This is a difficult time for the business of wine. There are extraordinary pressures that influence the bottom line. And, sadly, these are largely pressures over which those in the industry have no control.

Natural disasters ranging from forest fires and drought, to the increasing concerns over global warming have threatening wineries as they plan for both the near and long-term. The increasing interest in craft beer and the resurgence of cocktails reallocates monies for beverages to those ‘the new and trendy’. A wine glut as new producing regions come on-line will negatively impact long established producers bottom-line. National news media reporting on the negative impact of alcohol impacts all segments of the adult beverage industry. And, now competition from legalized marijuana…

While the threats from foreign producers and environmental impacts are significant (and, worthy of in-depth future discussion), today we will examine growing concern over the impact of cannabis.

Marijuana has been approved for medicinal use in over 30 states and the District of Columbia, and for recreational use in 10 states as well as the District of Columbia. However, marijuana remains a Schedule 1 drug by the Federal Government. A Schedule 1 drug is deemed to have no health benefit and a high potential for abuse.

This was not always the case. The medical value of marijuana has been long recognized, but so too has been the potential for the abuse of the drug. Adulteration of marijuana-based products prompted concerns about the safety of the drug (pre-FDA), and films like Reefer Madness served to demonize it. Marijuana was listed as a Schedule 1 substance in the 1970 Controlled Substances Act.

Times have changed. A new generation of politicians, more effective lobbying, and pressure for decentralized decision making have prompted marijuana legalization/decriminalization to slowly make its way through state legislatures. Marijuana now competes for an individual’s ‘expendable capital’.

Let’s look at some numbers. Internet research suggests that the cost of a 1/8 of an ounce of marijuana averages about $40. The product is less expensive in the east than in the west (by approximately 22%). For our purposes we will extend the cost to slightly over $5,000 (wholesale) for a pound of quality marijuana, and $7,500 retail assuming a 50% retail markup. Additional research indicates that a pound of marijuana would allow for the rolling of approximately 640 ‘joints’. The math suggests that each joint has a retail value of slightly over $11.70.

Using a glass of wine as a relative measure, a .750 ml bottle of wine will yield 6 glasses of wine. An equivalent bottle of quality wine would require an expenditure nearly $80 – good wine vs. good ‘weed’. The $80 bottle would be a hard sell for wine retailers attempting to compete with marijuana shops.

Now, this concern about lost revenues assumes evidence that does not exist (or has not been uncovered). SVB on Wine (a blog devoted to the business of U.S. fine wine) argues that for “cannabis to impact wine sales a wine consumer also has to be a cannabis consumer”.  In fact, young (under 21) consumers dominate the cannabis market. There are multiple arguments for why…younger consumer can access marijuana easier than alcohol and once over 21 alcohol is legal and tempered use does not represent an illegal act. In fact, examining the collection of state taxes (SVB on Wine tells us) in Colorado and Oregon following the legalization of marijuana indicated “no change in alcohol consumption”. The greater concern for the wine retailer is not the competition from marijuana but rather the need to effectively sell that $80 bottle or to find comparable (and less expensive) alternatives.

The importance of wine as a compliment to food and as a beverage with a sense of place related to travel and history cannot be supplanted by marijuana. Studies suggest that the ‘half-life intoxicating’ impact of a glass of wine is approximately one hour. By comparison the half-life of coffee is six hours. The half-life of marijuana is 36 hours. The legal, employment, and physical impact of this ‘half-life’ negatively impacts the image, and thus the market, of marijuana. Moreover, in the first months of 2019, marijuana is still a Federally scheduled narcotic with the stigmas that accompany that designation.

There are serious issues facing the wine industry. Marijuana legalization is not one of them.