Starbucks Entering In Cannabis Industry

Unless you have been living under a rock, you may have noticed that cannabidiol (CBD) products have exploded in the past couple of years. This non-addictive substance, derived from cannabis, is said to provide relief from a wide range of ailments, including chronic painanxietyinflammation, and depression, without any of the psychoactive effects associated with THC.

Legal in all 50 states, products using CBD have flourished: not only oils and tinctures, but also dog treats and beauty products, chocolates and beer, and, of course, the drink America could not survive without: coffee. With an exploding market projected to grow up to $646 million or $1.3 billion by 2022 depending on the projections, it is only a matter of time before industry giants step in to get a piece of the cake.

 

 

Although the number of small independent coffee shops to offer a shot of CBD oil with your favorite extra-large iced macchiato is on the rise, none of the leaders of the food industry has stepped up to be the first to do so on a larger scale. Starbucks, a company which prides itself for being in tune with the latest consumer trends, is, of course, a favorite when it comes to being the first mainstream company to offer caffeinated drinks laced with CBD.

However, when asked during an interview with the CNBC’s Squawk on the Street on January 25, 2019, if Starbucks would be next, CEO Kevin Johnson replied: “We’re well aware of what’s happening on CBD, THC, and all the trends in the industry, but we’re staying focused on the beverage innovation. We’re going to keep watching this, but right now, it’s not on the road map.”

That is not to say that the coffee giant entirely excludes to join in the growing cannabis industry by offering CBD infused lattes in the future. In fact, in a lengthy report released on February 25th, 2019, Cowen’s senior analysts estimate that Starbucks could be the first to join the movement.

 

 

Nevertheless, it might be some time before you can add CBD to your favorite morning drink at the drive-thru. A significant obstacle is the government’s reluctance to explicitly legalize the component. Until the U.S. Food and Drug Administration adopts a clear policy on the subject, major players like Starbucks will keep on playing coy: “the dynamics are fluid, likely delaying adoption from major coffee players like Starbucks in the near term” states Cowen analyst Andrew Charles in the report. “Should the regulation of CBD oil as an additive to food/beverage change or craft/independent coffee shops find a way to comply with the existing regulation, we could envision Starbucks ultimately piloting the ingredient.”

Another issue is the legality of cannabis and its components when it comes to operating vehicles: “Given Starbucks’ heavy reliance on the drive-thru business at more than 50 percent of sales and 80 percent of ongoing development, SBUX would need to gain clarity around potential liability this entails around selling cannabis-infused beverages before introduction.”

That said, with nearly 7% of respondents in a January 2019 study reporting using CBD as a supplement, things could evolve quickly.