Cannabis Products Will Surpass Craft Beer Sales In California

Californians love their beer — especially microbrews. But according to a new report, the cannabis industry will surpass the beer business in the state by early as next year.

The Golden State is the birthplace of the American craft brewing movement and, along with its neighboring state of Oregon, is at the forefront of the industry’s growth. California is home to 900 craft breweries, more than any other state in the nation. Supermarket sales of craft beer in the state amounted to more than $150 million a year and craft beer accounts for nearly 20 percent of total beer sales. 

But recreational cannabis, which has been sold for only two months so far, will take a huge chunk of market share from beer. A report from research firm BDS Analytics forecasts cannabis sales to hit $3.7 billion by the end of this year. The report predicts that sales will increase to $5.1 billion in 2019.

• Related Story: Alcohol Sales Suffering In Legal Marijuana States

For comparison, overall beer sales in California hit $5 billion in 2017, according to IBIS World, a beer industry research group.

As Business Insider reports:

• California — the world’s sixth largest economy with a population of close to 40 million — will be a huge chunk of the total market for cannabis in North America. Legal marijuana sales hit $9.7 billion across the seven states where recreational marijuana is legal, excluding California, and Canada in 2017 alone, according to BDS. That number is expected to hit $24.5 billion in sales by 2021, despite continued federal prohibition.

By 2021, BDS Analytics says the state will collect nearly $1.5 billion in taxes from recreational marijuana sales.

• Related Story: Most Americans Believe Alcohol Is More Dangerous Than Marijuana

Sales of alcohol typically decline in states that enact medical marijuana programs, according to a report from researchers from the University of Connecticut and Georgia State University.

The researchers concluded:

States legalizing medical marijuana use experience significant decreases in the aggregate sale of alcohol, beer and wine. Moreover, the effects are not short-lived, with significant reductions observed up to 24 months after the passage of the law.

A 2016 analysis of beer sales in Colorado, Oregon, and Washington reported that retail sales “collectively underperformed” in the years following the enactment of adult-use marijuana regulation.