Starbucks is the Coffee Chain Most Likely to Enter Cannabis Market

Starbucks executives told a nation of curious cannabis enthusiasts last year that the company had no interest in getting involved with the cannabis trade. But now, it appears the coffee giant is reconsidering that hardline stance.

In response to a question about whether the nation’s largest coffee chain would ever produce a cannabis-infused brew, Starbucks CEO Kevin Johnson told Bloomberg that a product of that nature was “not anything we’re considering or pursuing.”

Johnson went on to say that the concept of selling THC drinks didn’t “feel accretive to our brand and kind of what our brand stands for.” Yet Johnson concluded by saying that Starbucks would “monitor and watch what happens in the industry as we always do.” Overall, it was a statement that oozed of, hey, we’re not going to sell anything weed-based products until the plant is completely legal.

One Venti CBD Frappuccino, Please!

Fast forward several months and now investors are being told that Starbucks will likely be the first national fast-food chain in the United States to enter the marijuana game. However, the company will probably go a different route than Constellation Brands and Molson Coors, who partnered up with cannabis firms to create lines of Canadian cannabis beverages last year.

A report from Wall Street’s Cowan suggests that Starbucks will most likely move into the CBD market and capitalize on the non-intoxicating hemp-derived cannabidiol products. The company will do this to avoid missing out on a sector that Cowan believes is destined to hit $16 billion by 2025.

It wasn’t any sort of wizardry that led Vivien Azer, Cowan’s senior research analyst specializing in the beverage, tobacco, and cannabis trades, to draw this conclusion. She didn’t just gaze into a crystal ball in New York and see Starbucks executives launching CBD-infused macchiato double espressos in the near future. All she did was take a look at the attention the compound is attracting right now – CBD is now an ingredient in everything from beard balms to coffee (that one might have tipped her off) — to see that the most likely scenario for Starbucks was in this general direction.

“In our monthly proprietary consumer survey, we were surprised to see that nearly seven percent of respondents in January 2019 reported using CBD as a supplement,” Azer wrote in the report. “This strong consumer interest is validated by the growing number of brands and form factors that are now available through increasingly diverse retail channels, including Amazon, Sephora and Neiman Marcus.”

Per Usual, Feds Drag Their Feet

As always, the only real snag is the federal government. Although Congress passed a law last year that gave hemp-derived CBD products a new lease in the grand scheme of American commerce, the U.S. Food and Drug Administration came in soon after and confused the matter. CBD food products are considered a bit of an outlaw substance. Local and state jurisdictions are now banning the sale of food items that contain CBD until the FDA provides more precise guidance on what is allowed and what’s not.

Although FDA commissioner Scott Gottlieb said recently that the agency was looking into “possible alternative approaches” to regulating products made with CBD, nothing is yet on solid ground.

Cowan believes the FDA’s position on CBD is “delaying adoption from major coffee players like Starbucks in the near term.” But it is just a matter of time before it unfolds, according to Cowan analyst Andrew Charles, because the corporation is “the most forward-thinking” of the major coffee slingers in the United States. Charles admits, however, that Starbucks “would need to gain clarity around potential liability this entails around selling cannabis-infused beverages before introduction.”

Regardless of what Wall Street is saying, Starbucks CEO Kevin Johnson still maintains that cannabis beverages are not in the cards — at least not at the moment. Last month, he told CNBC that “We’re well aware of what’s happening around CBD, THC, and all the trends in the industry  . . . Right now, that’s not on the roadmap.”

TELL US, would you buy CBD coffee from Starbucks?