Recreational Cannabis Legalization A Substitute for Alcohol, Not Tobacco

A new study forthcoming in Marketing Science indicates although recreational cannabis legalization (RCL) significantly increases cannabis online search volume, the increase comes from adults only, not the younger demographic. RCL also influences the alcohol and tobacco industries asymmetrically: it reduces search volume and advertising effectiveness for alcohol, but increases those for tobacco.

“There are legitimate concerns being expressed in connection with drug abuse and whether or not people, especially young people, would use marijuana more, if it were to be legalized,” said Guiyang Xiong, assistant professor of marketing at Syracuse University’s Martin J. Whitman School of Management. “This study is meant to take a look at the asymmetric effects recreational marijuana legalization has on adults vs. the youth’s interest in cannabis.”

Interestingly enough the study finds that the increase in online cannabis search comes from adults only, but not the youth. If online search serves as a reasonable proxy for consumer interest in this context as suggested by prior research, results imply that RCL significantly increases adults’ interest in cannabis but not the youth’s, contrary to the widely held public concern over the effect of cannabis legalization on the youth.

“There is a ‘coolness’ factor currently associated with marijuana use and the youth tend to be curious about a substance when it is illegal; however, once legalized or widely accepted, the substance loses its coolness because it is less likely to engender disapproval,” said Xiong. “Case in point, past research has shown that there is a direct correlation between stricter tobacco restrictions and youth curiosity in using tobacco products.”

The study, “Asymmetric Effects of Cannabis Legalization,” also takes a look at the threat that potential marijuana legalization is thought to pose to alcohol, as well. Marketers, policy makers and researchers are also curious about the cross-commodity relationships across cannabis, alcohol and tobacco. The literature however provides inconclusive results on whether or not cannabis and alcohol/tobacco are economic substitutes.

An examination of large-scale, web-based behavioral data and found that although RCL significantly influences alcohol and tobacco industries asymmetrically, it reduces search volume and advertising effectiveness for alcohol, while increasing those for tobacco.

“These results indicate a substituting relationship between cannabis and alcohol, but a complementing relationship between cannabis and tobacco,” said Xiong.

According to Xiong, marketers of other recreational substances are paying close attention to cannabis policy changes. The alcohol industry has valid reasons to be concerned about legal cannabis and may need proactive creative strategies to avoid market decline, if recreational marijuana legalization passes nationwide.





Bill Conallen