Cannabis Adoption Getting Higher; Analyst Sees It Killing Alcohol Stocks' Buzz

America’s self-medication preferences may be making a major long-term shift. In celebration of 4/20, Cowen analyst Vivien Azer took a look at what could be a coming cyclical upswing for marijuana and a cyclical downswing for alcohol. According to Azer, what’s good for the marijuana business is bad for the alcohol business.

Analyst Commentary

“Of the 5 long-term alcohol cycles that we have seen in terms of per capita alcohol consumption since alcohol prohibition was lifted (and cannabis prohibition was implemented), the latter 3, since 1980, show a notable inverse correlation with cannabis trial and use,” Azer explained.

Recent data suggests the United States may be entering a sixth cycle in which marijuana becomes the preferred option for many Americans.

Azer said cycles in vice markets are often lead by younger Americans. In the past seven years, alcohol use among Americans aged 18–25 is down 2.5 percent, while marijuana use in the same age group is up 4.6 percent.

For traders who want to trade the shift from booze to weed, Cowen’s preferred marijuana plays are Kush Bottles Inc KSHB, CANOPY GROWTH CORP COM NPV TWMJF and Turning Point Brands Inc TPB.

In addition, Cowen remains bullish on best-in-class beer stock Constellation Brands, Inc. STZ but has downgraded rival Molson Coors Brewing Co TAP to Market Perform.

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