Beer sales take a hit in states where marijuana is legal.

Yep, Marijuana Legalization Is Bad News for Beer Sales

Yep, Marijuana Legalization Is Bad News for Beer Sales

Business Insider
Analyzing the top news stories across the web
Dec. 7 2016 3:11 PM

Yep, Marijuana Legalization Is Bad News for Beer Sales

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Data shows a significant overlap between marijuana users and cheap beer drinkers.

Photo by Sean Gallup/Getty Images

This post originally appeared on Business Insider.

Beer sales are taking a hit in states where marijuana is legal.

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So far this year, beer volumes have dropped roughly 2 percent in Colorado, Oregon, and Washington, which have all legalized recreational pot, according to Neilsen data cited in a recent report from Cowen & Co.

At the same time, marijuana consumption has grown in those states.

The data indicates that many beer drinkers are swapping their six-packs for marijuana instead, and that has major implications for the beer industry—especially for makers of cheaper beers like Anheuser-Busch and Molson Coors Brewing Company.

"Mainstream beer" including Bud Light, Coors Light, Miller Lite, is "under siege" from legal marijuana, with volumes down 4.4 percent in the states studied, according to Cowen and Co. analysts.

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Craft beer sales growth is slowing in those states, but not to the same degree.

The trends show significant overlap between buyers of cheaper beers and users of marijuana.

"The pressure we are seeing on lower-priced beers is consistent with the trends we are seeing in cannabis use by income group nationally," analysts wrote. "Indeed, while cannabis incidence has been on the rise nationally, over the last 10 years (through 2014, the most recently available) we have seen the biggest increases among lower-income households, where cannabis use is also highest.

As additional states consider legalizing marijuana, beer companies will be at an even greater risk.

"With Anheuser-Busch and Molson Coors Brewing Company controlling roughly 70% of the overall beer category in the US, there is clear risk that growing cannabis use will weigh on their businesses," analysts wrote.