Alcohol Companies Afraid Cannabis Will Hurt Their Sales

Opponents of cannabis legalization, may have an unlikely ally—the alcohol industry.

In May we reported that The Wine and Spirits Wholesalers of Arizona donated $10,000 to fight legalization efforts in the state, and now the same is happening in Massachusetts.

The Beer Distributors PAC, an affiliate that represents 16 beer distribution companies in Massachusetts, donated $25,000 to Safe and Healthy Massachusetts. A similar scenario played out in California in 2010 during the state’s previous attempt at cannabis legalization. That effort was thwarted in part due to the financing of an alcoholic beverage company.

Sam Adams’ parent company, The Boston Beer Company, recently said the “sale and distribution of marijuana” could “adversely impact the demand” for beer during a recent investor report.

Other major alcohol producers have also gone on record with their Securities and Exchange Commission reports, stating that cannabis could negatively affect their profits.

The Brown-Forman Company, which manufacturers Jack Daniel’s Whiskey and Finlandia Vodka made a similar claim, stating that “consumer preferences and purchases may shift due to a host of factors, many of which are difficult to predict, including … the potential legalization of marijuana use on a more widespread basis within the United States, and changes in travel, leisure, dining, gifting, entertaining, and beverage consumption trends.”

Studies regarding the financial impact cannabis has on alcohol sales have been mixed. A study conducted in Colorado claimed that given the option, consumers would substitute cannabis for alcohol. However, tax revenue in Colorado doesn’t support that claim and shows that alcohol is being sold just as frequently as it was before cannabis became legal in 2012.

Paul Varga, the chief executive of Brown-Forman, told investors in August 2014 that cannabis legalization would be a “big threat.” But four months later, in another discussion with investors, Varga backpedaled a bit. “I wouldn’t say I’m losing sleep over the legalization of marijuana,” he noted. “But I’m paying attention to it.”

One thing is certain though, health concerns are not the reason that big-alcohol wants to stop cannabis legalization.