Legal Marijuana Could Give a Buzz to Beer, Analyst Says

Beer has no need to fear weed.

The legalization of medical marijuana has helped beer sales, contrary to previous research that pointed to a decline, according to a note from Sanford C. Bernstein analyst Trevor Stirling. Recreational pot use in Colorado and Washington, the two states where it’s legal, has so far not had a “significant impact” on beer, he said.

“The average blue-collar Bud drinker is less likely to be smoking pot,” Stirling said. “As far as medical marijuana is concerned, it does not appear to be a big threat to the beer industry.”

The research could relieve one concern for beermakers Anheuser-Busch InBev NV (ABI) and SABMiller Plc (SAB), which have seen U.S. volume decline over the past five years due to high unemployment and a shift to spirits like bourbon and gin. Twenty-three states have allowed medical marijuana and about a dozen, from Florida to Alaska, are considering legalization in some form.

Per-capita beer drinking had a one-time increase of about 0.5 percent in the 10 largest states that have legalized medical marijuana, the Bernstein analyst found. While beer consumption later declined in those states, the rate of decline slowed to become more in line with the national average.

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“There may be a ’constrained budget’ effect for some consumers, but legalized recreational weed is likely to lead to lower prices in the long term, potentially freeing up more cash either for more weed or more beer,” Stirling said.

Bernstein’s research contrasts with an October 2012 study by professors at Montana State University, the University of Oregon and the University of Colorado Denver. It found that alcohol sales declined about 5 percent in states that legalized medical marijuana, “suggesting that marijuana and alcohol are substitutes,” especially among young adults, the authors said.

States that have legalized weed in some form including Colorado also have the highest rates of craft beer production, Stirling said, and some craft brewers have “whole-heartedly embraced the weed counter-culture.” One brewer, Oskar Blues Brewing Co. of North Carolina, indicates on some of its beer cans where they might be punctured in order to turn the can into a bong for smoking cannabis.

A Pew Research center survey published in April shows 75 percent of the population thinks marijuana’s sale and use will eventually be legal nationwide. Legalized weed could also be a boon for restaurant chains including Chipotle Mexican Grill Inc. (CMG), Dominos’s Pizza Inc. (DPZ), and Yum! Brands Inc. (YUM), Bernstein said.

AB InBev fell 0.1 percent to 83.42 euros at 1:57 p.m. in Brussels, while SAB rose 0.1 percent to 3,300 pence in London.

To contact the reporter on this story: Matthew Boyle in London at mboyle20@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net Thomas Mulier, John Bowker

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Legal Marijuana Could Give a Buzz to Beer, Analyst Says