Craft Collusion? Breweries in Denver vs Denver Dispensaries

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For a number of years now, Colorado has been within the top five states for breweries. This can be measured by the sheer number of licensed breweries, the total volume of beer brewed, the number of breweries per capita, and point-of-sale tracking data analysis. As the recreational marijuana industry rolled out, thrusting Colorado to a place of high social visibility, some of the forces that be had anticipated a dwindling of craft beer sales as customers chose to embrace a new and shiny adult freedom — to smoke the weed — instead of the heretofore legal intoxicant of choice: alcohol.

The thing is, breweries in Denver vs Denver dispensaries are two areas of adult social life where intoxicants (alcohol and psychoactive cannabinoids, respectively) have large-scale cultural implications. As the cannabis industry rolls out, as acceptance of marijuana into culture gains momentum, the depth of collusion between the two industries — in the long run — may just turn into one of the most fascinating combinations of experiential craft available in human society. However, marijuana’s relationship with the federal laws are still being worked out and, well, as much as I’d like to see this change quickly, breweries and dispensaries aren’t likely to become a one-stop shop anytime soon.

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Craft Beer & Cannabis — Number of Licenses Issued

The first point of contact I’d like to make when comparing these two fiscal juggernauts — breweries in Denver vs Denver dispensaries — relates to the volume of licenses issued. Before we get into the numbers, there are a few places where weed is at a legal disadvantage, all of them relating to being in public. You can, at just about any casual or fast-casual food establishment, order a drink with your meal. With this in mind, it is important to remember that a liquor license allows a business to sell alcohol, not limiting on product variety, meaning a fully stocked bar could have a bunch of taps from any number of vendors.

Alcohol Licenses Registered in Denver: 1,811

Dispensary, manufacture, cultivation, and testing (med & rec) licenses in Denver: 1,145

The products and services produced under the marijuana licenses lack the same scope existing within the beer industry. Cultivation centers are usually associated with a dispensary, whereas a single alcohol license can produce a beer that is available within taprooms, brewpubs, restaurants, lounges, and bars across the state. That is not to say that product manufacturing companies cannot cross into multiple dispensaries, but that it has been, thus far, less common. Dispensaries can avoid excise taxes on production if they vertically integrate and brewers have less regulation preventing them from increasing market share through distribution, requiring fewer licenses in total.

Craft Beer & Cannabis — Economic Impacts

While it truly is too soon to tell how the breweries in Denver vs Denver dispensaries will ultimately affect one another, how they affect the economy of Colorado as a whole is something we can currently measure. There is data on sales revenues and tax collection provided by the Colorado Department of Revenue (DOR) and various trade organizations that can give us a side-by-side comparison of the economic heft each industry carries, and, well, that’s the thing about Denver dispensaries and breweries: they each generate verifiably large sums in sales, creating thousands of jobs and incomes (not to mention taxes) and boost the economy to that effect.

There are, in fact, many metrics on which we could measure the economic input, though, for our purposes, it will be the outputs that we focus on.

Cannabis Industry 2015 Report

In 2015, the Marijuana Policy Group (MPG) estimated that the entirety of Colorado’s marijuana industry touts a $2.39 billion dollar economic impact, creating over 18,000 full-time jobs and producing nearly $1 billion in sales alone. A result of the industry’s confinement within Colorado, any consumer spending creates more jobs and output per dollar than many other industries within the state. While Colorado boasted a growth rate nearly double that of the national average between 2014-15, marijuana sales grew over 42%. It is expected that much of this growth comes from black market sales being transformed into legal ones. Additionally, as more states legalize, growth pressures will slow to around a 10% annual growth rate and further adoption will influence pricing drops.

In 2016, the Colorado marijuana industry achieved over $1.3 billion in sales, showing that this industry has yet to see a plateau. There are around 2,600 marijuana licenses that are active within the State, with over 40% of these licenses being contained within Denver county. That is hundreds of millions of dollars spent annually and an estimated 7,000 jobs.

Economic Outlook of Colorado Breweries

Alcohol has absolutely had a tumultuous experience integrating into human culture (just think prohibition); however, nearly a century has passed since alcohol was last removed from mainstream America. One of the many results of changes in alcohol policy over the years includes the takeover of big beer. In the last decade, the craft beer industry in Colorado has experienced tremendous growth, pushing the market for new breweries into stiff competition. Acquisitions of built craft beer brands are becoming increasingly common, as is micro-marketing (being the neighborhood brewery).

In Colorado, Denver county holds around 18% of the total liquor license in the state. Denver breweries, therefore, have an incredible opportunity to reach a large market. In 2016, Colorado’s beer industry was estimated to have a $2.7 billion dollar economic impact, producing over 1.77 million barrels of beer within the state. In 2015, Colorado had 350 breweries licensed, with nearly a quarter of all beer sales come from craft purchases and the industry statewide had almost 8,000 employees.

Along with the high growth in years previous, the craft beer industry expects continued growth. The acquisitions of the smaller craft brands displays a bit of market saturation and the extents of a breweries finances when looking to penetrate other markets. Many Coloradoans are waiting for the craft beer bubble to burst, but it hasn’t happened yet. Given the fact that there are over 10,000 liquor licenses currently active within the state, it is difficult to estimate the value of Denver licensees based on individual sales.

Craft Collusion — The Risky Benefits of Mixing Industry

Hops are certainly one of the most vital ingredients to a beer. I, myself, am a fan of IPAs, with rich notes of citrus, pepper, and flowery herbs. In this way, Denver dispensaries vs breweries in Denver can learn from each other, applying focus on flavor to create truly unique beverages. Of course, alcohol and cannabis are a bit off in terms of mutual social integration, but there is interest in further exploring the flavor profile of cannabis within brewing.

Hops, it turns out, are within the same genetic family as cannabis. Many of the terpenes that create the floral musk and citrus-pepper bite in cannabis are also present in hops — and vice-versa. I, myself, am excited for the future, at least when it comes to CBD IPAs, herbal cider, and extra “special” bitters. Luckily, these two industries continue to boast solid growth, great sales and capture a section of the population that doesn’t seem like it’ll be going away soon. While big brand acquisition may signal maturity for the craft beer market in Colorado, consolidatory behaviors are seen in the cannabis industry as well, even though the market is confined to the state.

As far as the next few years, cannabis is expected to continue on the trajectory of increasing sales, lowering prices, and double-digit growth. Craft beer is expected to continue increasing sales in Colorado, though this may come with some creative strategy as impending legislation allowing full-strength beer be sold in Colorado drug and grocery stores (around 2019) puts pressure on small liquor stores and brewers to find unique ways to position their products or brands and find ways to make it in with the bigger chains.