Alcohol Consumption Is Declining as Cannabis Popularity Rises

In the latest report from an international investment bank, it was revealed that cannabis is becoming a significant competitor to the alcohol industry. It is projected that in the next five years, the number of regular cannabis users will increase by nearly 20 million people, while the alcohol market will lose about two million consumers. Cannabis sales are also expected to reach $37 billion by 2027, as more states introduce legalization.

For more news like this, along with all the latest in legalization, research, and lifestyle, download our free cannabis news app.

Growing Market and Changing Consumer Preferences

An analysis by TD Cowen showed that cannabis sales reached $29 billion in 2023, accounting for about 11% of the alcohol market’s value. This marks a considerable increase from 4% five years earlier. Cannabis consumption is expected to grow at a rate of about 7% annually over the next five years.

The report, titled “Cannabis Beats Booze,” highlights that in the next 5 years, the cannabis category will gain 18 million new consumers, while the alcohol market will lose 2 million. Changing consumer preferences, particularly among young people, are contributing to this trend. TD Cowen’s study found that over two-thirds of cannabis users report reducing their alcohol consumption.

State-Level Market Developments

The report also notes that developing cannabis markets in individual states, as well as upcoming regulations in states that have recently legalized cannabis, like Minnesota and Ohio, will contribute to achieving sales of an estimated $37 billion by 2027.

Alcohol Industry’s Response to Market Changes

The analysis points out that in the short term, alcohol companies are likely not to face problems adapting to changing consumer trends. However, in the medium and long term, some brands may face competitive challenges.

The report emphasizes that “alcohol will continue to underperform in states with legal cannabis,” and beer sales are most at risk. The average number of drinks consumed on a single occasion is lower in states with legal cannabis, which is partly attributed to cannabis’s influence on alcohol consumption.

Canadian Market as a Case Study

TD Cowen’s report also analyzes the Canadian market, where cannabis was legalized nationally in 2018, as a “useful case study.” It was found that Canadian cannabis sales now account for 20% of the alcohol market’s value.

Impact of Legalization on Other Substance Use

Furthermore, a study published last month showed that legalization of cannabis might be associated with a “substitution effect,” with young adults in California “significantly” reducing their use of alcohol and cigarettes following the reform.

Survey data from Gallup in August also indicated that Americans consider cannabis less harmful than alcohol, cigarettes, e-cigarettes, and other tobacco products.

A separate survey conducted by the American Psychiatric Association (APA) and Morning Consult in June showed that Americans perceive cannabis as much less dangerous than cigarettes, alcohol, and opioids, and also less addictive than each of these substances, as well as technology.

State-Level Market Trends Confirm Analysis

The state-level cannabis market also confirms TD Cowen’s analysis. For example, in Michigan, cannabis sales surpassed purchases of beer, wine, and spirits combined in the last fiscal year, according to a new report from an independent state parliamentary fiscal agency.

Similarly, in Illinois, legal cannabis brought in $451.9 million in the last fiscal year – about $135.6 million more than alcohol.

In Colorado last year, cannabis generated more revenue than alcohol or cigarettes, and nearly as much as alcohol and tobacco combined. Similar milestones have been achieved in Arizona and Washington State.

—

(Featured image by Adam Wilson via Unsplash)

DISCLAIMER: This article was written by a third-party contributor and does not reflect the opinion of Hemp.im, its management, staff, or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the company may believe that its expectations are based on reasonable assumptions, the actual results that the company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in Fakty Konopne, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Hemp.im assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Hemp.im is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.