8 GERMINATION.CA NOVEMBER 2017 Migrating to Marijuana Exactly how legalized pot would affect Canada’s beer market and demand for malt barley varieties, both initially and over the long term, has been the subject of much speculation. A study by Canadian business consulting firm Deloitte posits that the legalization of marijuana would cut into beer and other alcohol sales across Canada. According to Recreational Marijuana: Insights and Opportunities, about 80 per cent of current cannabis consumers rarely or never mix the drug with alcohol. The study also indicates marijuana users are also drawn to drug for the same reason people choose alcohol — to have fun or help connect with others. “Taken together, these two find- ings suggest a potential for some cur- rent beverage alcohol consumers to migrate away from that category and toward marijuana when it becomes legal,” the study states. Deloitte vice-chair Mark Whitmore, who co-authored the report, says 5,000 Canadians were interviewed for the study, which predicts up to 39 per cent of Canadian adults would be consuming cannabis (some regu- larly but others infrequently) when it becomes legal. The report’s findings were also based on data from U.S. states where recreational marijuana has been legalized. “Marijuana is going to have an impact on the alcohol industry here,” he says. “The data [in the U.S.] shows that as cannabis comes onto the market, it does start to erode away market share, particularly in beer.” Peter Schwartz is a consultant with Anderson Economic Group, a busi- ness consulting firm in New York. He predicts that in the first year of legali- zation, recreational cannabis would drain $70 million from Canada’s beer market, worth about $9.2 billion. That’s only a small portion — less than one per cent of the total beer market — but that number would rise in subsequent years as marijuana use expands in Canada, according to Schwartz. GENERAL CONSENSUS: Probably not, but if it does, the effect won’t be that pronounced. QUESTION: Will legalized marijuana mean lower demand for malt barley and new varieties of the crop? “Because of the infancy of the cannabis products industry, it’s going to take some time to grow,” says Schwartz, adding that it would be up against a very well established beer industry as well as strong wine and spirits sectors in Canada. Over time, however, he expects sustained growth for the marijuana market and says it could happen quickly. Schwartz based his projections on alcohol sales in U.S. states where rec- reational marijuana is either fully or partially legalized. Factors in Canada such as spending patterns, income and demographic data were also taken into account. Aaron Onio, a malting specialist with the Canadian Malting Barley Technical Centre (CMBTC), works with germinating malt at the CMBTC pilot malt plant in Winnipeg, Man. Photo: CMBTC