Cannabis Is Not Tobacco’s Competitor, but Alcohol’s

Business News - Alcohol

One would think that if any industry truly suffered from the legalization of recreational cannabis, it would be the tobacco industry. Indeed, on the surface, it seems to make sense. Both products are essentially dried plants that are rolled into paper and smoked. However, quite the opposite is true, and there is some research published in the journal Marketing Science done by the Terry College of Business at the University of Georgia that implies that cannabis is actually fighting with alcohol.

The data gathered points towards the fact that interest in alcohol has diminished. The researchers have reached this conclusion by observing advertising revenue, advertising click-through rates, and search volumes all tied to alcohol, cannabis, and tobacco.

The methodology used was done in conjunction with a high-level web portal that is based in the US.

The research incorporates information between 2014 and 2017. Their data encompassed 120 million ad impressions and 28 million searches that all lead to cannabis, alcohol, and tobacco. They focus on the six states that have legalized recreational cannabis in the aforementioned time period, namely, Alaska, Maine, Oregon, Nevada, Massachusetts, and California.

The same pattern is present for search volumes, click-through rates, and ad impressions related to cannabis and alcohol. Said pattern shows that while interest for cannabis and cannabis-related terms has increased, search volumes, click-through rates, and ad impression for alcohol searches have decreased by roughly 10%.

However,tobacco-related searches have increased. The most likely cause are the more recreation-heavy motivations behind why one would use cannabis and alcohol, as opposed to tobacco.

In their own words within the article, researchers Jian Yang, Pengyuan Wang, and Guiyang Xiong state that while alcohol companies “typically view the cannabis industry as a potential threat” , and that they are “opponents of its legalization”, the economic, cross-commodity effects that this legalization may have on tobacco and alcohol industries is essentially inconclusive. Nevertheless, they also claim within this article that cannabis is a substitute for alcohol, but that it is not a substitute for tobacco.

At present, the public seems to agree with them, but we’ll see what the future brings.