An analysis report has found that with the legalization of adult use marijuana, sales of beer drop.
Beer sales have declined in states where recreational marijuana is legal, according to an analysis by Cowen & Company. The research firm examined the state of the beer industry in Colorado, Oregon and Washington – the first three states to legalize and have operating adult use marijuana markets – and presented its findings at a biannual conference hosted by craft beer media outlet Brewbound.
“While retail sales opened up in this markets at different points of time, with all three of these states now having fully implemented a [marijuana] retail infrastructure, the underperformance of beer in these markets has worsened over the course of 2016,” said Cowen and Company senior investment analyst Vivien Azer.
“This is perhaps not surprising, given that U.S. government data for the states of CO, WA and OR all show consistent growth in cannabis incidence among 18-25 year olds,” she added, “coupled with declines in alcohol incidence (in terms of past month use).”
Azer and her fellow researchers used data collected by the Nielsen Company to conclude that total beer sale volume has declined by 2 percentage points across the three states. Premium brews like Bud Light and Coors Light have experienced the greatest hit, declining by 4.4 percent. More mainstream brews like Busch, Coors and Miller High Life have seen declines of 2.4 percent. Craft beers fared better, but sales were said to have “decelerated” in Oregon and Washington and decline in Colorado.
According to the analysis, the city of Denver has experienced the largest decline in total beer volume sales, which have dropped by 6.4 percent year-to-date. Craft beer volumes were found to have dipped by 5 percent. Colorado, which began selling adult use marijuana on January 1, 2014, saw tax revenue from marijuana sales exceed that of from alcohol sales starting in 2015.
In July, a survey from Headset found that nationwide consumers are now spending more on legal marijuana than they are on alcohol. According to the report, the typical male and female customer spends about $647 and $634 annually on marijuana products, respectively, compared to an average of $645 a year on alcohol. Findings in 2014 study published in Alcohol and Alcoholism suggest that cannabis is being used as a substitute for alcohol and marijuana has been found to be by far the safest drug compared to alcohol, cigarettes and other substances.
Azer did note that the deceleration in craft beer volumes occurring in the three marijuana states is consistent with nationwide trends, though the beer markets where marijuana is legal are underperforming the nationwide market by 950 basis points.
Adult use marijuana is now legal in eight U.S. states. Besides Colorado, Washington and Oregon, recreational marijuana has been legalized in Alaska, California, Nevada, Massachusetts and Maine. A recent report from Arcview Market Research found that legal cannabis sales in the U.S. for 2016 totaled $5.86 billion.