The End of an Era: How Legal Cannabis Is Impacting the Alcohol Industry

For more than a hundred years, alcohol has dominated social drinking and been the main legal way for relaxation or celebration. But as we move through 2024 and into 2025, that era is clearly coming to an end. New alternatives are rising, and the old monopoly is fading.

We’re watching a real shift in how people socialize, where drinking is no longer the default. One of the reasons for this shift is that legal cannabis, especially hemp-derived THC drinks, is moving from a niche option to a true competitor. These beverages are cutting into alcohol’s market share noticeably. Tax data and sales numbers tell the same story. The bottle is being replaced by the bud, and it’s happening fast. 

In this article, we explore the evidence and mechanisms behind this change. We look at what research and market data say about the substitution of cannabis for alcohol, how drinking habits are changing, how cannabis beverages are emerging, and what this all means for the future of alcohol.

Cannabis vs Alcohol: The Substitution Effect

Evidence from Sales Data

One of the clearest signs of cannabis’s impact on alcohol comes from sales data. In Canada, where recreational cannabis became legal in 2018, new data shows a clear trend. As cannabis sales climb, alcohol sales are falling. Recreational cannabis sales grew by 11.6% and reached CAD 5.2 billion in the fiscal year ending March 31, 2024. During that same period, alcohol sales declined, and beer saw the biggest drop. This shift shows how modern and convenient cannabis products are starting to replace alcohol in everyday life.

Research from individual Canadian provinces makes the pattern even clearer. A quasi-experimental study found that beer sales declined sharply after cannabis legalization. The drop was immediate, with a reduction of 96 hectoliters per 100,000 people right after legalization. The decline continued over time, with an average monthly decrease of 136 hectoliters per 100,000 people. 

Alcohol sales dropped by 2.2% during the first 17 months in Nova Scotia after legalization. Sales also stayed lower than they were before legalization for the entire study period.

Self-Reported Substitution

Personal surveys show many cannabis users intentionally reduce their alcohol consumption. 

• In one study of 23,500 people who used cannabis and other substances, 60% said cannabis helped them cut back on drinking.

• New research on young adults shows the same trend. After legal marijuana stores opened, people ages 18 to 29 reported drinking less alcohol.

Both personal surveys and larger data trends show a clear substitution effect. Cannabis is starting to replace alcohol for many people.

Changing Drinking Habits and Demographics

Rise in Daily Cannabis Use

One notable change is that daily or near-daily cannabis use now surpasses daily alcohol use. In the U.S., data from 1979 to 2022 show that by 2022, about 17.7 million Americans used cannabis daily or nearly every day, compared to 14.7 million for alcohol. 

This shows cannabis isn’t a fringe option anymore. For many, it’s replacing regular or frequent drinking. Some analysts think this could reduce beer sales by up to 230 basis points in Canada and 75 in legal U.S. states.

Cultural and Generational Shifts

Factors other than legalization are also reducing alcohol use. Health awareness, changing social norms, and a “sober-curious” generation all play a role. Younger adults are more willing to skip alcohol or drink less, especially when safer or socially accepted alternatives like cannabis are available.

 Some people now view cannabis as less harmful than alcohol, tobacco, or opioids. This shift in perception normalizes cannabis use and weakens alcohol’s long-standing cultural dominance.

The Rise of Cannabis-Infused Drinks

A major trend is the rise of cannabis-infused drinks. These THC or CBD drinks attract people who enjoy drinking rituals but want a gentler or different psychoactive effect.

Cannabis drinks are growing quickly in legal markets. From March 2024 to March 2025, U.S. dispensary sales of ready-to-drink drinks with 100 mg THC reached $141 million, far surpassing 10 mg or 25 mg options. Global analysts estimate that the cannabis beverages market will reach USD 1.88 billion in 2025 and may expand dramatically by 2034 as regulations evolve and more consumers adopt cannabis drinks.

As cannabis drinks become more popular, they provide an alternative not only to smoking cannabis but also to alcohol. These drinks can be a natural substitute for beer, wine, or cocktails for people who are seeking a milder or more socially acceptable experience.

Market Disruptions for Traditional Alcohol Producers

The traditional beer business is under pressure as legal cannabis grows, with Canadian provinces reporting beer sales declines since legalization. High volume, casual beer drinking, once a steady revenue stream for breweries, is declining as consumers are switching to cannabis or lower alcohol options. 

Spirits sales are holding steady, so premium spirits are more resilient for now. But as cannabis beverages expand and diversify, even spirits may have issues. So big alcohol companies are looking at investing and partnering in cannabis derived products, recognizing that traditional alcohol may not be the top dog in a cannabis friendly market. 

Public Health, Policy, and Future Implications

Reduction in Alcohol-Related Harms

If cannabis replaces alcohol for some people, public health could improve. Fewer heavy drinkers may lead to fewer alcohol-related illnesses, accidents, and social issues. In fact,  many users report using cannabis to reduce their alcohol intake.

However, the long-term effects of cannabis are still unclear, and some people may use both cannabis and alcohol. Public health outcomes will rely on proper regulation, education, and responsible use.

Economic and Policy Consequences

Governments might face changes in tax revenue. Falling alcohol demand could disrupt budgets, but legal cannabis regulations and taxes can create new income and redirect spending. Moreover, regulation plays a key role. Where cannabis is illegal or restricted, alcohol stays dominant. But as legalization expands and more cannabis products like edibles, drinks, and vapes become available, alcohol may lose market share, prompting changes in public policy.

Adaptation for Long-Term Survival

In these changing times, the traditional alcohol producers can either adapt or risk decline. They can diversify into low- or no-alcohol drinks, invest in cannabis beverages where legal, or focus on premium and luxury products to maintain market share.

Conclusion

The rise of legal cannabis is reshaping the beverage market. Alcohol sales, especially beer, are declining in regions where cannabis is accessible, as many consumers substitute cannabis. Cannabis-infused drinks are growing fast, while spirits remain more resilient but may face pressure. In these changing times, the alcohol industry must adapt through new products and business models. For public health and policy, this shift brings both challenges and opportunities. If these trends continue, alcohol’s dominance may fade, and cannabis will dominate the new social landscape.