Does legalizing recreational marijuana cut into beer sales? That’s the million-dollar question. More likely, it’s a billion-dollar question, since recreational marijuana was estimated to be a 6 or 7 billion-dollar industry in 2016.
Debate over the answer began heating up in November of last year, when a report from Cowen and Company, first published by Brewbound, found that legalized recreational weed was associated with decreased beer sales in the three historically strong beer markets of Colorado, Washington and Oregon.
The Cowen report led to a flurry of headlines, and not just from beer-industry publications: “Legal Marijuana Hurts Beer Sales” (Time); “Beer sales take a hit in states where marijuana is legal” (Slate); “Buzz Kill, Dude! As Pot Sales Soar, Beer Takes a Hit” (Barron’s).
Also last fall, The Boston Globe reported that The Beer Distributors of Massachusetts and the Wine & Spirits Wholesalers of Massachusetts chipped in $75,000 toward the anti-marijuana-legalization campaign in advance of a November 2016 ballot measure. It ran under the headline “Why is booze business against legal pot in Massachusetts?”
Then came the counterpoints. Bart Watson, chief economist for the Brewer’s Association, a trade group representing small and independent breweries, penned a post questioning some of the Cowen study’s methods. He wrote instead that “Although I don’t purport to know what the long-term effects of marijuana legalization will be, I can say that I see no evidence that legalization has had an effect on beer sales in the short term.” MarketWatch reporter Jason Notte authored an opinion piece arguing that Big Beer’s troubles aren’t weed-related, writing “Folks are still saying weed is bad for beer, but nobody seems to remember any of the evidence to the contrary.”
The debate was on. With a handful of states recently decriminalizing marijuana possession and starting the process of licensing dispensaries, stakes are high (pardon the pun).
Missing from much of the back-and-forth, which dealt primarily in economic forecasts and sales data, were the actual experiences of breweries in the four states (Colorado, Washington, Oregon and Alaska) allowing recreational weed. Were they feeling the pinch of legal pot?
Yes and no. Some breweries, especially in Denver, cite an increasingly expensive commercial real estate market as dispensaries and growers snap up warehouses left and right. A few other taprooms relay stories of overly high customers who had to be refused service. But none that I spoke with said legalized recreational marijuana had noticeably impacted their sales.
“I’ve read a lot of the articles saying people are concerned about it cutting into beer sales, but I’m a little skeptical,” says Patrick Annesty, sales and marketing director at Denver’s River North Brewery. The brewery’s Washington Street taproom is located near several dispensaries as well as a bar-type space where it’s legal to smoke recreational marijuana. “We do see some tourist overflow from those. People are in the neighborhood from going to those places, but overall, I couldn’t really claim a positive or negative effect either way. It’s such a small blip on the radar in terms of everything else going on in Denver.”
Everything else going on in Denver includes a booming restaurant scene, an influx of new residents and enough construction cranes to create steel hashtags across the sky.
Sarah Howat, co-founder of Black Project Spontaneous & Wild Ales, also located in Denver, says she also can’t point to a boom or dip in sales attributable to legalized weed.
“I don’t know that it’s impacted our business; I guess it’s hard to know. But I think [weed and beer] are different experiences. You’re either in the mood to smoke weed or to drink beer,” she says. “But sure, people will come in, have a couple beers and then ask ‘Hey, isn’t there a dispensary down the block?’ That’s pretty normal.”
What’s not normal, Howat says, is how dispensaries and growers have driven up the cost of warehouse space in Denver. She says Black Project was considering expanding to a larger facility in Denver, but had to put it on hold because industrial space was so expensive.
“When we’d look at warehouses, they’d be snatched up right away and a few months later there’d be a growhouse there,” she says. “We didn’t want to look at a second space outside of town initially, but we’ve considered that now.”
But Brandon Proff, managing partner of Our Mutual Friend in Denver’s booming, nightlife-centric River North neighborhood, says some of that real estate competition has leveled out due to new regulations. He also says legal weed’s saturation point causes those looking for real estate these days to not be willing to pay as high a price for spaces, thus leveling the playing field a bit.
“A couple years ago, the marijuana industry was definitely to blame for a lot of things because warehouses were just being gobbled up by grow operations. Now they’ve implemented a lot more oversight and they’ve put a lot more road blocks in the way in terms of types of buildings and where in neighborhoods they can be. That’s kind of mellowed it out and is making it easier for other types of businesses to be there,” he says. “I was looking at potentially doing a second location and one space that I looked at was a former growhouse.”
Overall, Proff says, he would characterize pot’s effect on his business as neutral.
“As I see it, there’s not a blatant competition. I certainly wouldn’t say that we’re missing out on anything, no way.”
“As I see it, there’s not a blatant competition,” he says. “I certainly wouldn’t say that we’re missing out on anything, no way.”
Though none of the breweries I spoke to reported a decline in sales due to legalized pot, all had at least one story of the unexpected effects it can have on taproom patrons. Some were more dramatic than others.
“Last summer, a paramedic had to be called to the brewery because a woman ate too much of an edible—unbeknownst to us—then came to the brewery, ordered a beer, took one sip, passed out and fell off her barstool,” says Steve Luke, founder and head brewer at Seattle’s Cloudburst Brewing. The brewery’s location near cruise ship piers means the taproom sees its fair share of tourists, some of whom are new to marijuana but are curious to try it. “The people that are coming from out of town, walking into a weed shop and buying whatever they want as a novelty, those are the people we see affected the most. Our staff is already trained not to overserve people, and [weed] is a separate element, but it’s fairly obvious if they see one of those people that are doing it for the first time.”
Though the woman was eventually fine, Luke says the said the incident made him worried that this type of thing could become a regular occurrence. Since then, though, Cloudburst hasn’t had a problem as intense as that, and Luke says any type of weed-related issues have been “few and far between.”
“There is some big marijuana fest every year down by the Sound. Those people are just walking outside all day; they’ve been smoking weed for eight hours outside so they’re not really interested in beer at that point,” he says. “They might come in, look around, get some free water and walk out.”
Proff from Our Mutual Friend said the taproom staff sees an occasional overly stoned patron, at which point they’ll stop serving that person alcohol and politely ask one of his or her friends to take the guest home. He says that the brewery encourages its staff to monitor people “in real time” because guests can arrive seeming coherent and then become less so as a marijuana edible kicks in. Mostly, though, he doesn’t see a huge percentage of drinkers overlapping their beer drinking and marijuana consumption, even if they’re into both.
“I feel like at least as far as people I know, it’s not a part of the menu of what people are specifically planning on doing when they’re going out on the town. … I would say that as far as the ecosystem is concerned, everyone coexists. There are frequenters of all the different industries at each others’ places. In that way, it’s pretty harmonious,” he says.
Though recreational marijuana was first legalized by referendums in Colorado and Washington in 2012, it’s enjoyed a longer relationship with some breweries who make no efforts to hide their enthusiasm for hops’ biological relative, cannabis. Lagunitas’ OneHitter series; Oskar Blues’ Pinner; SweetWater’s 420; KettleHouse’s Fresh Bongwater … all reference an enthusiasm for the sticky stuff and long predate legalization.
“Sort of no matter their legal status, both beer and marijuana have been around for millennia,” says River North’s Annesty, who says the brewery doesn’t specifically look to market to or collaborate with dispensaries or marijuana users. “It’s not like this is some seismic shift in the culture of consumption. Both have been around for a while and I don’t think either will go anywhere anytime soon.”