The alcohol industry has been at odds with weed before there even was the real promise of a burgeoning marijuana industry so it can only be expected that marijuana’s fiscal success over the last few years has been quite the thorn in Big Alcohol’s side. This week, those phantoms that so haunted the alcohol industry became concrete as statistics were released showing a clear drop in alcohol and beer sales in the states that have legalized cannabis for recreational use. Despite their best attempts to stop or slow the rise of legal marijuana, the alcohol business is now faced with hard facts. But facets of the industry have been preparing for this moment for some time.
Big Alcohol Still Isn’t Losing Much to the Marijuana Industry
Should the alcohol industry be afraid? Probably not. As analyst Vivien Azer of the financial service firm Cowen Group, Inc. points out, the maximum drop in percentage of alcohol sales in states that have legalized marijuana was a meager 2%. Likewise, the three states that were analyzed, Oregon, Washington, and Colorado, trailed most of the country in beer and alcohol sales even before the adult use of marijuana passed. Of course, any good business takes notice of a revenue dip and while a 2% decrease in the revenue of three states may just feel like the smallest of scratches in the here and now, it could point to a more substantial wound in the future. Naturally, the alcohol industry tried to take some snipes at the marijuana industry in its infancy, donating a documented $35,000 to anti-marijuana organizations
before this year’s November ballot, but the will of the people gathered too much inertia to be halted. Macro-breweries took the brunt of the hit and some liquor stores were largely unaffected meaning there are several factors at play to consider before assuming that the marijuana industry is sending wine, beer, and spirits into a tailspin.
If You Can’t Beat ‘Em, Join ‘Em
Since throwing money at a situation until it goes away is typically a tried-and-true problem solver for corporate America, the alcohol barons were probably a bit confused when it didn’t really put a dent in the marijuana industry. As the old adage goes, “if you can’t beat ‘em, join ‘em” and a few micro distilleries gave it the ol’ college try by attempting to sell the public on hemp-infused liquor. As you can guess, hemp-infused alcohol doesn’t quite offer the same oomph that THC-infused liquor would. In fact, the oomph of hemp-infused liquor is pretty much…errr, exactly
the same as that of straight up liquor. Chances are that if you’re reading this blog, you already know that hemp gives off no psychoactive effects. Humboldt Distillery was recently featured in Leafly
for a concoction they created called Humboldt’s Finest; hemp-infused vodka with “an aroma reminiscent of fresh cannabis.” It’s a weird concept. When you’re sipping vodka, you’re probably not that fixated on catching a whiff of cannabis. If you are, you’re probably smoking cannabis and not that fixated on getting a swig of vodka. The popular exception to this would be someone that wants to get stoned and drunk simultaneously and Humboldt’s Finest can’t do that for you. So you can see how the novelty can wear thin pretty quickly.
Another Form of Opportunity
But not everyone affiliated with Big Alcohol is mourning the rise of the marijuana industry. In fact, distributors who have made a lucrative business of overseeing and regulating alcohol distribution in post-prohibition America are chomping at the bit to get into a similar relationship with the marijuana industry. In California, Prop. 64 has already greenlit a system by which a distributor has jurisdiction to measure, test, and tax medical weed after it leaves the grower and before it hits the dispensary. They don’t offer this service for free. Actually, they take a pretty hefty cut. Many growers fought Prop. 64 out of fear that such a system would create a marked rift between a corporate marijuana industry and smaller boutique-style operations. Prior to the legalization of recreational marijuana, growers were already feeling the bite of the regulatory system for medical marijuana while dispensaries saw profits rise. We may be waiting until 2019 to see how Prop. 64 impacts this system and the different factions of the marijuana industry. But as the distributors can attest, not everyone in the alcohol industry is crying over the passage of recreational marijuana. Some just see another form of opportunity.
Is alcohol going the way of the dodo? Not by a long shot. Marijuana is not really comparable to alcohol with the two offering starkly different experiences. Sometimes, I even forego a hit from the glass pipe in favor of a shot of whiskey. I’ve even been known to combine the two at times, though those incidences are thankfully rare for everyone involved. The marijuana industry has been unnaturally suppressed for decades so the alcohol industry can expect some growing pains as more states legalize for recreational purposes. But business has always been about adaptation and growing with the demand of the people. It’s time for Big Alcohol to get comfortable with the fact that the people demand marijuana.