Marijuana vs. Alcohol: How the Two Industries Are Dealing with Inflation and What That Means for Consumers

If there are two things Americans can’t escape from right now, they’re rising prices and talking about rising prices. There is no denying that inflation is dangerously high, with a recent inflation rate of around 9.1% Bloomberg. However, not all areas of the economy are equally affected. Take marijuana and alcohol, for example.

While both the marijuana and alcohol industries are being hit by rising costs and supply shortages, their prices aren’t rising at the same rate as many other consumer goods. In fact, marijuana prices have fallen. But if you take a closer look at these two industries, you can see that just because their prices didn’t skyrocket immediately doesn’t mean there isn’t an internal struggle. Both industries have their own inflation problems and their own ways of dealing with them.

A key difference between alcohol and marijuana is how it can be purchased and consumed. Marijuana is only legal in certain states and must be purchased through a licensed recreational or medical dispensary. Alcohol, on the other hand, can be purchased and consumed in countless ways. You can buy it from the source (a vineyard or distillery), at a wholesale club, retail store, and at a bar or restaurant. All these different buying methods have different experiences and also different prices.

This wide variety of purchasing methods makes alcohol affordable for almost all Americans, but rising costs have meant that some of the more expensive ways in which it is typically consumed have declined. Corresponding a Morning Consult survey, “More than 8 in 10 respondents who say they have made adjustments eat out less often. Around three quarters go to bars less often.” This means that while the alcohol maker may still be able to sell the same amount of product, certain aspects of the industry are suffering.

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Many who may have had a few beers at a bar will be more likely to purchase a 6-pack offered in-store. This makes price increases less obvious as the consumer is likely to feel they have saved money by buying beer from a store rather than a bar, even if the price of the beer or wine they have purchased is always still increased.

Even if alcohol sales haven’t plummeted yet, the cost of doing business is beginning to worry even the most successful alcohol producers. This is not just an American problem either. Take the hugely popular international beer brand Heineken, for example. The managing director of the brewery, Dolf van den Brink to the Financial Times the, “We are faced with insane increases across the board. There is no model that can handle this kind of inflation.” You are not alone as overall beer prices have already risen by 4.3% across Europe, corresponding The guard.

Marijuana manufacturers, on the other hand, have a different pricing problem. Marijuana must be purchased from a licensed dispensary, but increased competition in the legal market and illegal black market competition have made it difficult for companies to raise prices. As we did before reported“The cost of cannabis has been falling in many major markets for months, with consumers seeing per-milligram prices trend down for most of the year.” With so many other prices rising and rising, the price of weed is becoming more affordable .

This might seem like good news for the consumer, and for now it is, but eventually marijuana growers need to somehow pass the rising cost of doing business on to consumers. With rising prices currently considered too risky in the current marijuana market, many large companies have scaled back operations and even fire parts of their workforce. This also means less variety of products in many stores. So, while marijuana doesn’t appear to be affected by inflation given falling prices, a closer look reveals that at its core, the business is struggling to grow.

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Marijuana is still a new business, and it faces another test from the financial powers. Alcohol, on the other hand, has been through prohibitions, recessions, and depressions before. That doesn’t mean it isn’t struggling as much as other industries. It means it has a few tricks it learned along the way, which not only makes it legal at the federal level, but also gives it a little more leeway to set prices and grow during these times.

Regardless, both industries are reporting gains, maybe just not as much as expected. Perhaps more importantly, both alcohol and marijuana remain affordable for consumers. That doesn’t mean that one day, one or both of these industries will need to raise prices to ensure they remain afloat and profitable.