The widespread legalization of adult use cannabis is giving consumers a new vice to consider – and that could dent sales of some alcoholic beverages.

That’s one of the theses of investment bank Cowen, a firm that has been at the forefront of coverage of the cannabis space. Both recreational cannabis and alcohol serve similar functions as social lubricants, which could lead to some substitution.

In fact, Vivien Azer, managing director at Cowen, called 2018 the “worst year for beer sales in the near decade we have been covering the alcohol industry, and we continue to believe that growing cannabis use is a factor.”

Azer in a report published Friday cited Nielsen data, which showed combined beer sales were flat for the four weeks ending on December 29, coming in just slightly above the 0.3% decline seen over the past 12 weeks. And the National Beer Wholesalers Association’s Purchasers’ Index registered at 47 for December, coming in below the reading of 55 from December 2017 and extending a four-month trend of readings below 50, indicating contraction in total beer orders placed with suppliers.

Based on a Cowen survey, beer was the most popular alcoholic beverage among current and former cannabis users, and 60% of current consumers cited a reduction in alcohol consumption when mixing the two products. And 70% of lapsed cannabis users – or those who had used cannabis in their lifetimes but were not current users – said they believed they would reduce their alcohol consumption if they returned to use, “suggesting there could be an even greater impact to alcohol consumption if and when lapsed users re-enter the category,” Azer said.

While only about 20% of consumers reported perfect substitution between cannabis and traditional alcoholic beverages, “What you’re really worried about is this marginal alcohol unit,” Azer said.

“Hypothetically you take a consumer that on a beer occasion would have three or four beers and then add cannabis to the mix, well now that’s one or two beers plus cannabis,” she added. “As we think ahead to 2019, we are increasingly cautious again on beer.”

Bobby Burleson, a managing director for Canaccord who anticipated that the cannabis-infused drinks industry could balloon to a $600 million market in the next three years, agreed that “a robust adult use recreational cannabis industry is going to be competing with alcohol sales to a certain degree.”

“There’s a psychoactive wallet share of consumer dollars,” he said in an interview with Yahoo Finance. “I don’t think it’s a perfect substitution, but it’s some erosion into the discretionary spending on alcohol.”

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Spirit substitution

Some other firms aren’t convinced cannabis is the culprit for lukewarm beer sales. A study released last week from the Distilled Spirits Council examining trends in Colorado, Oregon and Washington – three U.S. states which have had adult use legalized the longest – found that while per capita consumption of beer sales has steadily dropped in the past several years, the sizes of the declines have been roughly consistent with the national average.

The study found that per capita beer sales declined 3.6% in both Colorado and Oregon and 2.3% in Washington, based on state-level alcohol tax receipts and shipment data for the two years prior to recreational marijuana legalization and up to four years post-legalization. This compares to an about 4% decline at the national level.

But when considering per capita total beverage sales including spirits, wine and beer, the results were roughly flat, with increases in per capita wine sales in Colorado and Oregon offsetting some of the decline in beer sales. This may undercut the idea that adult use cannabis is behind the decrease in beer sales, when a consumer taste shift toward other alcoholic beverages may in fact be to blame, said David Ozgo, senior vice president of economic and strategic analysis for the Distilled Spirits Council.