How Did Alcohol Sales Change After Canada Legalized Marijuana? It’s Complicated

*Consider the immediate sales drop at alcohol-only stores—this could
suggest some consumers switched from alcohol to cannabis right after
legalization.*

*By Michael J. Armstrong, Brock University via The Conversation*

Before Canada legalized recreational cannabis in October 2018, it was
unclear how the change might affect beverage alcohol consumption. Would
consumers drink less or more after cannabis became legal?

Drinking might decrease, for example, if people used cannabis in place of
alcohol. That switch potentially could reduce alcohol-related harms. But
economically, it would mean any gains in the cannabis industry would likely
come at the expense of alcohol producers.

Conversely, drinking might *increase* if people used alcohol along with
cannabis. That could boost alcohol industry profits and government tax
revenues, but at the cost of increased health risks of both substances.

In response to this uncertainty, some businesses diversified. One alcohol
producer bought a cannabis grower, while a cannabis firm took took over
several beer brewers.

Research from the United States into the relationship between alcohol and
cannabis use is inconclusive. Some studies report that alcohol use
decreased in states that allowed cannabis, while others said usage
increased or didn’t significantly change. Those conflicting conclusions
might reflect the complex legal situation in the United States, where
cannabis remains illegal under federal law, even in states that allow its
use.

In Canada, some studies indicate alcohol consumption declined slightly as
medical cannabis use became more common. Did similar decreases follow
recreational legalization?

To investigate this question, I first collaborated with health science
researchers Daniel Myran, Robert Talarico, Jennifer Xiao and Rachael
MacDonald-Spracklin to study Canada’s overall alcohol sales.

*Total sales looked stable*

We started our research by examining annual alcohol sales from 2004 to
2022. During that period, beer sales gradually fell, while the sale of
coolers and other drinks steadily rose. That left total sales basically
unchanged.

So consumers were apparently switching from beer to other beverages. But
there were no obvious effects from 2018’s cannabis legalization.
[image: This diagram shows how beer sales declined while other beverage
sales increased from 2004 to 2022. Total alcohol sales remained roughly
constant.]*Annual Canadian beverage alcohol sales from 2004 to 2022, in
litres of ethanol content per capita. The vertical gray bar marks cannabis
legalization. (Statistics Canada), CC BY-ND*

We also compared monthly sales during the 12 months before legalization
versus the 12 after. This included national average sales by liquor
retailers and beer producers. In both cases, sales trends showed no
significant changes in October 2018.

However, this research on Canada-wide sales was mainly designed to detect
large changes. To find subtler ones, I focused on the province of Nova
Scotia.

*Some liquor stores sold cannabis*

When Canada legalized cannabis, most provinces banned liquor stores from
selling it to avoid tempting alcohol drinkers into trying cannabis.

Nova Scotia did the opposite. Its government-owned liquor corporation
became the main cannabis retailer. After legalization in October 2018, most
provincial liquor stores kept selling only alcohol, but some began selling
cannabis as well.

This unique situation prompted me to study the province’s sales. I focused
on the 17 months before and 17 months after legalization.

The corporation’s total alcohol sales initially fell in October 2018, then
slowly regrew. As a result, monthly sales after legalization averaged about
$500,000 below their earlier levels.

More interestingly, the changes differed between the cannabis-selling
stores and the alcohol-only ones. At the alcohol-only stores, sales
immediately fell. They averaged $800,000 below previous levels.

But at cannabis-sellers, alcohol sales began growing. Total monthly sales
from October 2018 to February 2020 averaged $300,000 above earlier levels.
[image: This diagram shows that after October 2018, alcohol sales rose
gradually at liquor stores that sold cannabis but fell quickly at stores
selling only alcohol.]*Seasonally adjusted Nova Scotia Liquor Corporation
retail sales of beverage alcohol in Canadian dollars, from May 2017 to
February 2020. The vertical gray bar marks cannabis legalization. (Nova
Scotia Liquor Corporation), CC BY-ND*

The divergence in sales was larger for beers than for spirits or wines.

Interestingly, alcohol-only stores located near cannabis-selling stores had
changes similar to those located farther away, suggesting that
cannabis-seller proximity didn’t matter.

*Switching substances or stores?*

My data can’t say why the sales split occurred, but I can speculate.

Consider the immediate sales drop at alcohol-only stores—this could suggest
some consumers switched from alcohol to cannabis right after legalization.

Meanwhile, the lack of a drop at cannabis sellers might mean some consumers
simply changed where they shopped. Instead of visiting their local
alcohol-only retailer, they went to cannabis sellers to shop for alcohol
and cannabis together.

The cannabis sellers’ ongoing growth might reflect people increasingly
buying cannabis from licensed stores instead of illegal dealers. They went
to those stores to buy weed, but picked up some extra booze while they were
there.

*Looking ahead*

My research so far has focused on the initial post-legalization period,
from October 2018 to February 2020.

I plan to study later periods next, when cannabis retailing was more
widespread and perhaps more influential.

That will be more challenging, however, because COVID-19 arrived in March
2020. The pandemic disrupted sales of alcohol, though not of cannabis. It
will be tricky to separate cannabis effects from pandemic ones, or from
Canadian consumers’ evolving drinking habits in general.

My guess is that cannabis legalization had little short-term impact on
existing drinkers overall. Most Canadians didn’t suddenly consume cannabis
with their cabernet or replace vodka with vapes.

Instead, we might see gradual long-term shifts. Young Canadians now reach
legal age in a context where cannabis and alcohol are both allowed. Some
folks who previously would have started drinking alcohol might now choose
cannabis instead, or in addition.

For now, alcohol drinking is still three times more common than cannabis
use. Whether that continues, only time will tell.[image: The Conversation]

*Michael J. Armstrong is an associate professor of operations research at
Brock University.*

*This article is republished from The Conversation under a Creative Commons
license. Read the original article.*

The post How Did Alcohol Sales Change After Canada Legalized Marijuana?
It’s Complicated appeared first on Marijuana Moment.