Per capita soda consumption fell to a 31-year low in 2016, and fizzy drink consumption continues to decline as consumers become more health conscious and give them up. It certainly seems possible that cannabis could become a bigger market as even consumption of bottled water is set to overtake soda consumption. Coke and other companies are being forced to look at ways to adapt and move away from sugar – and at the same time cannabis sales have never been stronger.
A $75 billion market by 2030 predicted
According to research firm Cowen and Co’s cannabis sector analyst, Vivien Azer, cannabis sales are already at around $50 billion, and if it was legalized nationwide in the States by 2030, sales could reach $75 billion in that year. That is nearly as large as the 2017 market for carbonated soft drinks in North America.
Cowen & Co previously predicted that sales would reach $50 billion by 2026, but new forecasts show that this figure has already been reached. These market estimates are somewhat higher than those offered by other research firms, such as BDS analytics, and Marijuana Business Daily estimated that cannabis sales would reach $17 billion by the year 2021.
Challenges and growing legality
There are still many challenges that lie ahead, including the fact that cannabis is still considered an illegal, schedule 1 substance by the federal government. Attorney Jeff Sessions opposes increasing access to cannabis and rescinded protections from the Obama era that restricted the interference of federal prosecutors in state-legal cannabis enterprises. Officials from states where cannabis is legal want to meet with Sessions to try and resolve the conflict that exists between state and federal laws.
As the cannabis industry has expanded, it has gained more support in Congress. Varying cannabis bills, ranging from federal legalization to allowing more scientific research into medical cannabis, are receiving support
At present, one out of every five Americans is allowed to use cannabis legally. Washington D.C. and nine states allow recreational use of cannabis. Nearly 30 states have legalized it in one form or another. Legislation to legalize it federally was introduced this year.
Attitudes towards cannabis have changed significantly in recent years, and polls show that support for legalizing it nationwide is increasing.
Pressure on alcohol sales
Cowen’s research confirmed that binge drinking rates where cannabis has been legalized fell to nine percent below the national average. Azer noted that they have consistently argued that cannabis acts as a substitute social lubricant for alcohol. This means that as access to it expands, it could put pressure on alcohol sales.
Some in the alcohol industry see an opportunity instead of a threat
Alcohol industry insiders have been watching the legalization of cannabis and cannabis sales, waiting to see whether it would affect alcohol sales. From the small craft beer industries to large multi-national corporations, this was a concern.
Some in the alcohol industry are starting to see opportunity instead of a threat from the growing cannabis industry. Some craft brewers have embraced the opportunity. Smaller breweries are releasing hop-flavored THC vape cartridges and terpene-infused beers.
Constellation Brands has invested in weed-infused beverages with a Canadian cannabis company. Other beer-makers are expanding their experimentation with cannabis. Rebel Coast Winery in California has launched a cannabis-infused wine that does not contain alcohol. A trend to watch out for in 2018 is canna-alcohol products.
What may happen with full recreational legalization
If full recreational legalization gives easy access to cannabis, the alcohol industry may have reason to worry. Cannabis sales are still far behind those of alcohol at this point. But cannabis may become an easy substitute for alcohol and more practical for those wanting to avoid a hangover.
Researchers at the University of Connecticut and Georgia State University found alcohol sales dropped as much as 15% in states where medical cannabis was legalized. The authors of the study reached this conclusion after examining Nielson sales numbers and data of purchases of alcoholic beverages in stores across U.S. counties for 2006 to 2015. They looked at shifts from before and after medical cannabis was legalized.
The alcohol industry is keeping a sharp eye out as more states legalize cannabis and it will be interesting to observe what takes place as competition increases. Those in the industry will have to be ready for the day when consumers have a choice of spending their money on alcohol or cannabis.
Factors that could affect global markets
The WHO has called a summit in May where cannabis and its legislation will come under the spotlight. This organization does not make the laws, but it has a great influence on its member nations and its conclusions affect drug policy. Any revisions to its policy could shake up the global cannabis market.
The FDA is also set to give a decision on a cannabis-derived drug used to treat two rare forms of epilepsy. A decision in its favor would make it the first plant-derived cannabidiol to be approved and contradict the U.S. federal position that cannabis has no medical use.
California is already the world’s largest cannabis market and its conversion from a two decades old gray medical cannabis market to a fully regulated one has had its challenges. Many companies have had to make changes to the way they have been doing business for years, and some of them have found themselves out of business. Activists believe that California will be the state to tip the scales on national cannabis policies and perhaps 2018 is the year when this proves to be the case.
Canada is planning to authorize CBD hemp extraction and adult cannabis use. This change could cause global repercussions. Some predict that hemp-derived CBD products made in Canada could flood the market at cheap prices and affect global prices.