Beer Gives Model for Legal Canada Marijuana, Sleeman Says

Canada could use the beer industry as a model if it ever decides to legalize and tax marijuana, according to the founder of the nation’s third-largest brewer.

John Sleeman of Sleeman Breweries Ltd. said rules imposed after Prohibition transformed a crime-ridden industry into one that pays high taxes, helps battle social problems such as drunk driving and accounts for almost 1 percentage point of gross domestic product. While not advocating the move, he said in an interview in the Bloomberg News Ottawa bureau that the model could be applied to pot.

“It’s not unlike Prohibition where you had people making money and the government finally said: ‘Hey wait a minute, we have to clean this up,’” said Sleeman, the head of a national beer lobby group whose family smuggled alcohol into the U.S. when it was banned in the 1920s and 1930s. “I can see some time down the road the Canadian government will use parts of how we’re regulated as a way to base the regulation for the production and sale of marijuana.”

Canadians may be warming to the idea of legal weed. Prime Minister Stephen Harper said in August he would consider a proposal to allow police to write a fine for possession rather than press charges. Liberal Party Leader Justin Trudeau said he used the drug while a parliamentarian. The federal government is licensing companies to grow and distribute medical pot.

Provincial bodies, such as the Liquor Control Board of Ontario with its network of government-owned stores, could also guide any marijuana framework, Sleeman said.

Smuggling, Tax-Evasion

The Sleeman family began brewing beer in Guelph, Ontario in 1851. Sleeman revived the company in 1988 after it was shut down for 50 years after facing Prohibition-era smuggling and tax evasion charges. The brewer, which counts Al Capone as a former customer, uses its colorful history in advertisements.

Sleeman, in Ottawa to promote a Conference Board of Canada report on the industry’s economic contribution, was due to meet Harper yesterday to discuss beer taxes, which he said are the world’s second-highest after Norway. For every dollar Canadians spend on beer, 44 cents goes to the government, for an annual average of C$5.8 billion ($5.6 billion) from 2009 to 2011, according to the report.

Marijuana is more potent than alcohol, said Beer Canada President Luke Harford. The lobby group represents 26 companies accounting for 90 percent of Canada’s production, including Sleeman’s namesake producer bought by Japan’s Sapporo Holdings Ltd. in 2006.

A good thing “about the conversation that’s taking place now is the scrutiny that has been put onto beverage alcohol will now be applied to marijuana,” said Harford, who also attended the interview. “There is a perception out there that it’s benign, has no impact. But it has a massive impact on young people in particular.”

The government should keep beer taxes at a level where people can afford the product, Sleeman said, adding high taxes are leading some consumers to buy 12-packs instead of cases of 24, he said.

Is he tempted by pot’s potentially higher profits? “John Sleeman won’t be getting in the business of growing marijuana.”

Before it's here, it's on the Bloomberg Terminal.