Article by Ross Marowits, Waterloo Region Record
The recreational marijuana industry is expected to take a sip of less than one per cent initially out of annual Canadian alcohol sales once it becomes legal, a new analysis says.
The Anderson Economic Group, a business consulting firm in New York, says legalization of marijuana would sap $160 million out of the country’s $22.1 billion booze sector, rising as use of the drug expands.
While there are numerous unknowns governing the sale of marijuana, the Anderson Economic Group based its projections on alcohol sales in U.S. states that have legalized the drug. It also took into account a host of factors in Canada including spending patterns, income and demographics.
The beer market, which is worth about $9.2 billion, is anticipated to take a $70 million hit from in the first year of marijuana legalization, the Anderson Economic Group says.
“It won’t affect spending patterns necessarily the first year to the degree where individuals’ buying habits will change overnight,” said Peter Schwartz, an Anderson consultant and editor of its biannual Cannabis Market Report that will include the analysis in its summer issue.
A Deloitte report has estimated that the Canadian market for marijuana could be worth up to around $22.6 billion a year, including about $4.9 billion to $8.7 billion from the sale of the substance, with the rest coming from the ancillary market including growers, testing labs and security.
Analyst Vivien Azer of U.S.-based research firm Cowen and Company is anticipating the alcohol industry could be under substantial pressure over the next decade if young people continue to take a pass on drinking.
In a report released last month, Azer said just under 82 per cent of 18- to 29-year-olds in Ontario consumed alcohol in 2015, down 5.5 percentage points since 2008, while marijuana use has been steady at around 34 to 36 per cent.