Legal marijuana expected to pose threat to $200 billion alcohol industry
By Trey Williams
Published: Sept 23, 2016 12:36 p.m. ET
A legal cannabis industry could be worth as much as $50 billion a year by 2026, says Cowen
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A bartender opens a bottle of wine next to a marijuana plant at a cannabis food event
The $200 billion U.S. alcoholic beverages business is under threat from a budding cannabis industry, as advocates fight to legalize the use of the plant, according to Cowen and Co. senior analyst Vivien Azer.
“While the alcohol beverage category has looked insulated from cannabis thus far—from a revenue perspective—with the legal market still in its infancy we think the risk to alcoholic beverage consumption will become increasingly apparent,” Azer wrote in a 110-page report on the potential of the cannabis industry.
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Azer said men in particular are replacing alcohol with marijuana. In the last 10 years, alcohol incidence for U.S. men has fallen 200 basis points while cannabis has risen 260 basis points. Beer and whiskey are the most at risk of losing business, she said.
A previous MarketWatch article notes in Washington state, where recreational cannabis has been legal since 2014, the industry generated $2 million in tax revenue its first year compared with the $30 million beer sales brought in. Cannabis boomed to $65 million in tax revenue last year and beer tax, rather than decreasing, rose slightly to $31 million.
“Over the last decade, while we have seen a rise in drinkers who use cannabis, we have also seen declines in cannabis users who drink,” Azer wrote. “Nonetheless, there is undeniable overlap, as close to nine million adult consumers used cannabis with their most recent alcoholic beverage occasion.”
