(Wines&Vines) - The most unusual talk at the 24th Wine Industry Financial Symposium Monday and Tuesday was about the impact of legalized marijuana in Colorado. Cleverly scheduled as the last session to keep the busy attendees in their seats, it documented a fall in wine sales after medical marijuana was legalized there, but later a dramatic gain when recreational marijuana was allowed.

The conference united executives and staff from the wine business with lenders to hear from experts in all aspects of the business. Attendance at the event held in Napa was more than 250.

A recurrent theme was the growing split of the wine business into two worlds: high-volume wines made mostly from grapes grown in California’s Central Valley and priced less than $10 per bottle, and higher priced wines from coastal grapegrowing regions.

Sales of cheap wine have been shrinking as more expensive wines have grown in popularity. In recent years this trend has led the three largest wine companies to invest in the coastal region.

Cannabis’ coming impact
Jim Smith of Republic National Distributing Co.-Colorado, a major distributor, reported that after only a year, taxes from recreational cannabis sales are greater than those from all alcoholic beverages combined.

He showed that legalization of marijuana seemed to have hurt wine and other alcohol sales initially, but the event fairly quickly increased tourism and even migration into the state by young people, which has more than compensated for the drop.

He reported, however, that while most of the tax money was intended for schools and medical research, in practice half of the money has been used for enforcement.

He added that four states and the District of Columbia allow recreational marijuana sales at present, and an additional 12 states are considering it.

Surely people in all tiers of the wine business are pondering marijuana’s possibilities, too. For now, recreational marijuana is a direct-to-consumer business, but Smith said wine and spirits wholesalers are looking closely at cannabis sector, and some believe it will need the middle tier to provide a level playing field, as was intended for immediate post-Prohibition alcohol sales.