A popular independent craft spirits distillery says it’s scaling back its operations—due in part to the fact that more adults are choosing marijuana over alcohol.
Heritage Distilling Company, Inc.–which has distillery locations for its whiskey and other spirits in Oregon and Washington State where cannabis is legal—said on Thursday that a confluence of factors informed its decision to close tasting rooms, shift to contract production partnerships and focus on direct-to-consumer sales.
This company cited four reasons for the merger. This includes “consumer shifting towards alternative products such as marijuana and reduced alcohol consumption.”
The alcohol industry is watching this shift closely. In an interview earlier this year, Brown-Forman Corporation’s CEO, who produces Jack Daniel’s and Woodford Reserve brands, stated that increasing marijuana use as a substitute for alcohol was putting pressure on the spirits market.
New congressional lobbying reports show that major companies like Anheuser-Busch North America, Bacardi North America, and Moet Hennessy USA have been lobbying federally to change cannabis policies in response to the recent surge of interest in THC-containing beverages.
Jennifer Stiefel stated in a release that Heritage Distilling has been a place for family and friends to come together to share great spirits and each other’s companies. As we enter the last quarter of the year we want to allow our club members and customers two months to make their final tasting room visits, share great memories, and thank our staff for helping them on their journey.
As an additional reason for the change in business model, the company cited tax and regulatory challenges faced by Oregon and Washington State.
It’s not surprising that the evolving preferences of cannabis consumers played a role in the decision, since recent analyses and studies have shown that legalizing marijuana has been disruptive for the alcohol sector.
A poll released earlier this month found that a majority of Americans believe marijuana represents a “healthier option” than alcohol—and most also expect cannabis to be legal in all 50 states within the next five years.
Another recent survey showed that four in five adults who drink cannabis-infused beverages say they’ve reduced their alcohol intake—and more than a fifth have quit drinking alcohol altogether.
That survey was released shortly after a leading alcohol industry group added a company that makes THC-infused drinks to its membership roster for the first time, furthering signaling the cultural shift.
This also comes at a time when younger Americans are increasingly using cannabis-infused beverages as a substitute for alcohol—with one in three millennials and Gen Z workers choosing THC drinks over booze for after-work activities like happy hours, according to a new poll of 1,000 young professionals.
Target has announced that it will soft launch the sale of THC-infused drinks in Minnesota at select Target stores.
Meanwhile, Veterans of Foreign Wars (VFW) of the United States recently entered a first-of-its-kind partnership with a hemp THC beverage company, with a licensing branding deal that will support a variety of veterans services and promote cannabis drinks as a potential alcohol alternative with the drinks being available at VFW posts across the country.
Separately, while Target is apparently moving into the THC drink space, the airline Virgin Atlantic denied satirical and false claims earlier this year from a cannabis beverage company about a deal to sell its THC-infused beverages on flights.