Looks Like Recreational Cannabis Legalization Isn't Hurting Wine Sales After All

January 15, 2019

I've talked a lot on this blog about whether or not cannabis legalization will hurt wine sales.  At first, I was pretty adamant that the effect would be small enough that we couldn't detect it.  I based this on some basic research I did showing that (a) wine consumption is positively correlated to cannabis consumption on a state-by-state basis; and (b) nationwide wine consumption is positively correlated to cannabis consumption over time.  It also made little sense to me that, with cannabis widely available prior to recreational use legalization, that such legalization would even lead to much higher cannabis consumption.

 

A few things caused me to soften this view.  Rabobank released an opinion contrary to mine.  A very well-constructed study also showed that medical marijuana legalization reduced wine consumption.  While I expressed caution in jumping to conclusions based on these two pieces of evidence, I did change my opinion to basically say that (a) I am more uncertain about cannabis' future effect and will wait and see; and (b) that the effect may well be strong enough to notice, though I still think it will be small, especially for premium and smaller wineries.

 

Well, we've had a few years to see what happens and, while the data is not conclusive, the preponderance of evidence seems to indicate that cannabis is not reducing wine sales in any significant way.  This is based off sales from Colorado, Oregon and Washington.  In light of that, I will add one important caveat. 

 

These are three states that had already legalized medical marijuana use and where marijuana was readily available to adults through the medical scheme.  Of course, it was also readily available to all through the black market, as in the rest of the country.  It is certainly possible that loosening cannabis prohibition in states where prohibition is still fully or almost-fully intact would reduce wine sales.  

 

The bigger threat from cannabis, in my opinion, is, has been and will continue to be competition for qualified agricultural laborers.

Please reload

Follow Us
  • Twitter Basic Square