Legal weed won’t really hurt alcohol sales, Alcanna CEO says

Weed vs. Alcohol, who ya got?

The head of Alberta liquor and cannabis retailer Alcanna says recreational bud sales are likely to cut into his beer and alcohol business to the tune of about five per cent —a minimal impact which might not bode well for investors in Canada’s cannabis companies who are betting on a pot-sized revolution in consumer spending.

We’re one week into legal recreational cannabis and although some hiccups have occurred, for the most part it’s been a fairly uneventful, one might say truly Canadian, experience, with customers approaching the long lineups and (hopefully temporarily) dwindling supplies in the nation’s pot stores with a judicious mix of patience and friendly good nature. And, without too much fanfare, while some provinces have reported higher than expected demand, others are saying that sales have just about hit their targets for the first seven days.

After all that hype, leave it to Canada to turn marijuana’s debut into a measured and mellow non-event.

To wit, the Societe Quebecoise du Cannabis reported first day activity that included a whopping 30,000 online transactions, yet that number diminished steadily over the following four days. By comparison, the Nova Scotia Liquor Commission said that sales were “pretty much on [target],” with only a store in Sackville having to close an hour early (for one day) due to a quickly remedied shortage.

In Alberta, where private retail has been handed the reins, Alcanna, which so far has one cannabis outlet open for business in Calgary and four in Edmonton, reported 17,000 transactions and a total of 68,000 items sold over the first five days, a level of activity not necessarily expected, according to CEO James Burns.

“We had anticipated a very strong opening day as well as thinking that Saturday would be busy, but to have lineups from 10 am to 10 pm right through the first five days, we were very surprised,” says Burns, in conversation with BNN Bloomberg.

Burns says that while he sees cannabis cutting into booze sales at his liquor stores, the impact will be manageable. Burns speaks from experience: Alcanna has stores in Alberta and BC but also in Alaska, where recreational pot was legalized in 2015.

“We’re the largest liquor retailer in Alaska, and cannabis has been legal there for two and a half years,” says Burns. “There was an initial bump down in liquor, essentially beer, but once that happened it levelled out. [Cannabis] doesn’t affect it much more than five per cent.”

“Beer is quite a low-margin product for us so [cannabis] really hasn’t affected our business in Alaska, frankly,” he says.

Burns’ five per cent echoes claims from a Deloitte study in 2017 which pointed to a 4.4 per cent drop in beer sales in Colorado, Washington and Oregon after recreational cannabis use was legalized.