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Cannabis Legalization Linked to Drop in Alcohol Interest, Study Finds

Jul 18, 2019

Cannabis Legalization Linked to Drop in Alcohol Interest, Study Finds

The global marijuana market may be set to rake in $15 billion this year, but it might be at the expense of booze businesses.  

According to a new study, the number of online searches for alcohol fell by 11 percent once recreational cannabis was legalized in certain US states. 

Set to be published in the upcoming edition of INFORMS journal Marketing Science, the study also found that the legalization of recreational marijuana may have led adults to increase their online searches of the once-prohibited drug by 17 percent. Searches from those aged 19 years and younger reportedly decreased post-legalization, while searches for tobacco increased by 8 percent. 

To produce their results, Wang and her co-author Guiyang Xiong of Syracuse University scanned anonymous data from 28 million online searches and 120 million ad impressions from a “leading US-based web portal” from January 2014 to April 2017.

The study’s authors claim their conclusions should be a wake-up call for the alcohol and tobacco industries. 

“It appears the alcohol industry has valid reason to be concerned about legal marijuana and may need creative strategies to avoid market decline if it passes,” Pengyuan Wang, an assistant professor at the University of Georgia and lead author, said in a press statement.

In 2017, the global alcohol and tobacco markets were valued at $1324.1 billion and $785 billion (excluding China), respectively. Many companies within the industries have already taken steps to incorporate and invest in the upcoming cannabis market, such as Altria, the world’s largest tobacco company, which last year made a $1.8 billion investment in the Canadian cannabis producer Cronos for 45 percent of the company. 

But according to Wang, new businesses approaches like these could only be the beginning if alcohol and tobacco industries wish to stay relevant in the changing global market.    

“Tobacco companies may need to re-examine their presumption, and that anti-cannabis legalization is not to the best of their interest,” she added.

But prior to the study’s publication, it’s unclear whether online searchers for these products actually translate into more or fewer sales. And as certain cannabis products, such as rolling papers and vaporizer devices, can overlap into tobacco markets, it remains to be seen how many of the “tobacco searches” were actually linked to interest in the cannabis industry. 

The study’s other finding, that cannabis searches from those aged 19 years and younger decreased post-legalization, does have precedent in other studies, though. Research recently published the American Medical Association found that states that legalized recreational cannabis were associated with an 8 percent fall in the number of high school-age teenagers who claimed they used cannabis in the last 30 days, and a 9 percent drop in the number who said they'd consumed the drug at least 10 times in the last 30 days.

“I think the big takeaway is that we find no evidence that teen marijuana use goes up after legalization for medicinal or recreational purposes,” Mark Anderson, an associate professor at Montana State University and lead author of that study, told Analytical Cannabis earlier this month

“We view this as a very important result from a policy perspective because opponents often claim that teen use will skyrocket after these laws are passed. Based on our analysis, this has simply not been the case.”

 

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