Is Cannabis Replacing Alcohol, or Are They Finding a New Balance?

Is cannabis really replacing alcohol, or is the story more complex? As more states legalize recreational cannabis, you’d expect a dip in alcohol consumption. But data from Sightlines News tells a different story. In several states where cannabis is legal, alcohol consumption hasn’t dropped—it’s actually increased.

Cannabis and Alcohol: The Data Behind the Debate

Between 2014 and 2021, 17 states legalized recreational cannabis. Conventional wisdom suggests that increased cannabis use might lead to decreased alcohol sales, but Sightlines News data reveals the opposite. In states like California, Colorado, and Massachusetts, alcohol consumption has risen by double digits since legalization. California, for example, saw a 14.3% increase in per capita ethanol consumption. Colorado reported an 11.2% increase, and Massachusetts saw a 10.2% rise.

The data challenges the idea of a simple substitution. Instead, it suggests that cannabis and alcohol fulfill complementary roles for consumers, coexisting within a broader landscape of lifestyle choices. Alcohol and cannabis are no longer viewed as mutually exclusive; instead, they cater to different needs and preferences, depending on the occasion.

Spending Habits: Cannabis Users and Alcohol

One notable trend is that cannabis users tend to spend more on alcohol than non-users. Daily cannabis consumers allocate 15.3% of their grocery dollars to alcohol, while non-users spend around 14.3%. Occasional cannabis users spend even more, at 18.1%. This suggests that people who use cannabis aren’t abandoning alcohol. However this data doesn’t factor in volume vs percent of grocery dollars spent. So are they buying more or are they buying more high quality booze? Anecdotally, if they are like me when i was still drinking, they’re likely choosing higher-quality products, resulting in a larger overall spend.

The trend indicates that cannabis consumers are curating their choices, focusing on premium experiences. Rather than drinking more frequently, they may be choosing higher-end products, aligning with broader trends in “intentional indulgence.” This audience is discerning—they want quality, not just quantity.

Functional CPG, Health Trends, and Intentional Indulgence

Today’s consumers are health-conscious, but they still want indulgence. The concept of “intentional indulgence” speaks to this balance, as people seek options that are both enjoyable and mindful. For instance, they might opt for a lower-ABV ready-to-drink (RTD) cocktail rather than a stronger spirit, allowing for flavor without overconsumption.

Brands are responding to this shift. Diageo, for example, coined the term “neo-hedonism” to describe the consumer preference for indulgent yet health-conscious products. Cannabis beverages fit well within this trend, offering a balanced alternative to traditional alcohol. Low-dose THC drinks meet the demand for lighter, enjoyable experiences, catering to the consumer who wants to feel good without the intensity of high-THC products or the aftereffects of alcohol.

Cannabis beverages offer a unique solution for consumers who want flexibility and choice, whether it’s alcohol, THC, or a combination of both. As options continue to diversify, consumers are empowered to make decisions based on their lifestyle, preferences, and social setting.

Shifts Among Younger Generations: Gen Z’s Preference for Cannabis

High school seniors today consume far less alcohol than previous generations. Sightlines News, drawing on Monitoring the Future data, shows a significant decline in teenage alcohol use since the 1970s. In 1980, around 93% of seniors had tried alcohol. Today, that figure is closer to half. Cannabis use, on the other hand, has stabilized, with usage rates hovering between 36% and 43% among high school seniors.

Younger consumers, particularly Gen Z, view alcohol differently from past generations. With an emphasis on health and wellness, many in Gen Z see cannabis as a safer option than alcohol. They’re open to social cannabis use, but they’re also mindful of its effects. As they come of age, they bring a fresh approach to social drinking—one that includes cannabis and alcohol, often in moderation.

This trend underscores a change in how people experience “social beverages.” The market for low-dose cannabis drinks aligns with Gen Z’s demand for choices that fit diverse social situations. This generation isn’t replacing alcohol with cannabis entirely; rather, they’re integrating both into their social lives in ways that feel intentional and tailored.

The Minnesota Experiment: THC Beverages in Mainstream Retail

Minnesota offers a unique look at how low-dose THC beverages might integrate with alcohol in mainstream settings. Unlike most states, Minnesota allows THC drinks to be sold in grocery stores and served in bars. This setup positions THC beverages directly alongside alcohol, offering consumers a full range of choices.

Minnesota’s thriving craft beer culture makes this experiment especially relevant. With cannabis drinks available in bars and restaurants, will alcohol consumption hold steady, increase, or decline? Early observations could set the stage for how other states approach THC beverages. This experiment shows that low-dose THC beverages can be seamlessly introduced into traditional retail and social spaces, creating a more inclusive beverage landscape.

Functional CPG and the Future of Cannabis

Beyond alcohol, the broader trend toward functional CPG products reflects a growing consumer desire for wellness. People want products that feel good to consume and provide some added benefit, even if they’re not overtly “healthy.” This trend has spurred the popularity of probiotic sodas, adaptogen drinks, and low-alcohol options.

Cannabis beverages fit naturally within this trend, especially low-dose THC options. They offer a relaxed experience that aligns with wellness-oriented lifestyles without the intensity associated with smoking or high-THC products. These drinks appeal to consumers looking for a light, enjoyable option that provides a balance between wellness and indulgence.

Brands like OLIPOP have demonstrated that emphasizing enjoyment over health benefits can strengthen a product’s appeal. They have also found that focusing too much on health can actually detract from the enjoyment factor. People drink soda because it’s fun and tasty; the health aspect is a bonus.

For cannabis beverages, this approach suggests a focus on delivering an experience, not just health messaging. Positioned correctly, low-dose THC drinks can attract consumers who seek relaxation without compromising their wellness goals.

Coexistence, Not Replacement

So, is cannabis replacing alcohol, or are they finding new spaces to coexist? The data suggests that both alcohol and cannabis are evolving to fit within a larger landscape of consumer choice. Consumers want options that allow them to balance personal wellness, social enjoyment, and lifestyle alignment.

Today, beverage choices go beyond alcohol or cannabis alone. People want options that feel right for different settings—whether that’s a beer at a concert, a THC beverage at a social gathering, or a non-alcoholic drink at a work function. It’s about inclusivity, flexibility, and matching the product to the occasion.

As states like Minnesota test broader access to THC beverages, we’ll continue to see how these trends unfold. The future of social drinking may not be a battle between cannabis and alcohol but a blend of choices that give consumers control. Cannabis beverages are a natural part of this shift, meeting the demands of a generation that values both wellness and enjoyment.

What do you think? Is cannabis poised to stand alongside alcohol as a mainstream choice for social and personal enjoyment?