Sunday, February 18, 2018

Sell your alcohol stocks? Millennials staying at home to smoke pot versus going out and drinking having major effects on alcohol sales

The marijuana legalization movement is no longer residing on the fringes of society as the advent of its legalization in places like California and Washington D.C. has brought the commodity fully into the mainstream of society.

Yet perhaps what was not anticipated in all of this was how quickly its adoption would bring about economic changes onto the financial landscape, and in this we mean even above that of providing a new revenue stream for government coffers.

As more and more states begin to legalize pot, there are two significant trends taking shape.  The first is the fact that sales of alcohol in states which have legalized pot in either medicinal or recreational form are in severe decline, with an estimated $2 billion so far being transferred over to the pot industry.

joint study by researchers at two U.S. universities and one in South America claims a reduction in the U.S.’s overall alcohol consumption appears directly related to the rise of medical marijuana laws recently enacted in a number of states. Presented by Michele Baggio, University of Connecticut, Storrs; Alberto Chong, Georgia State University, Atlanta and Universidad del Pacifico, Lima; and Sungoh Kwon, University of Connecticut, Storrs, the working paper may add to what many believe will prove definitive regarding the relationship between wine and marijuana consumption. 
Using the 90-chain data, the study compared alcohol sales of states that do not have medical marijuana laws and states with medical marijuana laws (before and after the laws were implemented). The researchers also included demographics (age, race) as well as economics (income) for the study because those areas make a measurable impact on alcohol consumption. 
Over the ten years studied, counties located in medical marijuana states showed almost a 15 percent reduction in monthly alcohol sales. - Forbes
The second growing trend however is one that will most likely carry the biggest impact for the beer and alcohol industry as the now largest demographic in the United States, that of the Millennials, are en masse ditching booze for pot.  And even more, millennials are also ditching the bar scene to instead stay at home to smoke weed while watching Netflix.

This new report reveals that the growing use of cannabis in California will have a significant impact on the alcohol industry. “We found that for millennials, the choice between the two main recreational substances, alcohol and tobacco, has always been an easy one. Growing up with anti-tobacco messaging, the smoking rate for 18–29 year olds in the U.S. has dropped by 22% over the past decade, leaving alcohol as the substance of choice,” said OutCo CEO, Lincoln Fish. “But we are already seeing a decrease in alcohol sales, which means that cannabis is poised to be the new recreational substance of choice for many millennials and beyond.” 
• Beer was the most popular substitution, with 34% of millennials saying they will opt for cannabis over beer. 
• 18% of millennials will substitute cannabis for wine. 
• 14% of the millennial population will substitute cannabis for spirits. - Outco
Businesses, along with much of Wall Street, are both working hard to accommodate the millennial generation, and at the foundations of this demographic is the need for quality over quantity, and experiences over material goods.  And with this in mind their trend of transferring alcohol consumption for that of marijuana is one that could potentially change the future for both industries, and remain a trend for decades to come.


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