Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Wednesday, December 7, 2016

Beer sales are down in states with legal weed

According to this notable Business Insider article, both "mainstream" and craft beer sales have taken a hit in states where recreational marijuana use is legal. The article states:

Beer sales are taking a hit in states where marijuana is legal.


So far this year, beer volumes have dropped roughly 2% in Colorado, Oregon, and Washington, which have all legalized recreational pot, according to Neilsen data cited in a recent report from Cowen & Co.


At the same time, marijuana consumption has grown in those states.


The data indicates that many beer drinkers are swapping their six-packs for marijuana instead, and that has major implications for the beer industry — especially for makers of cheaper beers like Anheuser-Busch and Molson Coors Brewing Company.


"Mainstream beer" including Bud Light, Coors Light, Miller Lite, is "under siege" from legal marijuana, with volumes down 4.4% in the states studied, according to Cowen and Co. analysts. 


Craft beer sales growth is slowing in those states, but not to the same degree.


The trends show significant overlap between buyers of cheaper beers and users of marijuana. 


"The pressure we are seeing on lower-priced beers is consistent with the trends we are seeing in cannabis use by income group nationally," analysts wrote. "Indeed, while cannabis incidence has been on the rise nationally, over the last 10 years (through 2014, the most recently available) we have seen the biggest increases among lower-income households, where cannabis use is also highest."


As additional states consider legalizing marijuana, beer companies will be at an even greater risk. 


"With Anheuser-Busch and Molson Coors Brewing Company controlling roughly 70% of the overall beer category in the US, there is clear risk that growing cannabis use will weigh on their businesses," analysts wrote.

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