Las Vegas Sun

August 14, 2018

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Why weed could cut into liquor sales across Nevada

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John Locher / AP

People wait in line at the Essence cannabis dispensary in Las Vegas, Saturday, July 1, 2017, as recreational sales of marijuana begin.

In three of the first four states to start legal recreational pot sales, an increasing number of consumers are choosing bud over Budweiser.

That conclusion comes from a study by New York-based investment and research firm Cowen and Co. In Colorado, Oregon and Washington, domestic beer sales for Budweiser, Coors and Miller were down 4.4 percent from January 2015 to the end of 2016, while purchases of craft beer fell 2.4 percent. No data was available for Alaska.

How the beginning of recreational marijuana sales in Nevada affects local alcohol sales remains to be seen, as the program began just eight weeks ago.

Robert McDonald manages Nevada Beverage, one of Clark County’s largest distributors, and he anticipates “plenty” of demand for beer — even with pot.

“I know in other states we saw it, but we’re certainly hoping it’s not here,” McDonald said. “I just don’t see an effect right now.”

In the booming Colorado market, business for Denver-based alcohol vendor Vieri Gaines of Western Distributing Co. flourished four years ago, with sales of beer, wine and liquor all increasing steadily across the board.

Gaines’ model changed on Jan. 1, 2014, when legal recreational marijuana sales began in Colorado. While wine and liquor sales have continued on the same growth pattern since then, beer sales — domestic, imported and specialty craft beers — have seen a dip of up to 5 percent.

“It happened gradually, and there was a smoking gun,” Gaines said, referring to marijuana sales growth across his state. “I don’t think most people saw it coming.”

The average American alcohol consumer spent about $645 annually on booze last year, including beer, wine and liquor, while an average pot consumer spends $643 annually on weed, according to separate studies from Cowen and Seattle-based Headset Inc.

Cowen’s research notes the drop in beer sales experienced by Gaines and other vendors in pot-legal states mirrored nationwide trends of decline for beer. But those states significantly underperformed compared to states where recreational pot is not legal.

Las Vegas marijuana advocate Jason Sturtsman said deciding between alcohol and marijuana has become a “one or the other” choice for many consumers. While alcohol is a depressant and can result in a hangover, marijuana generally won’t produce a lingering effect for casual users.

“It’s definitely not recommended to mix a depressant and cannabis together,” said Sturtsman, who manages Las Vegas Releaf dispensary in addition to running nonprofit marijuana education groups across the valley. “But on its own, cannabis is a great substitute, and people are doing it as much for their health as for their enjoyment.”

Sturtsman warned of “continued pressure” on the alcohol industry in pot-legal states, as some consumers — primarily those under 30 — choose to smoke weed instead of sip a cold brew. And if recreational pot’s emergence in Nevada at all mirrors what happened in other pot-legal states, beer sales here also will feel the heat.

While recreational pot sales have been legal in Nevada since July 1, alcohol vendors said they’ve yet to feel the impact of the plant as thousands of daily transactions happen across the state’s nearly 50 licensed recreational marijuana dispensaries. Official numbers on recreational pot sales in Nevada won’t be available from the state’s Department of Taxation until at least mid-September, department spokeswoman Stephanie Klapstein said.

Allan O’Neil of Las Vegas-based Bonanza Beverage echoed McDonald’s sentiment, saying business has “continued as usual,” despite marijuana’s expansion across Nevada. O’Neil, like McDonald, said his company does not plan to modify their business strategy around the plant.

“Honestly it’s just too early to tell at this point,” O’Neil said. “It’s just something else here in the market.”

Allan Nassau of Red Rock Wines is one of six alcohol distributors across the state now licensed to distribute recreational pot, according to regulations outlined in last year’s Ballot Question 2, in which voters approved legal use and possession of recreational pot in Nevada.

While Nassau doesn’t sell beer, he sees pot’s legalization and sale as “beneficial” to Nevada alcohol distributors who can also cash in on the ability to distribute the plant. From a sales standpoint, he said his wine business hasn’t been negatively impacted.

“I really haven’t seen any changes,” Nassau said.

Editor’s note: Brian Greenspun, the CEO, publisher and editor of the Las Vegas Sun, has an ownership interest in Essence Cannabis Dispensary.

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