When California legalized medical marijuana in 1996, few in the beer industry were modeling its long-term impact on alcohol sales. Recreational legalization in Colorado and Washington followed in 2012. Today, 43 states have legalized medical marijuana and 25 have legalized recreational use in some form. More recently, hemp-derived THC products (often containing Delta-9 (D-9), Delta-8 (D-8), or other cannabinoids) have stepped onto the scene.

These products have entered the market through what some describe as a loophole in the 2018 Farm Bill. Whether loophole or not (and whether or not it will be closed in 2026), there are some markets around the country where these products have proliferated rapidly.

In today’s beer market with volumes under pressure, cannabis and hemp-derived THC are frequently cited as culprits, a major factor in the decline of beer sales. The narrative is simple: as access to THC expands, consumers substitute away from beer. It’s a tidy explanation, but tidy explanations deserve scrutiny.

And so, I wanted to look at what the data actually say.

Some Background

In May 2024, a study published in Addiction provided fodder in the discussion about cannabis and alcohol substitution. Those claiming substitution are prone to circulating the following chart from that study.

The implication drawn from the research is that cannabis legalization has directly led to reduced alcohol consumption. Back in November 2024, Bart Watson addressed this claim head-on in his own post (Craft Beer and Cannabis).

In the time since Bart’s post was published, we have another year plus of shipment data and there has also been a boom in hemp-derived THC products flooding many new markets. The fact that legalization has happened piecemeal across the country has created something of a natural experiment where we can compare how beer is faring across different THC landscapes.

Recreational Cannabis

In the years since states have legalized recreational marijuana, we have seen, on average, slightly steeper declines in beer shipments than in states without recreational legalization.

Over the past 10 years (2016-2025), non-recreational states saw shipments decline by -0.7% annually, compared to -1.9% in recreational states. Over five years (2021-2025), the figures were -2.9% and -3.8%, respectively. And when considering the recent past three years (2023-2025), non-recreational states saw beer shipment declines of -3.2% versus -4.0% in recreational states.

At first glance, that difference seems meaningful. But context matters. Across all states, the overall averages for those same time periods were -1.3%, -3.3%, and -3.6%, respectively. In the same periods standard deviations hovered around 1.2–1.3 percentage points. In other words, the differences in shipment trends between recreational and non-recreational states sit comfortably within one standard deviation of the mean. Statistically speaking, that’s not a large divergence suggesting that if there is an effect, it is marginal relative to broader industry trends.

And there’s another wrinkle. Not every state with legal recreational marijuana today had it 10 years ago, or even five. So, I next looked at states only during the years in which recreational cannabis has been legal within their borders.

Across the 25 states with recreational marijuana, legalization has ranged from 3-14 years. Comparing each state’s beer shipment trend since legalization against the U.S. average over those same years yields an average difference of -0.7 percentage points. While this is not a large enough difference to suggest a strong statistical effect, it’s something we’ll be watching over the coming years. Again, some of the other structural pressures already facing beer seem to have more of an impact at the moment, including consumer behavior, increased competition across beverage alcohol, and broader changes in social occasions.

Hemp-Derived THC Products

The more recent entrant into the conversation is hemp-derived THC products such as beverages. Enabled by the 2018 Farm Bill and subsequent state-level interpretations, these products have expanded rapidly over the past several years.

While every state has different rules, each state can be broadly grouped into one of five categories based on their regulatory stance toward hemp-derived THC products: fully legal, legal with some restrictions, mixed, heavily restricted, and illegal.

Over the past three years (the period in which these products have gained meaningful visibility) states with at least some legal status for hemp-derived THC products have performed almost exactly in line with the national average. Beer shipments declined -3.5% in fully legal states and -3.6% in states that are legal with some restrictions, compared to -3.6% nationally.

There is somewhat more variability among states with heavy restrictions or outright illegality. Heavily restricted states saw a -4.2% decline, while illegal states declined -3.1%. But when simplifying the analysis into two broad buckets — “legal” (-3.6%) and “not legal” (-3.5%) — the difference effectively disappears.

In other words, hemp-derived THC beverages do not appear to be carving out a dramatically different trajectory for beer in the states where they have gone mainstream.

One more approach to considering this data is combining the two factors of recreational cannabis legalization and hemp-derived THC legalization. In those cases, over the past three years, the average beer shipments were down most sharply in states with both legalized (-4.1%), then in states with legal recreational and no hemp THC (-3.8%), then hemp THC and no recreational (-3.2%), and least in states with no legal cannabis or hemp-derived THC (-3.0%). It’s worth pointing out that there are only six states with legalization of both, a small sample size that includes some of the most populous states where other factors could be at play.

Substitution and Occasion

None of this means cannabis and beer never compete. At the individual consumer level, substitution absolutely happens. Some consumers may choose a THC beverage instead of a beer on a given night. Others may use cannabis in addition to alcohol, or in entirely separate contexts. And, alternatively, beer can take from cannabis occasions.

Beer remains however, fundamentally, a social lubricant. It’s a product often shared in public spaces and with existing friends or brand-new ones. On the other hand, many THC occasions are solitary or done privately. The overlap of occasions exists, but it may not be as large as casual commentary suggests. That said, there remains an opportunity for beer to focus on creating more social occasions to combat industry contraction.

The larger takeaway is that beer’s recent performance challenges are broad-based. States with and without cannabis access are declining. States with hemp-derived THC beverages are tracking close to the national average. The differences that do exist are generally small relative to overall category contraction.

So, What Does THC Take From Beer?

Based on beer shipment data, not much (at least not at a scale that meaningfully alters state-level trends).

That doesn’t make the topic irrelevant, and it is not an excuse to not be at the table. Educated by our members who have entered the cannabis space (or are thinking about it), the BA continues to represent the interest of craft brewers as an active participant in the Hemp Beverage Alliance and through maintaining communication with the Hemp Roundtable and the Coalition for Adult Beverage Alternatives. And by diving into the numbers for you here.

So, the next time cannabis comes up in taproom discussions, distributor meetings, or industry panels, help ground the debate in data rather than assumption. And know that as the industry continues to evolve in the coming months and years, the BA has you covered.