The impact of cannabis legalization on the NYS Alcohol Industry

The alcohol industry is a major contributor to the New York State economy. With 495 craft breweries, New York State is the fourth highest beer producer in the country with an economic impact of $5.4 billion. Then there’s wine—of which New York is the third highest producer, following California and Washington—that as an industry provides 80,000 jobs across 11,000 acres of vineyards. Spirits also contribute to the state’s alcohol industry with roughly 190 New York distilleries operating today. Rochester, New York, is home to the country’s largest beer import company, Constellation Brands. Bold claims have been made about the impact of legalized cannabis on alcohol, but experts say it’s far more nuanced than that.

Simply put, there is not yet enough data to strongly prove a trend between cannabis and alcohol in consumer habits. Both Oregon and Washington showed an overall alcohol sales drop of 2% upon cannabis legalization, but in Colorado, spirits sales increased by a surprising 7.6%.

There is, however, a larger looming threat to the alcohol industry entirely separate from the legalization of cannabis: a generational shift in how consumers feel toward alcohol. Just 2.2% of American college students reported drinking daily in comparison to 6.5% of college students in 1980. Gen Z is consuming more than 20% less per capita than their millennial counterparts drank at their age. Though many factors are at play in this data, younger generations cite health as the leading factor. While alcohol has an array of long-term negative effects, studies suggest that cannabis can actually improve wellness. This younger generation has coined the term “California sober” to indicate their preference, largely defined as using cannabis in place of alcohol.

So what does alcohol and cannabis coexisting in New York look like? While that depends on the state’s specific legal guidelines, we can make some strong predictions based on emerging trends in other states.

Cannabis-Infused Alcohol

Though reasons for consumption of cannabis and alcohol can differ, a large commonality between them is to achieve relaxation. Alcohol and cannabis can embrace each other by joining forces as companies develop cannabis-infused products. This will be a major player in the state economy, and many brands are already capitalizing on the trend (link to cannabis-infused beer article). New Belgium Brewing Co.’s Hemporium Hemp India pale ale, for example, does just that with its infusion of hemp, CBD, and THC.

Low ABV, Zero Proof, & Mocktails

Another way alcohol producers can embrace the growing trend is by offering lower- and zero-ABV (alcohol by volume) products to complement the cannabis experience. For many, the experience of enjoying alcohol is still preferred in a social setting. Low- and zero-ABV products appeal to cannabis consumers who still desire that experience without the adverse side effects of overconsumption or hangovers. This in-depth cannabis and beer pairing guide explores low-ABV products that offer an intentional flavor experience. On another front, California bars and restaurants like Auburn and The Edison embrace cannabis by offering a wider variety of “mocktails” for the quality and flavor of a great cocktail without the alcohol.

As for the real impact of legalizing cannabis on New York State’s alcohol habits, only time will tell. Regardless of any data thus far, those in the alcohol industry would be ill-advised to assume there will be no impact. Financial services company Cowen predicts the cannabis industry will be worth $50 billion in 2026. The sentiment of the phrase “If you can’t beat them, join them” rings true to this economic change, and many New York companies already recognize this. Constellation Brands recently invested $4 billion into Canopy Growth, a Canadian cannabis company, while Upstate New York’s Beak & Skiff Hard Cidery is shifting toward CBD-infused sparkling waters and coffees.

There are nearly infinite opportunities to get creative and breathe new life into the experience of alcohol consumption with the addition of cannabis. Connections can be made in the types of products as well as in the experience itself with elements like flavor pairings, food pairings, unique environments, specific music, and more. From cannabis-infused products on the shelves to on-site experiences like weed & wine dinners and cannabis-friendly hospitality, NYSCC is excited to see growth for both industries in New York.

Sources

https://newyorkcraftbeer.com/about/

https://www.newyorkupstate.com/wine-tours/2020/01/how-big-is-new-yorks-wine-business-inside-the-numbers.html

https://www.rdsiresearch.com/genz-the-generation-of-sobriety/

https://health.clevelandclinic.org/what-is-cali-sober/