Saturday, January 9, 2010
Medicinal whiskey and "The Loophole."
During prohibition in the ‘20s and early ‘30s, it was often referred to as “the Loophole.”
Section 6 and 7 of the Volstead Act, provided a way to legally purchase and sell Whiskey at a time when it was otherwise — a criminal activity.
“No one shall manufacture, sell, purchase, transport, or prescribe any liquor without first obtaining a permit from the commissioner to do so, except that a person may, without a permit, purchase and use liquor for medicinal purposes …” There was more legalese, stipulations and etceteras, of course, but the lawyers saw light in Section 6, and Section 7 gave some power to the Doctor.
“No one but a physician holding a permit to prescribe liquor shall issue any prescription for liquor. And no physician shall prescribe liquor unless after careful physical examination of the person for whose use such prescription is sought, or such examination is found impracticable, then upon the best information obtainable, he in good faith believes that the use of such liquor as medicine by such person is necessary and will afford relief to him from some known ailment.”
Men of vision, like pharmacist-turned-lawyer George Remus, memorized the Volstead Act and imagined and realized tremendous profit from its “Loophole.” Remus bought his first pharmacy when he was only 19 but tired of the business and became a lawyer at 24, according to author Thomas M. Coffey, in his 1975 book “The Long Thirst – Prohibition in America, 1920-1933.”
Remus specialized in murder cases and at the beginning of prohibition he noticed that many of his clients, of whom he had no great respect for their intelligence, were making a tremendous amount of money. About the same time he began an affair with his secretary, Imogene, divorced his wife, and decided to use his knowledge of the law to profit from prohibition.
He and Imogene were soon remarried (she had a 13-year-old daughter, Ruth), and they moved to Cincinnati to be near the bourbon distillery country.
Remus bought distressed distilleries and pharmacies and amassed a network that sold and transported legal whiskey from his distilleries to his pharmacies scattered across the country in specially designed trucks.
Much of the product, somehow “fell off the truck” on the way to its destination. In his first three years at that business, it was reported that he made $40 million.
By New Year’s Eve of 1922, he was making so much money and spreading it around so quickly that all the female guests at a party at his mansion, hosted by he and his wife Imogene, received a new car. But not to leave out the men; diamond watches were offered for their husbands. The wives and husbands just happened to be well-connected politicians, policemen, government officials, and such. “The Loophole” was very good to George Remus.
It, and the path it carried him down, also eventually landed him in jail. Perhaps because of something that “fell off the truck.”
And, while he was in jail, his wife Imogene, ran off with a “revenuer” (Franklin Dodge, prohibition agent) and “liquidated” his fortune. When he got out, he tracked her down and killed her in front of her daughter Ruth, and then successfully defended himself in court with a “temporary insanity” plea.
But Remus wasn’t the only one that saw benefits in “The Loophole.”
Though prohibition killed many good whiskey distilleries, some of the oldest operations surviving today found shelter in the medicine business at that time.
American Medicinal Spirits, for example, was formed around 1920 and preserved such longtime brands as Old Grand Dad, Mount Vernon, Hermitage, Tip-Top and Old Crow. All of these brands as a result were well positioned after repeal.
Interestingly enough, the decriminalization of marijuana, decided by Colorado voters in 2000 with a constitutional amendment that allows people with “debilitating medical conditions” to register with the state to use marijuana and allows “primary care givers” to legally supply for medical conditions — sounds more than vaguely familiar.
I’m surprised we are not already calling it “The Loophole.”
Please click on the following for related posts:
• Raise the glass: celebrate Repeal Day
• Colorado whiskey river don't run dry