Will Marijuana Sales Trump Wine In 2017? Tax Data, Flood Have Bad Signs

Is the growing marijuana industry pushing the wine industry out of business? According to 2017 data from the Treasury Department, the numbers for wine are lower than they were the year before. Of course, it is now common knowledge that the marijuana industry is booming, but could the weed business overtake wine in 2017 as far as overall production profits?

The United States Department of the Treasury released their 2017 data about the wine industry, and there are several numbers that show statistics are lower than in the previous year. Nevertheless, is this a sign that the wine industry is in trouble and about to be engulfed by the marijuana industry?

Currently, ABC News reports that there are factors that could be contributing to the lower production of wine in 2016, including a drought in the wine country region of Napa Valley in California.

Iran’s Hassan Rouhani Or Wine – French Officials Gave
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This drought is added to the fact that there might be a bad year for California wines in 2017 because vineyards in Napa Valley have been experiencing severe flooding during the first weeks of January.

When observing the Department of Treasury report from 2017, it is clear that a blow to the California wine industry is also a problem for the entire American wine market. For example, the total wine production in 2016 for all of America was 151,686,856 and California produced 138,110,139 of that total.

While the forecast for wine in 2017 could have grim results, this is not the first time that it was noticed that the wine industry is in a decline. In fact, long before marijuana was legalized for recreational use in the state of Colorado in 2012, the wine industry in America started to notice a decline in production and sales.

Starting around 2010, Mercury News reported about nearby Napa Valley wine country and stated that sales were down three percent, but they attributed this to the recession and not the burgeoning marijuana industry in the state of California.

In 2016, the Silicon Valley Bank produced a report that confirmed everyone’s fears that, for the first time since the early 1990s, the wine industry was going to continue to decline.

In Forbes’ predictions for the marijuana industry in 2017, they stated that weed sales will continue to grow, but the figures did not compare to the overall production of the wine industry in 2016.

In the end, marijuana and the wine industry projections do not predict any serious competition for 2017 — but that could change quickly if the wine industry does not recover from the January Napa Valley floods.

To get a perspective, it was estimated that the marijuana industry would only pull in about $11 billion in 2016, according to Fortune. By comparison, the wine industry in California that produces almost all of the nation’s wine earned $33 billion in 2015, according to statistics provided by the Wine Institute blog and the International Trade Institute.

CHS disease causing marijuana smokers to get sick.
CHS disease is a rare, misunderstood illness associated with excessive marijuana use. [Image by Bruce Bennett/Getty Images]

This means, if the wine industry is seriously affected by the Napa Valley floods, 2017 could be the first year that legal marijuana sales eclipse California wine profits.

Alternatively, the marijuana industry might not get their chance to outscore the wine industry because there are also reasons to believe that the vineyards will recover from the flooding in the Napa Valley because they have done it before. For example, in 1995, the flooding of wineries in the Napa Valley area caused tourist business to fall by about 50 percent in the area.

Despite this, it was also noted in 1995 that the Napa Valley floods were expected because they had happened in 1986, and the lack of sales from tourists were missed, but there were some agricultural benefits that occurred, according to LA Times.

In 2006, there was another flood in the Napa Valley, but the local vineyards did not think it would seriously affect their wine production that year, according to Wine Spectator.

Alternatively, the once every 10-year flooding curse that affects that wine industry in California seems to be far more damaging in 2017, but The Street reported that a few days after the flooding stopped, vineyards in Napa Valley were not yet worried about a drop in their sales this year.

What is also interesting is that it is well known that the wine industry in California often lies about how poorly they are doing after a natural disaster. For instance, flooding, wildfires, and droughts are not the only enemies of Napa Valley, and in 2014, the wine industry dealt with the brunt of a minor earthquake.

According to LA Times, after the 6.0-magnitude earthquake, over 100 vineyards in the Napa Valley area reported damage to an industry trade association, but the wine industry in California often chooses to keep a low profile about their damage price tags in the media.

According to wine industry publisher Lewis Perdue, the vineyards are unlikely to ever expose to the press how much the 2017 flooding affected them and stated that “a lot of them don’t want their names out there… because the wine industry is a luxury industry” and they do not want the public to “know about their business.”

The bad news is that if California wine sales do end up being seriously affected by the January 2017 flooding in the Napa Valley, there will not be easy alternatives outside of America to replace the absentee wine. According to US News, wine production fell worldwide by almost five percent in 2016.

[Featured Image by David Silverman/Getty Images]