Colorado Indicates Cannabis Is No Substitute for Alcohol

One of the most reliable opponents to legalization of cannabis has been the alcohol industry. In almost every state where referendums on legalization have been on the ballot, alcoholic beverage organizations have been among the biggest donors to the campaigns opposing it.

According to an article in the Intercept, “The Beer Distributors PAC, an affiliate that represents 16 beer-distribution companies in Massachusetts, gave $25,000 to the Campaign for a Safe and Healthy Massachusetts, tying it for third place among the largest contributors to the anti-pot organization.”

The article also noted that the Arizona Wine and Spirits Wholesale Association donated $10,000 to a group opposing legalization there, and when cannabis legalization was on the ballot in California in 2010, according to a Huffington Post article, the California Beer & Beverage Distributors made a similar $10,000 donation in opposition to a committee organized to oppose the proposition.

Based on what has happened in the two years in which cannabis has been legal in Colorado, the fear that its availability will cut into the sale of alcohol appears unfounded.

Colorado’s excise tax records indicate that alcohol sales in the state continue to grow at a pace similar to what was occurring before legal marijuana sales began.

The excise tax on alcohol is based on volume sold, increasing tax revenue, as can be seen in the chart below, indicates an increase in the actual volume of alcohol sold.

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According to a study by Divya Raghavan for financial advice website nerdwallet in 2014, states could anticipate bringing in as much as $3 billion in state and local taxes per year from legal marijuana sales.

Despite the numbers, the effort to cite legalized cannabis as putting a damper on alcohol sales continues unabated.

In November, industry publication Brewbound released a report on declining beer sales in Washington, Oregon and Colorado. The report’s methodology for gathering the data has been widely questioned, as it based its findings on point of sale scanner information, and a significant part of the market in all three states is not part of the scanner network.

In its coverage of the report, Marketwatch noted:

“What isn’t mentioned, and what we can’t believe we have to say again after we made the same argument in September, is that all beer sales have fallen steadily since the Great Recession. According to the Beer Institute, beer industry lobbying group in Washington, D.C., beer sales by volume have slipped from a high of 213.3 million barrels in 2009 to 206.3 million barrels last year.”

In that previous column, Notte cited Washington’s tax receipts and year-over-year craft beer sales in the before-and-after legalization time periods for both states.

According to Notte, in 2014, Washington received $29.91 million in tax revenue from beer sales and that figure rose to $30.8 million for 2015, without an increase in the tax rate.

Similarly, Oregon’s Liquor Control Commission reported the state’s brewers sold 54,272 barrels of beer in the June 2015, the month before legal cannabis sales began, and 62,800 in June 2016.

Existing evidence aside, Brewbound continues to beat the drum for marijuana as a threat to the craft beer industry. Speaking at its San Diego Brewbound Session conference, Vivien Azer, Cowen and Company’s managing director and senior research analyst specializing in the beverage, tobacco and cannabis sectors, told those in attendance that legalized marijuana is burning the craft beer industry.

Marijuana may now be legal for recreational use in eight states, but it’s opponents won’t be going away any time soon.

Joshua S. Bauchner, Esq. is a partner at the law firm of Ansell Grimm & Aaron, PC where he is co-chair of the Litigation Department and of the Cannabis Law Practice Group.  Lindsey Siegle is the firm’s social media coordinator.

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