Cannabis and Alcohol: An Industry Comparison
Cannabis and Alcohol: An Industry Comparison
As cannabis continues to build legalization momentum in the U.S., it also finds itself entering a new chapter, and one that steps away from its prohibition past.
The industry is now on a path similar to that of the alcohol industry during the 20th century. So what can we learn by comparing the two industries?
This infographic from Tenacious Labs looks at similarities and differences between alcohol and cannabis in relation to market maturity, legality, and cultural acceptance. It’s the second in a series that explores the future of the cannabis industry. Let’s dive in.
Sizing up the Market
We are entering what looks like the beginning of the end for cannabis prohibition in the U.S. which dates all the way back to 1937.
During this time, cannabis has faced extreme hurdles that have hampered its ability to flourish. But despite this bumpy past, the future of cannabis looks bright. In 2020, combined legal and illicit cannabis sales in the U.S. grew to be worth a combined $85 billion.
While this only represents 33% of total U.S. alcohol sales, consumption habits are changing quickly. For instance, the share of college students who drink daily fell from 6.5% in 1980 to 2.2% in 2017, and Americans overall are drinking far less these days compared to the 1980s.
On the other hand, cannabis holds a larger and growing influence amongst Americans old and young. In fact, the number of Americans who say they consume cannabis doubled from 28 million in 2009 to 48 million just a decade later.
|Year||Number of Americans Who Have Used Cannabis In the Past Year|
And since younger people nowadays are opting for cannabis over alcohol, the growth in their purchasing power in the years to come will likely have substantial influence on the alcohol and cannabis markets of tomorrow.
Cannabis’ prohibition period length stands at over 6x the prohibition period compared to alcohol. Not to mention, there are still some 30 states that have yet to legalize recreational cannabis, also known as adult use.
|State||State Level Legal Status Of Cannabis|
|Alabama||Legal for medical use|
|Arkansas||Legal for medical use|
|Delaware||Legal for medical use|
|Florida||Legal for medical use|
|Georgia||Legal for medical use|
|Hawaii||Legal for medical use|
|Indiana||Legal for medical use|
|Iowa||Legal for medical use|
|Louisiana||Legal for medical use|
|Maryland||Legal for medical use|
|Minnesota||Legal for medical use|
|Mississippi||Legal for medical use|
|Missouri||Legal for medical use|
|New Hampshire||Legal for medical use|
|North Carolina||Legal for medical use|
|North Dakota||Legal for medical use|
|Ohio||Legal for medical use|
|Oklahoma||Legal for medical use|
|Pennsylvania||Legal for medical use|
|Rhode Island||Legal for medical use|
|South Carolina||Legal for medical use|
|South Dakota||Legal for medical use|
|Tennessee||Legal for medical use (Limited)|
|Texas||Legal for medical use (Limited)|
|Utah||Legal for medical use|
|West Virginia||Legal for medical use|
Despite this, the progress recently has been significant. While 70% of Americans opposed cannabis use in the 1970s, the same amount of the population now supports legalization today.
Global views on cannabis and alcohol are changing, and in very different ways. Nowadays, alcohol is seen as more dangerous than what was initially perceived in the past, while cannabis is shattering old stigmas as 74% of Americans believe cannabis to be safer than alcohol.
According to Our World in Data, alcohol use is responsible for 2.8 million deaths worldwide, while no such statistic exists for cannabis.
|Risk Factor||Number of Deaths Worldwide (M)|
|High blood pressure||10.4 Million|
|High blood sugar||6.5 Million|
|Air pollution (outdoor & indoor)||4.9 Million|
|Diet high in sodium||3.2 Million|
|Diet low in whole grains||3.0 Million|
|Alcohol use||2.8 Million|
|Diet low in fruits||2.4 Million|
|Diet low in nuts and seeds||2.0 Million|
It is perhaps unsurprising given the case against alcohol use that 57% of Americans would choose cannabis over alcohol if only one could be legal.
What Cannabis Can Learn From Alcohol
Alcohol has become a near quarter-trillion-dollar revenue generating industry in part because of its functioning regulations. The standardization of alcoholic drinks is fairly widespread, and as a result people can safely and conveniently convert units of alcohol from a pint of beer to a glass of wine in order to drink responsibly.
Similarly, an effective regulatory framework from the National Cannabis Industry Association also has the potential to propel the cannabis industry to new heights by categorizing cannabis products into four policy lanes:
- Lane 1: Products approved as pharmaceutical drugs belong to Lane 1 and go through the rigorous drug approval process by the FDA.
- Lane 2: These are cannabis products that are inhalable, edible, or topically applied, and are not approved as pharmaceutical drugs by the FDA. In addition, products in Lane 2 have greater than 0.3% THC, measured by dry weight.
- Lane 3: Ingested and inhaled products with less than 0.3% THC make it onto Lane 3. These are cannabis products with little to no THC, and thus no psychoactive components in the plant.
- Lane 4: Topically applied products like creams and balms, with less than 0.3% THC fall under the Lane 4 category.
It should be noted that regulatory frameworks for cannabis are still in their introductory stage, and amendments as well as changes in legislation are needed for further progress.
A New Chapter for Cannabis
It’s an exciting time to be a cannabis investor. The era of cannabis prohibition could be coming to a close. Even after lasting over 80 years, cannabis remains a robust and popular product within American culture.
And rather than competing head on with alcohol, it’s likely the two industries can co-exist. In fact, most industry insiders are betting on it. After all, alcohol companies have already made a flurry of corporate investments in the cannabis space worth billions of dollars.
If cannabis’s recent momentum and growth is any indication, it’s one that may hold plenty of upside.
In the next part of the Future of Cannabis Series, we will explore the The New Cannabis Consumer.
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