Legal Cannabis Cuts Into Beer Revenue

The retail beer industry is already feeling the effects of cannabis legalization. As more U.S. states have legalized the use of recreational marijuana, the retail beer industry has seen additional lost sales, according to new research conducted by Cannabiz Consumer Group (C2G). And the results indicate that this could be just the beginning for losses in the beer industry — especially if the legalization movement continues to spread.

In legal markets, C2G’s research found that recreational marijuana has led to a 7.1 percent loss in revenues in the existing retail beer markets. Some 27 percent of beer drinkers surveyed by C2G stated that they already have substituted cannabis for beer or would substitute their retail beer purchases with cannabis in the future, if cannabis was legal.

“Consumers use cannabis to satisfy various social, medical and experiential needs,” said Rich Maturo, chief innovation officer at C2G. “By better understanding why different segments of consumers’ use cannabis, companies can minimize the loss resulting from legalization. Despite best efforts, however, leakage will occur. Those having the foresight to view cannabis as an opportunity as opposed to only a threat will fare much better than those who strictly take a defensive position.”

C2G found that there were some 24.6 million legal US cannabis consumers in 2016. Since then, legalization via medicinal and/or recreational legislation has since extended to a number of additional states. As of 2017, there are 28 total states that have voted to legalize marijuana in some form for medical purposes — and eight states, plus the District of Columbia, have voted for full legalization.

C2G projects that a full mature legal cannabis market would create a new $50 billion industry with penetration comparable to that of beer and wine. Further, if cannabis were to be legalized nationwide, C2G predicts that the beer industry could lose more than $2 billion in annual retail sales.