(The chart above averages the rates of gambling growth for
Detroit, Maryland, Connecticut, Atlantic City, & Pennsylvania.)
Where We Are In The State Of Gambling.
Gamblers are back.
Money is flowing into consumer pockets.
The local casinos are seeing positive growth, and online gambling is jumping even higher. (Atlantic City saw a 10% jump in online gambling revenue.)
Lower income gamblers are particularly happy. Las Vegas adds a little bit of color.
Recall that the Las Vegas Strip caters to more upscale visitors. And downtown casinos cater to more lower income visitors. Strip year-over-year (yr/yr) growth is: 5% Downtown yr/yr is: 16%.
This is a reversal of sorts: the Strip saw double-digit growth in Q1 (Jan-March) whereas Downtown was in the low single-digits.
In other words, the upper income saw the tax cut benefits sooner. Lower income households began to feel the effect only recently.
Key point: U.S. Consumers have begun to spend again.
Where We Are In The Green Economy
Last year, Aspen reported $11 million (M) in cannabis revenues, compared to $10M for alcohol. In fact, pot sales are smoking alcohol sales across many other cities in Colorado (pun intended).
It’s most noticeable in tourism areas that cater to outdoor activities like skiing. Alcohol impairs skiing – not to mention leaving a hangover. But skiing while stoned is very common.
(Recall that back in 1998 in the first ever Olympic snowboarding competition, Gold medalist Ross Rebagliati was found guilty of having THC in his blood. Yes: he was stoned when winning gold medals.)
Other reasons consumers are favoring pot over alcohol start with the downside of driving under the influence: stoners are less likely to be caught because of testing mechanics.
Drunk drivers can blow into a breathalyzer as soon as they get pulled over. Stoners can’t: THC can only be measured reliably with a blood test.
Blood tests aren’t administered by police officers. So that means an average of 2~3 hours from the time a driver is pulled over to the time the blood is drawn by a nurse. That’s long enough for someone stoned to be measured below the legal limit.
Unlike alcohol, the THC metabolism varies incredibly. Generally speaking, studies are showing that a few puffs on a joint (or the equivalent) move the THC blood content to 100 ng/ml in the first few minutes, after which it rapidly metabolizes.
Within an hour, the concentration falls into the single digits.
Simply put, someone getting completely stoned can be pulled over and be far above the legal limits but, by the time they get measured, be comfortably legal.
So this is fueling the switch away from alcohol over to cannabis. In Colorado, it is illegal to drive with more than 5mg/mL.
Basically, pot smoking is cannibalizing alcohol drinking.
This is the trend: alcohol sales in Colorado dropped (-15%) last year. MolsonCoors (NYSE: TAP), which is based in Colorado, reported sales were down 5% yr/yr in Q1 2018. In fact, North America sales have been falling $100M per quarter.
So here’s the problem: on the one hand bars are losing revenue while, on the other, pot dispensaries aren’t picking up the slack. It’s illegal to smoke pot in the dispensaries or in bars.
This means people buy and go home, instead of going out.
So last month a bill was presented to the Governor of Colorado: legalize ‘tasting rooms’ at cannabis dispensaries. He just vetoed it. Not coincidentally, the wine lobby has spent $100M over the last decade lobbying against cannabis. They know a threat when they see one.
The heart of the matter is and always will be money.
Given the choice between going out and drinking or staying home and smoking, consumers are voting with their feet.
In the spirit of if-you-can’t-beat-‘em, join-‘em, bars should be allowed to sell pot.
They can already sell cigarettes and alcohol, both controlled substances and both demonstrably bad for the health. The tax revenue is reliably collected (which is of paramount importance to the State).
Cannabis becomes just one more thing to sell.
The interests of the State, bars and cannabis producers are in alignment here, even if bars can’t see it.
Cannabis will continue to become even more mainstream.
Editor of Moneyball Economics