Certain segments of the alcohol industry did what they could to stymie the success of the legalization campaigns pushing for cannabis regulation during the 2016 election cycle. Their motives for doing so are captured by a 2014 10-K filing statement made by the Brown-Forman Company, the makers of Finlandia Vodka and Jack Daniel’s Tennessee Whiskey, in which the company cited “the potential legalization of marijuana use on a more widespread basis within the United States” as a risk to their business.
While existing research is inconclusive about the veracity of this threat assessment, it suggests that cannabis does have an impact on the alcohol industry. Evidence from a working study by researchers from Georgia State and the University of Connecticut found that the introduction of medical marijuana laws led to a 15 percent reduction of alcohol sales.
A 2016 review analyzing existing literature on the relationship between alcohol and cannabis consumption suggests that cannabis is likely a substitute for alcohol, though the evidence wasn’t definitive. The researchers reviewed 39 articles and found that 16 of the articles support the claim that cannabis is a substitute for alcohol while 10 of the articles support the claim that cannabis increased alcohol use. One of the articles supported both conclusions while the remaining 12 articles did not support either.
The tension is particularly relevant in northern California, a region of the state that is famous for its cultivation of two economically significant and competing crops: grapes and weed.
Napa Valley vs the Emerald Triangle
Napa Valley, located north of San Pablo Bay in northern California, is famous for the over 400 wineries that populate the region’s fertile soil. Tourists frequent the area to enjoy tours and the accompanying activities. It’s a money-making hub for sure—in 2016, it was visited by 3.5 million people who spent nearly $2 billion while there. Wineries existed before alcohol prohibition and have thrived since that legislative failure was rescinded. However, the entrance of legal cannabis into the fold presents the industry with a new kind of challenge.
Though cannabis is legal state-wide, it’s cultivation center is also located in northern California, a place known as the Emerald Triangle. The Emerald Triangle consists of Mendocino, Humboldt, and Trinity counties, and it is in this space that most of the cannabis in the United States is produced. Cannabis cultivation in the region is much younger than grape cultivation. The practice gained traction in the 1960’s, during San Francisco’s “Summer of Love,” a time period when the neighborhood of Haught-Ashbury became the stomping grounds for government-questioning, peace-loving, pot-smoking hippies. However, since cannabis remains illegal at the federal level, the region has not yet evolved into the tourist-friendly zone Napa Valley has become.
If You Can’t Beat ‘Em, Join ‘Em
Despite federal prohibition, cannabis remains the most widely used illicit substance in this country. In the states that have adopted regulation despite the national ban, the nascent cannabis industry continues to outpace the predictions experts have made about its profitability.
Cannabis’ relative safety, when compared to alcohol (it is far less toxic and less addictive), makes it a formidable competitor. That may be why some parts of the alcohol industry are looking for ways to partner with cannabis businesses rather than attempt to subvert them.
The Wine Industry Network launched its first Wine & Weed Symposium in late 2017 as an attempt to bring members of both industries together to focus on areas of collaboration. A survey taken by symposium attendees exhibited a shift in attitude about the relationship between cannabis and wine—one that is far more complementary than incompatible. The majority of the attendees were part of the wine industry, but 77 percent of them felt that the two industries were more likely to work together than against each other. Only 7 percent of survey participants expressed concern about competition.
Of the issues discussed at the symposium, the question of combining cannabis and wine was one that demonstrated the potential for interesting collaboration at the cost of federal prosecution. Because cannabis is a Schedule I substance, California wine companies that host cannabis events or infuse cannabis into their products open themselves up to the risk of prosecution. State laws also seem to work against this kind of combination.
The Alcoholic Beverage Control does not allow retailers with both a cannabis and an alcohol permit to sell both products from the same location. The Bureau of Cannabis Control does not allow a licensed cannabis retailer to be in a location where a consumer would have to pass tobacco or alcohol-selling establishments to get to it. Additionally, events in which cannabis and wine are paired are illegal. It is also illegal to consume cannabis at a location with a permit from the Alcoholic Beverage Control.
At the eleventh annual Direct to Consumer Wine Symposium held in early 2018, the question of cannabis and wine collaboration took center stage as well. Wine industry professionals were eager to learn how they could enter into the cannabis industry. Cannabis attorney Lauren Ayn Mendelsohn, one of the moderators of the event, explained ways to legally work around the barriers impeding full-on collaboration.
“There are still other ways for the wine industry to collaborate with or get involved in the cannabis industry,” she explained. “For example, a person could hold an ABC license and a cannabis license for different premises. To be extra safe, they could be held by different entities.”
Another solution for those who want to support both the cannabis and wine industries is one that meets consumer demands without violating any laws: combined wine and weed tours. On these tours, people complement the traditional orchard trip with one to a cannabis dispensary. Bay Area Cannabis Tours is a company offering this service. Tourists travel to and from cannabis dispensaries and wine orchards and are allowed to consume cannabis on the bus. The package includes lunch, wine tastings, and snacks. The Sonoma County Experience provides a tour that puts a greater emphasis on cannabis education than cannabis consumption. Tourists can taste wine at the different orchards they visit, but can only buy cannabis for later consumption at their one dispensary stop.
Cannabis and cabernet have made an indelible impact on the economy, and it’s clear that the two industries aren’t going anywhere. Whether or not they come together or compete depends on the way cannabis laws and the market continue to evolve.