SPOKANE, Wash. – Revenue numbers from the Washington State Liquor and Cannabis Board reveal a steady decline in alcohol and cannabis sales since 2019. This trend could have deeper implications for local businesses and communities.

Gonzaga economics professor Ryan Herzog explained how younger generations are impacting the market.

“The younger generations, Gen Z and even millennials, are drinking less. They are consuming less alcohol. They’re consuming less cannabis. And so for a state like Washington, that depends so heavily on these sources of revenue, it’s going to have a trickle down effect to the county and local levels,” Herzog said.

Local brewery owner Dan Dvorak from Black Label Brewing shared how his business is affected by shifting consumer habits.

“The beer market has just changed in the last while since Covid, especially downtown, killed business. For a lot of us, it’s just there’s not as many people downtown as there used to be,” Dvorak said.

Cannabis sales are also on a decline, but Mitchell Lowe from Lucky Leaf Dispensary noted that the issue is not solely due to decreased usage.

“We attribute a little bit to other states. Legalizing Montana is a big one. We used to get to see a lot of people driving over with Montana IDs. Definitely seen a lot less of that. And just other states across the country that used to be…more of a tourism to come to Washington because cannabis is legal here. Definitely see a lot less of that,” Lowe said.

Herzog suggested that costs and taxes might drive consumers to seek alternatives.

“I mean, if you’re in Spokane, we know that state line liquor store in Idaho is very busy. And so as those taxes and as the prices of stuff keep going up, people are going to find alternative means and substitutions, and where to buy,” Herzog said.

He also emphasized the potential financial impact on communities due to reduced tax revenue from alcohol and cannabis sales.

“The states already in a budget deficit. And when you are looking at not significantly a lot of money, but you are looking at a couple of million dollars every year going to Spokane County. So do we have the means to replace the 500,000 or the million or so that might be lost in those transfers? And where do we get that money from?” Herzog said.

To adapt to changing consumer preferences, Black Label Brewing is expanding its product range.

“The number one growing brewery in the country right now is nonalcoholic beer. And that’s why we sell a lot of can beer just to help tap into that market,” Dvorak said.

On the cannabis front, the Washington State Liquor and Cannabis Board is working on legislation to support small businesses.

“Tons of stores have more than five, and they have tons of buying power. You know, they’re the Walmarts and the Costcos of cannabis. It’s kind of like, really frowned upon within the industry, but we just applaud the LCB trying to crack down on that and, crack down those stores…getting a better deal from the mom and pop shops,” Lowe said.

Dvorak and Lowe are seeking new solutions to their challenges. Herzog highlighted the broader implications of declining sales and the need for creative solutions.

“The fact that people are consuming less actually makes me feel pretty good. Especially since typically the people that pay those taxes, they’re very regressive taxes and they hit lower income households disproportionately. So if we are seeing a declining consumption of alcohol and tobacco and spirits, that’s good. Yeah. It’s going to pose challenges downstream to find other funding sources. But we will have to get creative, right?” Herzog said.