Generation Sober: Good News or Bad News for the Cannabis Industry?

Gen Z's consumption habits might be bad for the cannabis industry.

Multiracial friends using smartphone against wall at university college backyard - Young people addicted by mobile smart phone - Technology concept with always connected millennials - Filter image iStock / ViewApart

If you still think of Millennials as a “youth generation,” it might be a little surprising to realize the oldest Millennials turned 40 this year. In fact, today’s 21 and 22 year olds are the leading edge of Generation Z. And once you learn a little about their attitudes and values, it can be eye-opening to realize just how different Gen Zers can be from Millennials, even those Millennials who are just a few years older.

The alcoholic beverage industry is clearly a bit nervous about the impact Gen Z may have on their business. Research has found this generation drinks 20% less alcohol than Millennials did at the same age,[i] leading some to go so far as to dub the post-Millennials “Generation Sober.”

But the big unanswered question is this: will that make cannabis more or less appealing to them? Is it really sobriety Gen Z is seeking, or simply a better alternative to alcohol – for which cannabis may fit the bill?

Generation Z’s Habits

The first bit of evidence would seem to fall squarely on the “Gen Z loves weed” side of the ledger. BusinessWeek commissioned a survey by the polling firm Morning Consult that found Gen Zers were more than twice as likely to be regular or occasional cannabis users as the national average. (See Figure 1.) They concluded, “It’s always hard to generalize about an entire age group, but early signs suggest it will be a generation of marijuana consumers.”[ii]

Regularly or occasionally use marijuana

Figure 1

I don’t want to step on BusinessWeek’s buzz (sorry – I couldn’t help myself) but the key question here isn’t “How do younger adults act compared to older adults right now?” Most people do most of their alcohol drinking and weed smoking in their early 20s, and so this sort of data doesn’t tell us much of anything about the future. Better questions would be “How does the current young adult generation compare to previous youth generations at the same age? How will the arc of their use over their lifetimes compare to the trajectories followed by older generations?” And the BusinessWeek data, while it’s undoubtedly useful in many ways, doesn’t address that.

What might be more telling are long-term trends in self-reported marijuana use published by the Substance Abuse and Mental Health Services Administration (SAMHSA) at the Center for Disease Control. Here’s the good news if you’re a parent (but bad news if you’re someone who’s looking toward the future of a business selling recreational marijuana): 12 to 17-year-olds were the only age group whose self-reported marijuana use declined over the period 2011-2017. (See Figure 2.) Usage had been growing among 12 to 17-year-olds until 2011 – roughly the point at which Gen Zers started replacing Millennials in this age range – and then the trend turned downward.

Figure 2

In search of insights about the reasons for this decline, Wikileaf spoke with Lindsay Kunkle, Head of Youth Consulting for Kantar, a leader among firms analyzing consumer trends (and proprietors of the Yankelovich MONITOR, the nation’s longest-running survey of Americans’ attitudes and values). She told us “I’m not surprised by [the CDC numbers]. [Gen Zers] don’t participate as much in a lot of risky teenage behaviors, not just marijuana use, but drinking and sex… They are laser-focused on getting ahead and know that with social media any one moment could end up living on forever. They saw the Millennials get slapped in the face because they weren’t prepared financially and with key life skills. Gen Z knows where they want to end up and that one fun night is not worth derailing their plans for a lifetime.”

How Does Gen Z View Cannabis?

Marijuana is actually less likely to be seen as “in or on the way in” among Gen Zers than among older generations, according to the Yankelovich MONITOR. (See Figure 3A.) But this isn’t as problematic for cannabis fans as it might initially appear, once this data is seen in a larger context. The images of wine, beer, and liquor have all taken much more of a beating among Gen Zers – the generation gap for marijuana is actually pretty small compared to the gap for alcoholic beverages. (See Figure 3B.) And so once the analytical dominoes have fallen marijuana remains standing as the clear leader in terms of being “in” among the youngest generation.

Agreeing that a given product is "in" or "on the way in"

Figure 3

The perception that cannabis is healthier than alcohol (or at least less unhealthy) may well be a driver of this shift in relative “in-ness.” Consulting firm BDS Analytics surveyed people on the reasons they use marijuana, and the top three were recreational or social reasons (75%), health or medical reasons (52%), and relaxation (42%).[iii] I worked in the beer business for many years so I can confirm what probably already seems obvious to readers: social reasons and relaxation are also a big part of why people consume alcohol. “Health and medical reasons” not so much. (Okay, not at all.)

Kunkle points out that one big aspect of health and wellness for Gen Zers has to do with mental health. “They’re very stressed, and a lot of it is pressure they put on themselves. Do well in school, be healthy, be self-reliant.” This leads her to conclude “Just because their marijuana use was declining [as teens] doesn’t mean they’re not going to embrace it as adults. They may well be leading the charge. It doesn’t give you a hangover. It’s associated with a calming sensation that could ease some of that anxiety they are constantly managing.”

In fact, if we take both the CDC data and the BusinessWeek survey results at face value, we see that in 2017 6.5% of 12 to 17-year-olds reported using marijuana at least once a month. Then in 2019 27% of Gen Zers over the age of 18 say they use weed at least occasionally. Is it plausible that among the oldest Gen Zers the rate of marijuana use quadrupled after they turned 18?

More likely the sheer magnitude of that number is a function of different survey methodologies and other complications. But according to the Yankelovich MONITOR, 41% of Gen Zers over 18 say they would be somewhat or very interested in using recreational marijuana if it were legal. As legalization advances, then, we may see something of a slingshot effect as a lot of repressed demand is suddenly released. And so I may owe BusinessWeek an apology because the potential would seem to be there for adult Gen Zers to become a generation of marijuana consumers after all.


Sources

[i] https://www.businessinsider.com/millennials-gen-z-drag-down-beer-sales-2018-2

[ii]https://www.bloomberg.com/news/articles/2019-04-20/gen-z-and-weed-the-u-s-generation-of-native-cannabis-consumers

[iii] https://www.brewbound.com/news/beer-institute-examines-marijuana-industry-annual-meeting

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