Marijuana Sales Outpace Alcohol in Aspen, Shows Growing Pot Popularity

Marijuana stocks
iStock.com/BruceStanfield

Marijuana Sales Surpass Alcohol in Aspen in 2017

In what is the first time, but almost certainly not the last, marijuana sales have topped alcohol sales in Aspen, Colorado. This has huge implications for the marijuana industry, and not just in Aspen, but across the globe.

Aspen’s marijuana dispensaries (cannabis is legal for both medicinal and recreational use in Colorado) outsold liquor stores in terms of revenue, bringing in $11.3 million in 2017 compared to $10.5 million from alcohol peddlers. (“Aspen marijuana shops sold $11.3 million in 2017, topping liquor stores for first time,” The Seattle Times, February 7, 2018.)

Overall, growth in the retail sector in Aspen showed a two percent rise compared to 2016, according to the city’s Finance Department.

So why is this such big news? Because it speaks to a growing trend in the marijuana industry, where marijuana sales are rivaling–or, in this case, surpassing–alcohol as a new vice-of-choice for consumers.

The alcohol industry is a multi-billion-dollar behemoth. If marijuana sellers can one day hope to attain that type of revenue and size in the future, then marijuana stocks are currently valued at a fraction of what they could be.

Consider also that cannabis revenue in Aspen last year jumped 16% over 2016. Of the 12 retail sectors in the city’s figures, the marijuana sector enjoyed the largest share of growth. Liquor, meanwhile, remained flat.

And this extends beyond Aspen. A study released by Georgia State University in December showed a 15% drop in alcohol sales in states that allowed medical marijuana sales. The study looked at a 10-year period from 2006 to 2015.

“Our findings clearly show that these two substances act as strong substitutes in the marketplace,” Georgia State economics professor Alberto Chong said in a statement. “This implies that rather than exacerbating the consequences of alcohol consumption — such as an increase in addiction, car accidents or disease risk — legalizing cannabis may temper them.” (Source: Ibid.)

Alcohol has long reigned as the legal drug of choice for millions of Americans and people around the world. But with marijuana sales increasing at an impressive rate, there’s a chance that booze may find itself dethroned.

What This Means for Marijuana Stocks

Marijuana sales are going up wherever cannabis is legalized. Growth is naturally a great thing to see in the industry, and it speaks to the potential of the green herb to become one of the most powerful industries in the world, given time.

But what does this uptick in marijuana sales mean for marijuana stocks right now?

As always, for an answer, you’re better off looking to Canada.

Aurora Cannabis Inc (OTC:ACBFF), (TSE:ACB) is one such company that sees the alcohol-marijuana connection and has made moves to get out ahead of the curve.

The company recently bought a minority stake in Liquor Stores N.A. Ltd
(OTCMKTS:LQSIF), (TSE:LIQ). Liquor Stores is set to receive CA$103.5 million from Aurora for an about 19.9% equity stake, with Aurora having the option to increase its stake up to 40%.

So why would two competitors offering very different products get into business together? It’s simple: Liquor Store sees the writing on the wall.

Rather than have it lose out on alcohol sales as marijuana laws become increasingly lax, Liquor Store instead decided to get involved in the emerging industry and offer marijuana products alongside booze.

It’s a move that I imagine we’ll see much more of as news like the Aspen marijuana takeover continues to break across the U.S., Canada, and Europe.

While there is more than enough room in the market for marijuana and alcohol to coexist, the introduction of cannabis will drain away some customers from booze. That just stands to reason. They are, after all, competing products.

Companies like Liquor Store and Aurora, however, see opportunity in the turmoil. Rather than develop an adversarial approach, the two companies are hoping that the combination of the two products being on offer will help boost sales for both alcohol and marijuana (or at the very least not set the two in opposition).

It’s a savvy move that only looks savvier when considered in light of Aspen and other regions that have seen alcohol sales fall as marijuana becomes available.

Analyst’s Take

It is worth noting that Colorado is considered a bigger weed enthusiast than most, but the Aspen marijuana sales topping alcohol is no outlier. I believe that these types of statistics will become a new normal as time goes on, with marijuana staging a strong challenge to become one of the more popular vices in the world.

I believe that marijuana does have the potential to rival or even top alcohol in many parts of the world, especially the west, as more and more people are coming around to the idea that weed is more innocuous a drug versus booze.

And if that does eventually come to pass where marijuana outpaces alcohol sales on a larger scale than just Aspen, Colorado, expect marijuana stocks to shoot through the roof.