Legalized Medical and Recreational Marijuana Use Appear to Hurt Alcohol Sales

pot-booze.jpg

High times.  In a recent Bacon’s Rebellion column … Will Virginia Legalize Recreational Marijuana Use … I noted that well over 20% of Americans now live in states that have legalized the recreational use of marijuana.  In the column I wondered whether our General Assembly’s reluctance to address the question in a meaningful way might be attributable to Virginia’s unholy trinity of political corruption:

  1. Unlimited campaign contributions

  2. Opposition by well heeled vested interests (i.e., the alcohol manufacturing, distribution and retail industry)

  3. Essentially non-existent rules on the use of, or reporting on, campaign contributions

My hypothesis was that a river of money flows from Virginia’s alcohol industry into the pockets of our elected officials.  The alcohol industry is opposed to legalizing marijuana since legalization hurts alcohol sales.  Meanwhile, our elected officials want to keep the money flow going since it funds not only their re-election plans but also dinners at Bookbinders, golf outings, private clubs and all sorts of other goodies.  Therefore, legalization of marijuana is intentionally stalled in Virginia.  Virginia’s reputation as America’s Most Corrupt State is, in my opinion, well established.  However, the question of whether legalized marijuana use hurts alcohol sales needs to be further examined.

Paging Doctor Weed.  The best information about the impact of marijuana legalization on alcohol sales comes from studies of medical marijuana legalization.  Medical marijuana has been legalized for longer and in more states than recreational marijuana.  Some would say that medical marijuana is a poor proxy for recreational marijuana because medical marijuana is only used to combat disease and therefore is not a substitute for booze.  Yeah, right.  A university study using retail scanner data from 2006 – 2015 found that alcohol sales fell 15% in jurisdictions that legalized medical marijuana.  For the sake of emphasis – this was a study of legal medical marijuana on alcohol sales, not legalized recreational use of marijuana.

The Oregon Trail.  The relationship between legalized recreational marijuana and liquor sales has been studied in Oregon.  In that state, recreational marijuana use is legal at the state level but localities have the right to ban it in their jurisdictions.  A study comparing Oregon localities that allow marijuana sales vs those that don’t found the growth rate of liquor sales for the “booze only” places was faster than in the “booze and reef” areas.  Early days.  Only one year of data.

Miller Time.  A 10-K disclosure by the Molson-Coors company cites legalized cannabis sales as a potential risk to their business. “Although the ultimate impact is currently unknown, the emergence of legal cannabis in certain U.S. states and Canada may result in a shift of discretionary income away from our products or a change in consumer preferences away from beer. As a result, a shift in consumer preferences away from our products or beer or a decline in the consumption of our products could result in a material adverse effect on our business and financial results.”  Four months after citing the business risks of legalized marijuana Molson-Coors announced they are considering the sale of ganja infused beer in Canada.

Rocky Mountain High.  Earlier this year the Aspen Times reported that Aspen’s legal marijuana dispensaries outsold its liquor stores in 2017.  As far as anyone knows, this is the first time such a shift has happened.  I’ll wager it will be far from the last time.

Original Article by Bacon’s Rebellion — Don Rippert

Victor Madril