Data: Legalized Marijuana Does Not Increase Alcohol Sales

Cannabis Producers in Washington state

Good news for cannabis legalization advocates!

“In the three states with the longest history of legalized recreational marijuana sales – Colorado, Washington state and Oregon – there is no evidence that legalization has had any impact on spirits sales, nor is there any evidence that it has impacted total alcohol sales.”

That’s according to research conducted by the Distilled Spirits Council of the United States (DISCUS).

In other words, cannabis legalization – neither recreational (nor medical) – has had no effect, either positive or negative, upon beverage alcohol sales in states were cannabis is legal, either for recreational, or medical purposes.

David M. Ozgo, Senior Vice President and Chief Economist of the Distilled Spirits Council analyzes market trends for DISCUS, and said in part that, “The data show there has been no impact on spirits sales from recreational marijuana legalization.”

David M. Ozgo, Senior VP and Chief Economist, Distilled Spirits Council of the United States

Mr. Ozgo also produces an annual spirituous beverage industry review, and provides tax and regulatory effect analyses, including analyses of over 200 state-level tax proposals.

Presently, 10 states and the District of Columbia have legalized Adult Recreational Use of marijuana.
Dates are in order of ARU legalization, and sales allowed.

1.) Colorado (Approved Nov. 6, 2012; Sales began Jan. 1, 2014);
2.) Washington state (Approved Nov. 6, 2012; Sales began July 8, 2014);
3.) District of Columbia (Approved Nov. 4, 2014; Effective Feb. 26, 2015, no retail sales allowed).

4.) Oregon (Approved Nov. 4, 2014; Sales began Oct. 1, 2015);
5.) Alaska (Approved Nov. 4, 2014; Sales began Oct. 29, 2016);
6.) Nevada (Approved Nov. 8, 2016; Sales began July 1, 2017);

7.) California (Approved Nov. 8, 2016; Sales began Jan. 1, 2018);
8.) Massachusetts (Approved Nov. 8, 2016; Sales began Nov. 20, 2018);
9.) Maine (Approved Nov. 8, 2016; Sales date TBD);

10.) Vermont (Approved Jan. 22, 2018; Effective July 1, 2018, no retail sales allowed);
11.) Michigan (Approved Nov. 6, 2018; Effective Dec. 2, 2018; Sales date TBD).

Several states are considering legislation legalizing recreational marijuana in 2019 including:
Arizona, Connecticut, Illinois, Missouri, Montana, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island.

Most recently, a marijuana ballot initiative passed in Michigan, and failed in North Dakota.

The DISCUS research found that “there was no evidence that legal recreational marijuana has impacted total per capita alcohol sales.”

Mr. Ozgo said “We did this study because there is a lot of misinformation circulating about the impact of recreational marijuana legalization on distilled spirits and the wider alcohol market. We now have four years of retail recreational marijuana sales history in Colorado and Washington state, and three years in Oregon, and each of these markets remain robust for spirits sales.”

The DISCUS specifically performed the research and analysis project as part of their social responsibility ethic.

Kraig R. Naasz, DISCUS President & CEO cited figures from the U.S. Department of Transportation that show underage drinking and binge drinking are both continuing a long-term decline.

According to the USDOT, alcohol-impaired driving fatalities as a percent of total vehicle traffic fatalities is at its lowest level since 1982.

Mr. Naasz also noted that, “Our country continues to make significant progress on social responsibility,” adding that, “the U.S. distilled spirits market is the second most valuable in the world, and we continue to promote consumer-friendly policies that expand responsible access to our products.”

The findings by DISCUS are similar to observations and predictions earlier made by Dr. Bart Watson, Chief Economist for the Brewers Association, who earned his PhD from the University of California, Berkeley, when he wrote December 12, 2016 in part that “I see no evidence that legalization has had an effect on beer sales in the short term.”

Dr. Watson also acknowledged the negative criticism that customers would be consuming marijuana in exchange for beverage alcohol by writing that, “I’m not convinced that anyone has clearly demonstrated what the causal mechanism would be for marijuana legalization decreasing beer sales. The usual explanation provided is called a “substitution effect,” where consumers substitute one good for another, in this case marijuana for beer. I haven’t seen any data that proves this one way or the other.”

Per Capita Beer Sales 2009 – 2018

More recently, as sales data for recreational cannabis has been growing, he wrote that, “As the cannabis industry grows, it’s time for beer to stop treating it as a monolithic boogeyman that is only going to lower sales, and start analyzing it like we do so many other things: A part of the complex marketplace for consumer goods, occasions, labor, and more.”

Critics of cannabis legalization have also claimed that tourism in Colorado has expanded as a direct result of legalization of marijuana for Adult Recreational Use.

However, that assertion is not borne out by facts. The Colorado Tourism Office hired an independent research firm to analyze that, and other questions, and found that 64% of tourists over age 25 reported that legalized marijuana played no role in their decision to visit the state, and that sightly less than 14% of travelers to Colorado who responded that legal marijuana sales was a negative factor for them, decided to visit Colorado despite their feelings.

Ultimately, the research found that only about 4% of Colorado’s vacationers aged 25 and older said they specifically visited the state for the availability of legal marijuana for Adult Recreational Use, and actually shopped for cannabis.

Research done by the Marijuana Policy Group October 2016 found that Colorado’s legalization of marijuana sales for Adult Recreational Use “generated $2.39 Billion in state output, and created 18,005 new Full-Time-Equivalent (FTE) positions in 2015.”

The MPG also noted that “because the industry is wholly confined within Colorado, spending on marijuana creates more output and employment per dollar spent than 90% of Colorado industries.”

Dr. Bart Watson, PhD, Chief Economist, Brewers Association

Bart is a self-described “stats geek, beer lover, and Certified Cicerone®,” and “in addition to his dissertation, he completed a comprehensive survey of Bay Area brewpubs one pint at a time.”

You can follow Dr. Bart Watson, PhD on Twitter @BrewersStats.

https://www.brewersassociation.org/insights/cannabis-and-the-beer-industry/

See also:

Impact of Retail Marijuana Legalization on Alcohol Sales in Colorado, Washington state and Oregon
by David Ozgo SVP, Strategic Analysis and Economic Affairs Distilled Spirits Council
January 2019