Cannabis Market Trends: Marijuana Will Gain Millions Of Consumers Over Alcohol, With Sales Hitting $37 Billion By 2027
According to an analysis conducted by the multinational investment firm, TD Cowen, the cannabis industry is showing remarkable growth and competitiveness against the alcohol market. This growth is projected to continue over the next five years, with an estimated addition of 20 million regular cannabis consumers. Meanwhile, the alcohol industry is predicted to lose around 2 million consumers. This article aims to explore how dispensary payment processing solutions, such as those offered by PayRio, can help drive this growth further.
The Rise of Cannabis Over Alcohol
Cannabis sales reached an impressive $29 billion in 2023, capturing around 11 percent of the alcohol industry’s revenue. This is a significant increase from a mere 4 percent five years prior. Notably, the cannabis market is projected to grow by another 7 percent annually over the next five years.
TD Cowen’s report, aptly titled “Cannabis Beats Booze,” suggests that consumers are increasingly embracing cannabis while moderating their alcohol consumption. This shift is particularly noticeable among younger demographics.
“We believe that over the next 5 years, the cannabis category will add 18 million past-month consumers, while alcohol will lose 2 million past-month consumers.” – TD Cowen’s Report
The Role of Dispensary Payment Processing
Understandably, a significant part of the cannabis market’s success can be attributed to dispensary payment processing solutions. By normalizing the checkout process for customers, companies like PayRio have made it easier for consumers to purchase their preferred cannabis products.
Such solutions also address the issues of security and convenience. They allow dispensaries to accept credit and debit card payments, a feature that is particularly appealing to younger consumers who prefer cashless transactions.
The Impact on Alcohol Sales
TD Cowen’s report shows more than a two-thirds reduction in alcohol consumption among cannabis users. The report also highlights how legal cannabis states are experiencing divergent revenue growth trends, suggesting that alcohol is underperforming in these states compared to prohibitionist states.
“Alcohol will continue to underperform in legal cannabis states.” – TD Cowen’s Report
Future Projections for Cannabis Market
As more states legalize cannabis and new markets emerge, marijuana sales are estimated to reach $37 billion by 2027. This growth is predicted despite the challenges alcohol companies might face in navigating shifting consumer trends.
The report indicates that beer sales are most at risk, with the number of drinks consumed per occasion being lower in cannabis states. This trend could be attributed to the impact cannabis has on alcohol consumption.
Alcohol Industry’s Response
The alcohol industry has shown interest in the cannabis market, but significant movement is not expected until there is a legislative or administrative regulation change at the federal level.
Canada as a Case Study
The report also studied Canada, which legalized marijuana nationally in 2018. The Canadian cannabis sales now account for 20 percent of the alcohol market size, providing a useful case study for other countries considering similar measures.
Public Perception of Cannabis
Various surveys show a shift in public perception of cannabis. A Gallup survey found that Americans consider marijuana to be less harmful than alcohol, cigarettes, vapes, and other tobacco products. This perception, along with the convenience provided by dispensary payment processing, may be contributing to the growing acceptance of cannabis.
Implication on Market Data
State-level market data aligns with TD Cowen’s analysis. For instance, marijuana sales in Michigan outpaced alcohol sales during the most recent fiscal year. A similar trend was observed in Illinois and Colorado, where legal cannabis generated more income than alcohol or cigarettes.
The report’s findings suggest a significant shift in consumer preference from alcohol to cannabis. This trend is fueled by a combination of factors, including evolving public perception, legalization in more states, and convenience offered by dispensary payment processing solutions like PayRio.
In the wake of this changing landscape, the cannabis industry and payment solution providers have a unique opportunity to shape the future of the market. As more consumers embrace cannabis, the role of convenient, secure, and normalized payment solutions will be pivotal in driving the industry’s growth.