Cannabis and Alcohol: An Industry Comparison
As cannabis continues to build momentum for legalization in the United States, it also finds itself entering a new chapter, one that moves away from its prohibition past.
The industry is now on a path similar to that of the alcohol industry in the 20th century. So what can we learn by comparing the two industries?
This infographic from Tenacious Labs examines the similarities and differences between alcohol and cannabis in terms of market maturity, legality, and cultural acceptance. This is the second in a series that explores the future of the cannabis industry. Let’s dive into it.
Size the market
We are entering what feels like the beginning of the end of cannabis prohibition in the United States, which dates back to 1937.
During this time, cannabis has faced extreme odds that have hampered its ability to thrive. But despite this rocky past, the future of cannabis looks bright. In 2020, combined sales of legal and illicit cannabis in the United States reached a combined value $85 billion.
Although this represents only 33% of total alcohol sales in the United States, drinking habits are changing rapidly. For example, the share of college students who drink daily has fallen from 6.5% in 1980 to 2.2% in 2017, and Americans as a whole are drinking much less these days compared to the 1980s.
On the other hand, cannabis holds a greater and growing influence among Americans young and old. In fact, the number of Americans who report using cannabis has 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 |
|---|---|
| 2019 | 48.2 million |
| 2018 | 43.4 million |
| 2017 | 40.9 million |
| 2016 | 37.5 million |
| 2015 | 36.0 million |
| 2014 | 35.1 million |
| 2013 | 32.9 million |
| 2012 | 31.5 million |
| 2011 | 29.7 million |
| 2010 | 29.3 million |
| 2009 | 28.6 million |
And since young people are opting for cannabis over alcohol today, the growth in their purchasing power in the years to come will probably have a considerable influence on the alcohol and cannabis markets of tomorrow.
Legal comparisons
The length of the cannabis prohibition period exceeds 6x the prohibition period in relation to alcohol. Not to mention that there are still about 30 states that have yet to legalize recreational cannabis, also known as adult use.
| State | Legal Status of Cannabis at the State Level |
|---|---|
| Alabama | Legal for medical use |
| Alaska | Legal |
| Arizona | Legal |
| Arkansas | Legal for medical use |
| California | Legal |
| Colorado | Legal |
| Connecticut | Legal |
| Delaware | Legal for medical use |
| Florida | Legal for medical use |
| Georgia | Legal for medical use |
| Hawaii | Legal for medical use |
| Idaho | Illegal |
| Illinois | Legal |
| Indiana | Legal for medical use |
| Iowa | Legal for medical use |
| Kansas | Illegal |
| Kentucky | Illegal |
| Louisiana | Legal for medical use |
| Maine | Legal |
| Maryland | Legal for medical use |
| Massachusetts | Legal |
| Michigan | Legal |
| Minnesota | Legal for medical use |
| Mississippi | Legal for medical use |
| Missouri | Legal for medical use |
| Montana | Legal |
| Nebraska | Illegal, decriminalized |
| Nevada | Legal |
| New Hampshire | Legal for medical use |
| New Jersey | Legal |
| New Mexico | Legal |
| new York | Legal |
| North Carolina | Legal for medical use |
| North Dakota | Legal for medical use |
| Ohio | Legal for medical use |
| Oklahoma | Legal for medical use |
| Oregon | Legal |
| Pennsylvania | Legal for medical use |
| Rhode Island | Legal for medical use |
| Caroline from the south | 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 |
| Vermont | Legal |
| Virginia | Legal |
| Washington | Legal |
| washington d.c. | Legal |
| West Virginia | Legal for medical use |
| Wisconsin | Illegal |
| Wyoming | Illegal |
Despite this, recent progress has been significant. While 70% of Americans opposed cannabis use in the 1970s, the same proportion of the population supports legalization today.
Health factors
Global opinions on cannabis and alcohol are changing, and in very different ways. Nowadays, alcohol is seen as more dangerous than initially perceived in the past, while cannabis breaks down old stigmas like 74% of Americans think cannabis is safer than alcohol.
According to Our World in Data, alcohol consumption is responsible for 2.8 million deaths worldwide, while no such statistics exist for cannabis.
| Risk factor | Number of deaths worldwide (M) |
|---|---|
| High blood pressure | 10.4 million |
| Smoking | 7.1 million |
| High blood sugar | 6.5 million |
| Air pollution (outdoor and indoor) | 4.9 million |
| Obesity | 4.7 million |
| High sodium diet | 3.2 million |
| Diet low in whole grains | 3.0 million |
| Alcohol consumption | 2.8 million |
| Diet low in fruit | 2.4 million |
| Diet low in nuts and seeds | 2.0 million |
It is perhaps unsurprising given the arguments against alcohol consumption 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 nearly quarter-trillion-dollar revenue-generating industry, in part because of its prevailing regulations. Standardization of alcoholic beverages is quite widespread and therefore people can safely and easily 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 tracks:
- Channel 1: Products approved as pharmaceutical drugs belong to Track 1 and go through the rigorous FDA drug approval process.
- Way 2: These are cannabis products that are inhalable, edible, or applied topically and are not approved as pharmaceutical drugs by the FDA. In addition, Lane 2 products have greater than 0.3% THCmeasured in dry weight.
- Track 3: Products ingested and inhaled with less than 0.3% THC go to track 3. These are cannabis products with little or no THC, and therefore no psychoactive components in the plant.
- Track 4: Topical products such as creams and balms, with less than 0.3% THC belong to the Path 4 category.
It should be noted that the regulatory frameworks for cannabis are still in their introductory phase and amendments as well as changes to the 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 may be coming to an end. Even after lasting over 80 years, cannabis remains a robust and popular commodity in American culture.
And rather than competing 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 investment in the cannabis space worth billions of dollars.
If the recent momentum and growth of cannabis is any indication, this is one that can hold a lot of benefits.
In the next part of the Future of Cannabis series, we will explore the 5 signs of maturity in the cannabis industry.
