A recent Canadian study suggests that the legalization of marijuana has led to a decline in beer sales, indicating a potential substitution effect between the two products. Published in the journal Drug and Alcohol Dependence, the study reveals that since Canada legalized adult-use marijuana in 2018, beer sales have consistently decreased.
Researchers from the University of Manitoba, Memorial University of Newfoundland, and the University of Toronto found that nationwide beer sales dropped by 96 hectoliters per 100,000 population immediately after non-medical cannabis legalization, followed by a monthly decrease of 4 hectoliters per 100,000 population. This averages to a monthly reduction of 136 hectoliters per 100,000 population post-legalization.
The study suggests that consumers may be increasingly choosing marijuana over beer as their preferred intoxicant, leading to a continued decline in beer sales. While acknowledging the need for further research on the health effects of this shift from alcohol to cannabis, the researchers note that the reduction in beer sales associated with cannabis legalization implies that individuals are likely not using both substances simultaneously.
Interestingly, the decline in beer sales was not mirrored in sales of spirits. Additionally, the study found that while legalization was linked to decreases in sales of canned and kegged beer, there was no notable reduction in sales of bottled beer. One explanation proposed by the study is that cans may be favored for individual consumption at home due to their increasing popularity and availability, as well as the perceived better taste and drinking experience they offer.
The study underscores the economic significance of the decline in beer sales associated with non-medical cannabis legalization, despite the modest magnitude of the decline. In the Canadian context, data from the 2022-23 fiscal year reveals that marijuana generated more excise tax revenue than wine and beer combined.
Similar trends have been observed in the United States, where cannabis sales have surpassed alcohol sales in various legal jurisdictions. For example, in Michigan, marijuana sales exceeded purchases of beer, wine, and liquor combined during the most recent fiscal year. Similarly, in states like Illinois and Colorado, legal cannabis revenue outpaced alcohol revenue by significant margins.
These findings align with projections suggesting that marijuana will become a formidable competitor to alcohol in the coming years. A multinational investment bank predicts a substantial increase in regular cannabis consumers over the next five years, accompanied by significant growth in marijuana sales. Moreover, surveys indicate that Americans perceive marijuana to be less harmful and addictive than alcohol, cigarettes, and other substances.