Does Marijuana Legalization Hurt Alcohol Sales?

beer marijuana cannabis alcohol

Alcohol and cannabis have a peculiar relationship. Whereas alcohol consumption has been an accepted part of American life for decades, cannabis (and those that consume it) has had to deal with a tremendous amount of stigma at the same time. That is extremely hypocritical given that cannabis has been found to be 114 times safer than alcohol. For the last 5 years, cannabis legalization campaigns across America have championed the phrase ‘regulate marijuana like alcohol’ with great success.

What cannabis consumers have been asking for is to be treated on the same level as alcohol consumers. Cannabis opponents like Kevin Sabet make claims that try to make alcohol and cannabis equals, and that since alcohol costs Americans enormous sums of money annually via social costs, that the spread of cannabis reform will result in the equivalent amount of social costs. Considering that cannabis is so much safer than alcohol. those claims are obviously unfounded.

The alcohol industry has a history of opposing cannabis reform. In 2010 the California Beer & Beverage Distributors organization donated $10,000 to oppose a legalization initiative in California. Beer Distributors PAC, an organization that represents beer-distribution companies in Massachusetts, donated $25,000 to the Campaign for a Safe and Healthy Massachusetts which opposed marijuana legalization in 2016 in Massachusetts. The Arizona Wine and Spirits Wholesale Association donated $10,000 to oppose marijuana legalization in Arizona in 2016.

In the political world, those sums of money are not very significant. Legalization campaigns pay millions of dollars throughout the course of the entire effort, so ten thousand dollars is a drop in the bucket comparatively (although a nice sum for the average person!). The motivation behind such donations is obvious – some alcohol companies fear that legalization will hurt their alcohol sales. But is there any validity to that fear?

About a year ago an article was posted by Brewbound which turned a lot of heads. The article discussed a study which found that beer sales declined in Colorado, Oregon, and Washington State post-legalization. Per the article:

In Colorado, Oregon and Washington, where recreational cannabis use has been legalized, the beer business is underperforming, according to Vivien Azer, Cowen and Company’s managing director and senior research analyst specializing in the beverage, tobacco and cannabis sectors.

Azer unpacked the latest Nielsen data in those three states — beer markets that have “collectively underperformed” in the last two years — and found that “the magnitude of the underperformance has increased notably,” with beer volumes falling more than two percent year-to-date and trailing the overall U.S. beer market.

Falling beer volumes could be caused by cannabis legalization, but it also could be caused by a number of other things. A two percent drop in beer volumes from year to year can be explained away fairly easily, which was a point made in a response article posted by Brewers AssociationOne of the many reasons offered up by Brewers Association was that not all beer sales are captured in the study featured in the Brewbound article. Whether or not legalization is the reason for the 2 percent drop in beer volumes, or if there actually was even a drop in volumes, only time will tell. More data needs to be collected and analyzed as the years go on before a responsible determination can be made.

Whereas the previous study looked at adult-use legalization’s impact on beer sales, another study recently found much more definitive evidence that medical cannabis legalization does indeed have an impact on alcohol sales. Researchers from the University of Connecticut and Georgia State University looked at alcohol sales data in more than 2,000 US counties for the years 2006 to 2015. Below is a summary of their findings:

We use data on purchases of alcoholic beverages in grocery, convenience, drug, or mass distribution stores in US counties for 2006-2015 to study the link between medical marijuana laws (MML) and alcohol consumption and focus on settling the debate between the substitutability or complementarity between marijuana and alcohol. To do this we exploit the differences in the timing of the of marijuana laws among states and find that these two substances are substitutes. Counties located in MML states reduced monthly alcohol sales by 15 percent.

Fifteen percent is a significant drop in sales, especially when considering the population size of the data involved in the study and the fact that the data was collected over the course of a decade. It doesn’t guarantee that alcohol sales were hurt as a direct cause of medical cannabis being legalized, but it’s extremely suggestive at the least. I would be interested to see what alcohol sales numbers look like in counties of Oregon, Colorado, and Washington that allow adult-use sales compared to counties where cannabis sales bans are in place. I am sure that type of study will come about sooner than later and will provide more insight into the ongoing debate as to whether or not legalization truly impacts alcohol sales. I would say that medical cannabis legalization definitely does, but that the jury is still out about adult-use legalization, at least for now.

Johnny Green
About Johnny Green 2234 Articles
Johnny Green is a cannabis activist from Oregon. Johnny has a bachelor's degree in public policy, and believes that the message should always be more important than the messenger. #LegalizeIt #FreeThePlant