Business
Marijuana Legalization Is A ‘Significant Threat’ To Alcohol Industry Because People Substitute Cannabis For Beer And Wine, Analysis Finds
Financial analysts say they expect the expansion of the marijuana legalization movement will continue to post a “significant threat” to the alcohol industry, citing survey data that suggests more people are using cannabis as a substitute for alcoholic beverages such a beer and wine.
A report from Bloomberg Intelligence (BI) projects that slumping sales of wine and spirits “may extend indefinitely,” which will “stem largely” from the increased consumer access to “legal cannabis,” as well as rising popularity of made-to-go drinks, for example.
They estimated that the combined influence of cannabis access and shifts in consumer demand for certain alcoholic product types accounts for a 16 percent share valuation discount offered by the beverage company Constellation Brands, which owns major brands including Corona, Modelo, Pacifico and Casa Nobel Tequila.
“The use of cannabis among consumers is on the rise, and we believe it’s being substituted for alcoholic beverages” based on an August 21 survey from BI involving 1,000 adults, it said. “We also anticipate that increasing US consumer access to recreational marijuana will be a significant threat to all alcoholic drinks, particularly beer and wine, given their lower price points relative to liquor.”
According to the survey, nearly half of respondents reported using cannabis as an alcohol substitute at least once per week. Additionally, 22 percent said they use marijuana more often than alcohol.
Meanwhile, a multinational investment bank similarly said in a report late last year that marijuana has become a “formidable competitor” to alcohol, projecting that nearly 20 million more people will regularly consume cannabis over the next five years as booze loses a couple million drinkers. It also says marijuana sales are estimated to reach $37 billion in 2027 in the U.S. as more state markets come online.
BBG Intelligence on 🇺🇸 #Cannabis 🌿 pic.twitter.com/xL6Lmhu89h
— Todd Harrison (@todd_harrison) September 6, 2024
Another study out of Canada, where marijuana is federally legal, found that legalization was “associated with a decline in beer sales,” suggesting a substitution effect.
The analyses comport with other recent survey data that more broadly looked at American views on marijuana versus alcohol. For example, a Gallup survey from last month found that respondents view cannabis as less harmful than alcohol, tobacco and nicotine vapes—and more adults now smoke cannabis than smoke cigarettes
A separate survey released by the American Psychiatric Association (APA) and Morning Consult last June also found that Americans consider marijuana to be significantly less dangerous than cigarettes, alcohol and opioids—and they say cannabis is less addictive than each of those substances, as well as technology.
Additionally, a poll released in July found that more Americans smoke marijuana on a daily basis than drink alcohol every day—and that alcohol drinkers are more likely to say they would benefit from limiting their use than cannabis consumers are.
Similarly, a separate study published in May in the journal Addiction that similarly found that there are more U.S. adults who use marijuana daily than who drink alcohol every day.
Another poll released last month found that marijuana use is one of the only crimes that a majority of Americans say is punished too harshly—and bipartisan majorities also back expunging prior cannabis convictions.