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Alcohol sales get higher after weed legalization contrary to industry fears

Alcohol sales get higher after weed legalization contrary to industry fears


Alcohol businesses are seeing ‘phenomenal growth’ alongside marijuana industry in Colorado, dispelling concerns that consumers prefer pot over booze


Source: The Guardian

Scott Keyes in Denver

Monday 31 August 2015


Underlying the debate over marijuana legalization has been an equally fierce battle between marijuana and another so-called vice industry: alcohol.


As an increasing number of states look to join the four states and Washington DC in legalizing recreational marijuana, many in the alcohol industry have feared that legalized weed will cut into their existing profits.


But a few years into Colorado legalization, alcohol sales are up in the state, and those in the alcohol business have embraced their fellow industry.


In the 18 months since recreational sales were legalized in Colorado, “we’ve just seen phenomenal growth”, said Justin Martz, 32, who runs Mr B’s Wine & Spirits in downtown Denver. He noted that there was some concern initially about legalization, “but it’s really turned out to be a non-issue”. In fact, he said, “if anything it’s kind of helped us. A high tide lifts all boats.”


Bryan Simpson, spokesman for the Fort Collins craft brewery New Belgium, agreed that doomsayers in the alcohol industry were wrong. He argued that rather than alcohol and pot directly competing against one another for consumers’ dollars, the two can be mutually beneficial in boosting overall sales. “There’s definitely some crossover in the two communities of beer drinkers and herb enjoyers,” Simpson said. “But I don’t think people are doubling down in one category or the other.” To underscore that point, he noted that legal marijuana has had “no demonstrable impact at all in terms of sales” at New Belgium.


Tax records show that alcohol sales have continued to grow in Colorado despite the rapid rise of recreational marijuana. Even as tax revenues from marijuana nearly tripled between June 2014 through May 2015, alcohol sales continued to steadily increase as well, with alcohol excise taxes rising 2.1%, the same increase as the year prior.


This symbiotic relationship comes after the two groups went head-to-head in the fight over legalization.


Industry groups have feared that marijuana legalization would deplete interest in alcohol. “Consumer preferences and purchases may shift due to a host of factors,” including “the potential legalization of marijuana use on a more widespread basis within the United States,” warned the Brown-Forman Corporation, a publicly traded liquor manufacturer that produces many well-known brands including Jack Daniel’s and Southern Comfort, in a recent SEC filing.


This fear is backed by some academic research, which has found that many consumers consider alcohol and marijuana to be substitutes. One study found that legalization of medical marijuana in many states led to sharp decreases in alcohol consumption. The alcohol industry is “smart to worry about it”, one of the study’s authors, University of Colorado Denver economics professor Daniel Rees, told the Denver Post.


In some cases, alcohol groups have openly opposed weed legalization initiatives and backed that opposition up with major campaign donations. In 2010, the California Beer & Beverage Distributors made a $10,000 contribution to Public Safety First, a group fighting Proposition 19, a measure to legalize recreational marijuana in the Golden State. The initiative ended up losing by seven points.


The marijuana industry has taken aim at alcohol as well. Nearly every marijuana legalization campaign bases its argument on comparisons to alcohol, contending that the plant is less dangerous and frequently using campaign name variations of “regulate marijuana like alcohol”.


In 2013, there was a big dust-up between the Marijuana Policy Project and the Beer Institute after the former put up advertisements in Portland, Maine with middle-aged people declaring: “I prefer marijuana to alcohol because it’s less harmful to my body” and “I prefer marijuana to alcohol because it doesn’t make me rowdy or reckless”. Chris Thorne of the Beer Institute responded that it’s misleading to compare marijuana to beer, because it’s “distinctly different both as a product and an industry”.


Part of the reason for the alcohol and marijuana industries’ success may be a boost in Colorado tourism. Though some state officials insist marijuana is not attracting new visitors, Colorado tourism set record highs in 2014, the first year of legalization, with 71.3 million visitors who collectively spent $18.6bn.


Many in the alcohol industry credit marijuana with helping boost tourism. Martz said he frequently asks tourists in his downtown store what brought them to Colorado. “Legalization adds to the overall draw,” he noted, even if most tourists don’t come solely for pot. Simpson concurred that the number of tourists visiting New Belgium has continued to increase steadily, including from some pot-inclined tourists.


And alcohol isn’t simply a remora to the marijuana shark; the two industries are even finding ways to help one another out. Many out-of-towners who visit Mr B’s Wine & Spirits ask Martz where the closest dispensary is. He’s not only happy to help direct them, but also has a stack of coupons from the dispensary in his shop to hand out.