There were fears that the legalization of adult-use marijuana in different U.S. states would trigger a decline in alcohol sales as consumers switch to marijuana instead of taking alcohol. Numerous reasons, such as the hangovers associated with alcohol consumption, were cited as factors that would impact alcohol sales once cannabis was legalized. However, a recent study conducted by the Distilled Spirits Council has found that no such slump in sales has occurred in the three states where recreational cannabis has been legal for the longest time in the U.S.
The alcohol trade association reported that the trends in alcohol sales remained consistent regardless of marijuana legalization in Washington, Oregon and Colorado.
The Distilled Spirits Council analyzed the per-capita alcohol consumption data in the three states from two years before legalization occurred to four years after legalization.
The data showed that the sales of spirits increased by 3.6 percent in Oregon and 7.6 percent in Colorado.
However, wine did not fare the same way in all the three states. Washington registered a drop in sales during the time studied by the Council. At the same time, an upward trend was noticed in wine sales in Oregon and Colorado.
Beer sales have generally been declining for over a decade, and the analysts weren’t surprised to find that beer continued to lose its market share to spirits and wine even after marijuana became legal for adult-use in the three states.
Vivien Azer, one of the analysts who pored over the alcohol sales data commented that lower-end beers faced the greatest risk of losing their market share because they were largely consumed by lower-income Caucasian men who often faced a choice between buying cannabis and taking a beer. The data shows that cannabis is emerging as the winner when such a choice has to be made.
Wines and distilled spirits appeared to be insulated from such pressures because they tend to be consumed by higher-income earners who can afford to consume marijuana and their favorite alcoholic drink. Besides, cocktails are increasing in popularity among women, so that demographic alone can keep the sales of wines and spirits up.
All the same, many industry watchers are cautioning that it is still early days to conclude that marijuana will not eat into the market share of alcohol. Different generations and demographics are likely to respond differently when marijuana becomes an option for them. As recent polls show, marijuana is clearly becoming a favorite across the board. Industry players like Canopy Rivers Inc. (TSX.V: RIV) and Cannabis Strategic Ventures, Inc. (OTC: NUGS) hope that such goodwill translates into the spending of disposable income on marijuana.
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