In the U.S., as of 2014, the beverage industry was valued at $354.2 billion, and 60 percent of that amount was due to alcoholic beverages. Specifically, the alcoholic beverage market raked in $211.6 billion in 2014. According to a report by Park Street Imports, around 20 percent of the volume of wine and spirits in America is sold in monopoly states like California, Florida, and New York. These figures demonstrate the vast amount of money the alcohol industry makes. However, the marijuana industry is significantly booming in its own right, and it won’t stop anytime soon.
Recreational marijuana is a multi-billion-dollar industry, and U.S. states that have recreationally legalize marijuana, especially Nevada, are giving alcohol companies a run for their money. Now it’s time for the alcohol industry to become a part of Nevada’s booming marijuana market.
Alcohol Companies’ Interest in Marijuana:
According to a report by Arcview Market Research, North American marijuana sales increased by 30 percent in 2016 to a whopping $6.7 billion as the legal marijuana market expanded throughout the U.S. and Canada. Alcohol companies are beginning to recognize the intense competition they’ll be facing from here on out, and many have shown interest in being a part of the recreational marijuana market however they can. Nevada is one state that has a strange recreational marijuana program in place that allowed only alcohol wholesalers to distribute marijuana to licensed state dispensaries.
Alcohol Wholesalers’ Involvement in Nevada’s Recreational Marijuana Market
As stated by the Reno Gazette-Journal last November, alcohol wholesalers were given exclusive rights to move marijuana from growers to retailers in Nevada for the first 18 months of legal sales. According to BusinessInsider, the intention of this act was to “promote the goal of regulating marijuana similar to alcohol and protect liquor stores from losing business as the demand for recreational marijuana rises.”
It’s no surprise that companies within the alcohol industry want to get involved in the recreational marijuana market due to how much money the market is worth, but also due to the millions of people who consume marijuana in the U.S.
Because of Nevada’s arrangement of only allowing alcohol wholesalers to distribute marijuana to dispensaries/stores, the state nearly ran out of product in less than two weeks after recreational sales began, according to Nevada’s Department of Taxation. Due to Nevada’s initial rule to only allow alcohol wholesalers to distribute marijuana from the grow facilities to dispensaries, dispensary owners had no choice but to wait for additional product to come in rather than take matters into their own hands.
Nevada’s Marijuana Shortage
Once Nevada began selling out of nearly all marijuana products, the state’s Governor, Brian Sandoval, endorsed the Department of Taxation’s call for a “statement of emergency.” This endorsement was a positive move because it allowed for additional licensed marijuana distributors (beyond only alcohol wholesalers) to distribute marijuana, according to the Reno Gazette-Journal.
On Thursday, July 13th, the Nevada Tax Commission approved of the regulation, which fortunately allowed for the issuing of additional distribution licenses to a larger pool of applicants including those outside of the alcohol industry, according to BusinessInsider.
Nevada‘s Recreational Marijuana Revenue
Moreover, what may come as a surprise is that according to USAToday, this past July, Nevada dispensaries sold $27.1 million of marijuana, which comes out to almost double what both Oregon and Colorado sold in their first few months of recreational marijuana sales. Additionally, as mentioned by USAToday, Governor Sandoval predicted that Nevada’s recreational marijuana market could pull in approximately $100 million over the next two fiscal years, including both marijuana fees and taxes. Thus, alcohol companies are very interested in being a part of Nevada’s booming marijuana market, especially due to how many tourists and out-of-state visitors Nevada receives annually.
Similarly, as stated by Forbes.com, “The Nevada Dispensary Association reported that at least $3-5 million in sales were recorded for the first weekend of recreational marijuana sales, and Nevada is on track to achieving $30 million in sales over the next 6 months.”
These figures are enough to catch the attention of entrepreneurs, investors, and especially competitors, including the alcohol industry. It’s no secret that the demand for recreational weed is high, and as time goes on, Nevada will continue raking in more millions, which explains why the alcohol industry has been showing so much interest in the marijuana market.
Will Recreational Marijuana Dethrone Alcohol?
Although Nevada is a popular place for gambling, partying, and having fun, it’s possible that the recreational marijuana industry could take precedence over the alcohol industry, especially due to the wide variety of medical benefits/properties marijuana contains compared to alcohol. However, Nevada needs to make sure their marijuana distribution issue is completely solved in order to keep their recreational program running as smoothly and efficiently as possible.
To learn more about Nevada’s recreational and medical marijuana programs, read the article here:
Find out how Nevada tourism could affect marijuana revenue by reading the article below:
Article by: Nicole Skrobin