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article imageLegal marijuana enhances craft beer in Colorado Special

By John Mitchell     Aug 29, 2014 in Business
Concern that legal pot in Colorado would compete with the state's world class beer scene appears to be unfounded. Four Colorado breweries report on their experience in the new market place.
When Colorado became the first state in the country to allow the sale of legalized marijuana this year, many experts weighed in with prophecies of unintended consequences. And while it’s possible such troubles may still emerge, so far the news has been mostly positive. In the first four months of the year, Denver realized almost $8 million in new tax revenue, a 6.7 percent increase in prior year tax collections. The city’s crime rate also dropped 5-10 percent (depending upon how the data is viewed), contrary to widespread predictions from law enforcement. And in a related development, researchers at Johns Hopkins University just released a study in the respected JAMA Internal Medicine journal that states with recreational marijuana (of which Colorado is one) saw a 25 percent drop in narcotic pain pill addiction.
There was also speculation about the impact of legal weed on the other popular homegrown specialty in Colorado — craft beer. Colorado ranks second in the country for Gallons Consumed Per Adult, third for Barrels Produced and fourth for Breweries Per Capita. Colorado also ranks fifth for the economic impact of craft beer on its state economy. Denver alcohol sales were up a half million dollars in the first four months of the year, compared to the same time period in the prior year. It reasons that eight months into the grand marijuana experiment, craft brewers across Colorado are in a unique position to have an opinion based on what they are seeing day-to-day at their breweries.
“I can see how some would think that legal pot would compete with craft beer,” said Sean Nook, owner and brewer at Black Bottle Brewing in Ft. Collins. “But I’m not seeing it. I think that’s because to some extent marijuana and craft beer have always existed together - first when it was illegal, then when it was by medical prescription and now that it’s legal. People who have always smoked pot and drink craft beer are still doing it - it’s not an either or proposition.”
Nook’s assertion is supported by a recent study conducted by the Colorado Department of Revenue that most recreational pot users are tourists or former black-market buyers.
Danny Wilson, Head Brewer at Palisade Brewing Company on the Western Slope of Colorado, echoes Nook’s sentiment. “People who drink craft beer are flavor motivated. I think that attitude extends to those who smoke marijuana. Both groups are open-minded and I have observed cross-over between the two.”
Both Nook and Wilson point out that smoking marijuana is not permitted in their breweries, per state law governing smoking. Smokers still must use designated smoking areas or smoke off the property. Nook said he is more concerned about customers who smoke marijuana oil in e-cigarettes. “I have had to inform some customers that they cannot use vapor cigarettes in our bar and restaurant to smoke marijuana products."
Wilson, who cans and ships much of his beer for sale, said that he has the same concern about stoned customers driving as those who just drink his beer.
"But most of our customers are locals and they walk home," said Wilson.
These Colorado brewers are reporting steady or increased sales in 2014. This mirrors data released by Brewers Association, a trade group, which reported that nationwide first half 2014 craft beer sales increased 18 percent. That is certainly the case for Kannah Creek Brewing in Grand Junction that just also began selling beer across the Colorado state line in Arizona. According to Kaitlin Lubeley, Marketing Coordinator, legalized pot has not had an impact in their market.
“The nearest store is 45 minutes away. Grand Junction has not yet allowed recreational marijuana to be sold,” she explained. “So we’re not yet seeing a real connection.”
Bart Watson, Chief Economist at The Brewer’s Association, often speaks of “a sense of place” in explaining the rise of craft beer. This intangible desire for a local experience is one of the reasons that traditional big brewers continue to lose market share every year to small neighborhood and regional craft brewers. It turns out people love the story of the craft beer they are drinking - of how the brewer took the risk. Craft beer customers see this as a reflection of their own desire for adventure in their lives. It is also a visceral emotion that helps drives the tourist trade.
“We have customers every week asking where they can buy weed,” said Erik Maxson, owner and brewer at Brew Pub & Kitchen, Durango Colorado’s newest craft brewer (there are four other breweries in town). He said Durango, which is the southern part of the state, is working its way through zoning and other issues; he predicts that recreational pot will be for sale in Durango by the end of the year.
“Pot was no fun in the past because it was illegal,” Maxson mused. “But now, just like craft beer, it has to be enjoyed reasonably - and that’s what I see people doing.”
As far as affecting his business, Maxson agrees that legal pot is not a competitor to craft beer.
“Mine is a new business and we’ve had a great summer selling craft beer,” he said.
More about Marijuana, craft beer, Colorado, Social business
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