable burdens for existing industry.”
While Krane sees the arrival of big mainstream industries as having potential to be a threat or a boon, he expects the cannabis world to benefit from an unprecedented unity. “The cannabis industry and movement have been growing together in a way I’ve never seen before,” he said. After decades of activism, there’s a “small window for federal reform. We’re going to have a strong voice at the table.”