Cannabis could soon become a bigger industry than soda, and it has already started putting pressure on alcohol sales.
If marijuana is made legal nationwide in the US by 2030, the legal weed industry could generate $75 billion in sales by that year, according to a new note from the investment bank Cowen.
Cowen’s cannabis sector analyst, Vivien Azer, revised her previous estimate up by $25 billion. Legal marijuana sales are already around $50 billion, Azer said in the note.
Soda consumption, on the other hand, is declining. Per capita consumption fell to a 31-year low in the US in 2016, Bloomberg reports, with $76.4 billion in sales in 2017.
Legal marijuana is already starting to impact alcohol sales as well.
In states that have legalized cannabis, binge-drinking rates have fallen 9% below the national average, and 11% below states that don’t allow the sale of recreational marijuana, according to the note. Adults in states with legal cannabis binge drink an average of 13% fewer times per month than those in states without legal recreational marijuana.
“This work builds on our prior assertions that cannabis acts as a substitute social lubricant for consumers,” Azer said in the note.
“As cannabis access expands, we expect further pressure on alcohol sales, given this notable divide in consumer consumption pattern,” she added.
The cannabis market is still far behind alcohol, however. Sales of alcohol hit $210 billion in 2017, according to the note.
Plus, the market for marijuana will primarily be led by older consumers, as people 55 and over are the fastest-growing segment of marijuana shoppers, according to the note.
Nine states allow or will soon allow the sale and consumption of marijuana, representing almost a quarter of the US population.
Marijuana may also prove to be a tax windfall. The industry is expected to generate $17.5 billion in tax revenue by 2030, according to the note.
Legal marijuana sales hit $9.7 billion in sales in 2017, a number that does not include the industry in California, where recreational marijuana sales began on January 1, 2018. That state’s market is predicted to hit $5.1 billion in sales by the end of 2019, outpacing beer sales.
There are still numerous challenges for the booming cannabis market. Marijuana is still considered an illegal, Schedule I substance by the federal government, and many plant-touching businesses don’t have access to traditional banks so can’t open lines of credit.
Attorney General Jeff Sessions is a noted opponent of increasing access to marijuana, and he rescinded Obama-era protections for that limited the federal government’s interference with cannabis businesses.