According to a multinational investment bank, marijuana is now a “formidable rival” of alcohol. They project that in the next five year period, nearly 20 million people more will consume cannabis regularly as alcohol loses two million drinkers. The bank also estimates that marijuana sales will reach $37 billion by 2027, as more states open up their markets.
According to an analysis by TD Cowen, marijuana sales will reach $29 billion by 2023. This is about 11 percent more than what the alcohol industry brings in. This is up from just four percent five years ago. Marijuana sales are expected to increase by seven percent per year over the next five.
The report “Cannabis Beats Booze” states that “we believe over the next five years, cannabis will add 18 millions past-month customers, while alcohol consumers will lose 2,000,000 past-month users as consumers embrace cannabis and moderate their alcohol consumption.”
Vivien azer, the team leader on the analysis told Marijuana Moment the report bolsters a growing collection of market research.
She said, “We have been calling for the cannabis industry to displace alcohol sales for over seven years. It’s only a matter time.” She said that it was “a bit surprising” to find data indicating a further underperformance of alcohol sales in states where marijuana is legal.
Analysts say that while marijuana sales still represent a small fraction of the alcohol market, there is reason to believe that alcohol could “risk” declining due to increased substitution by consumers, especially young people. In the TD Cowen Report, a proprietary survey found that more than two thirds of cannabis consumers reported reducing their alcohol consumption.
It said that the Bureau of Economic Analysis data showed alcohol was “underperforming” relative to prohibitionist state in states with legal marijuana.
Evolving state marijuana markets, as well as yet-to-be-implemented laws in states that recently legalized such as Minnesota and Ohio, will bring in an estimated $37 billion in sales in 2027, the report says.
In the short term, alcohol companies should not have any problems navigating consumer trends that are mainly younger people reducing their overall alcohol consumption. In the long and medium term, some brands could face challenges.
The firm stated that alcohol sales will continue to be underperforming in states where cannabis is legal. According to the firm’s analysis, beer sales are at greatest risk. The average number drinks consumed in one occasion is lower in states that have legalized cannabis, according to the firm. This could be partly due to cannabis’ impact on alcohol consumption.
Azer stated that while there have been reports about the alcohol industry’s interest in possibly entering the marijuana market she does not anticipate any significant movement until some “legislative” or “administrative” regulatory changes at the federal level.
The report focuses on U.S. state-level legalization, but TD Cowen looked at Canada as a useful case study, since it legalized cannabis at the national level last year. It found that Canadian marijuana sales now account for 20 percent of the market size of alcohol.
Separate research supports several of the findings of the report, including one published last month which found that marijuana legalization could be linked to “substitution effects,” and young adults in California “significantly reduced” their consumption of alcohol and tobacco after the cannabis reform.
A Gallup poll published in August found that Americans also consider cannabis to be less harmful than other tobacco products, such as alcohol, cigarettes and vapes.
In a separate survey conducted by the American Psychiatric Association and Morning Consult, released in June, Americans also believe that marijuana is significantly less harmful than alcohol, cigarettes and opioids. They also say that cannabis is less addictive.
A survey conducted last year showed that Americans believed that marijuana was less harmful than alcohol or tobacco.
TD Cowen’s analysis is also supported by state-level data. According to a recent report by the nonpartisan House Fiscal Agency, Michigan marijuana sales exceeded purchases of beer and wine combined in the most recent fiscal period.
In Illinois, the legal cannabis industry brought in $451 million during the fiscal year ending in June of last year– approximately $135.6 million more than alcohol.
Colorado generated more revenue from marijuana last year than alcohol or cigarettes — and nearly as much alcohol and tobacco combined. Arizona, and Washington State have also achieved similar milestones.
Italian Marijuana activists have already collected nearly half the signatures needed to put legalization measure before Parliament
The article Marijuana Sales Will Reach $37 Billion by 2027 According to Investment Bank Projections first appeared on Marijuana moment.
