The latest report by an international investment bank reveals that cannabis is becoming a significant competitor to the alcohol industry. Over the next five years, the number of regular cannabis consumers is expected to increase by almost 20 million people, while the alcohol market will lose about two million consumers. Cannabis sales are also projected to reach $37 billion by 2027 as more states pursue legalization.
Read more about the TD Cowen study on cannabis consumption and find the latest cannabis news of the day with the Hemp.im mobile app.
A TD Cowen study found that more than two-thirds of cannabis users report reducing their alcohol consumption.
Analysis by TD Cowen shows that cannabis sales will reach $29 billion in 2023, representing approximately 11% of the alcohol market. This is a significant increase from the 4% level recorded five years earlier. Cannabis consumption is expected to grow at a rate of approximately 7% annually over the next five years.
The report entitled “Cannabis Beats Booze” highlights that over the next 5 years, the cannabis sector will gain 18 million new consumers, while the alcohol market will lose 2 million. Changing consumer preferences, especially among young people, are one of the factors contributing to this trend. A TD Cowen study found that more than two-thirds of cannabis users report reducing their alcohol consumption.
The report also notes that growing cannabis markets in states, as well as upcoming regulations in states that have recently legalized cannabis, such as Minnesota and Ohio, will contribute to sales of an estimated $37 billion in 2027.
The analysis draws attention to the fact that in the short term, alcohol companies will probably have no problems adapting to changing consumer trends. However, in the medium and long term, some brands may face competitive challenges.
The report noted that “alcohol will continue to underperform in states with legal cannabis,” and beer sales are most at risk, according to the company’s analysis. The average number of drinks consumed per occasion is lower in states with legal cannabis, which is partly attributed to cannabis’ impact on alcohol consumption.
The TD Cowen report also examines the Canadian market, where cannabis was legalized nationally in 2018, as a “useful case study.” It was found that Canadian cannabis sales now account for 20% of the value of the alcohol market.
In addition, a study released last month found that cannabis legalization may be linked to a “substitution effect,” with young adults in California “significantly” reducing their alcohol use and cigarettes after the introduction of the reform.
Data from a Gallup poll conducted in August also showed that Americans consider cannabis less harmful than alcohol, cigarettes, e-cigarettes and other tobacco products.
A separate survey conducted by the American Psychiatric Association (APA) and Morning Consult in June found that Americans consider cannabis to be significantly less dangerous than cigarettes , alcohol and opioids, as well as being less addictive than each of these substances, as well as technology.
The state-level cannabis market also confirms TD Cowen’s analysis. In Michigan, for example, cannabis sales exceeded purchases of beer, wine and alcohol combined in the last fiscal year, according to a new report from the state legislature’s independent fiscal agency.
Similarly, in Illinois, legal cannabis brought in $451.9 million in the last fiscal year – about $135.6 million more than alcohol.
In Colorado last year, cannabis generated more revenue than alcohol or cigarettes, and almost as much as alcohol and tobacco combined. Similar milestones have been achieved in Arizona and Washington state.
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First published in Fakty Konopne. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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