According to a new report, people in states with legal cannabis are drinking less beer. This is especially true in places that have legalized recreational weed. These changes could lead to a slowdown in the beer industries in those states. And it could affect both large scale brewers and the smaller, craft beer scene.
It’s All In The Beer
Market analysts at Cowen and Company published the new report. They used the latest data from Nielsen to identify changes in how much beer people are drinking.
The report looks specifically at Colorado, Washington, and Oregon. Each of these states has legalized cannabis for both medical and recreational uses. And they all have historically strong beer industries as well. That combination makes them perfect test cases to see how legal cannabis might impact the alcohol industry.
“While [cannabis] retail sales opened up in these markets at different points of time, with all three of these states now having fully implemented a retail infrastructure, the underperformance of beer in these markets has worsened over the course of 2016,” market expert Vivien Azer wrote in the report.
“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, coupled with declines in alcohol incidence.”
Azer found that marijuana use is going up among adults in those states. And at the same time, alcohol consumption seems to be slowing down.
This is hitting the beer market especially hard. Big-time domestic brewers are selling less in those states. Bud Light, Coors Light, and other premium domestic companies are down 4.4 percent. And economy domestic brews are down 2.4 percent.
Similar downward trends are happening in the craft beer industry as well. Azer wrote that Colorado’s craft beer scene is “in decline.” Oregon and Washington still see some growth. But even that has slowed down in recent years.
She also said that Denver sees the most dramatic changes. Total beer volumes in that city have dropped by 6.4 percent over the last year. And craft volumes in the city are down 5 percent.
The Bigger Picture
The new report highlights the ways that legal cannabis sales may be affecting beer sales. But while states that allow recreational pot have seen especially big drops in beer sales, that’s not necessarily the entire story.
The report also mentions that the changes in Colorado, Washington, and Oregon are part of a bigger national trend. There is a “deceleration” in craft beer volumes across the entire U.S. And Azer noted that the drops in states with legal weed are “consistent” with these larger trends.
Although the craft beer market is slowing down around the country, imports are still doing well. But in the three states with recreational pot, imports are lagging behind national numbers.
The Final Hit
As cannabis moves into the mainstream, one of the paramount concerns is that it could negatively affect the alcohol industry. In fact, different players in the alcohol industry have even lobbied to keep weed illegal.
The legal cannabis industry is still too young to know exactly how it will affect other markets. But this new report sheds some light on how things might change.
Now that four new states have voted to legalize recreational cannabis, we’ll have a chance to see how things will play out in greater detail. These new marijuana markets could help us learn more about the changes going on in Colorado, Washington, and Oregon.
The drops in beer volumes in those states could be part of national trends. Or they could be the result of legal cannabis specifically.