I was recently purchasing coffee at a small independent coffee shop in an East Village neighborhood of New York City, in line with my caffeine-dependent daily routine.
As I completed my order for a medium, regular hot coffee, the barista looked at me as though I was forgetting something.
"Would you like to add CBD for $5?" she asked, as I whipped out my card to pay.
She was referring to cannabidiol, the non-psychoactive ingredient in cannabis that is purported to have a number of positive health effects and the only legal part of the red-hot cannabis market available in the U.S.
I did a double take to make sure I walked into a coffee shop and not the coffee shops that made Amsterdam famous. I was not and from this small shop I saw firsthand that the demand for this additive must indeed be present.
"I think [cannabis] is just too big of a category to ignore. I think all of the beverage companies will enter the category, just like alcohol companies," J. Smoke Wallin of Vertical Cos., which helps cannabis companies with compliance, cultivation and retail/branding strategies, told Real Money in an interview forecasting 2019 cannabis trends.
That colossal category and the demand that comes with it could be a driver for innovative companies like Starbucks (SBUX) that often tout their ability to adapt to consumer trends.
Now @SquawkStreet $SBUX CEO tells @jimcramer he can NOT get a cannabis triple latte right now. But says they are always on top of new ideas and mindful of the trends so he appreciates Jim's suggestion. pic.twitter.com/yQ61hFpQYk
— Shannan Siemens (@ShannanSiemens) January 25, 2019
"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," Starbucks CEO Kevin Johnson said Friday on CNBC's "Squawk on the Street". "We're going to keep watching this, but right now, it's not on the road map."
He highlighted the remaining issues that need to be sorted out as a reason for eschewing the space at the moment.
Still, Wallin noted that adoption by mainstream companies should only serve to promote further demand as the products achieve a degree of normalcy and could accelerate after at least one company makes a move.
"Consumers, for the first time, will have visibility into their CBD source and testing results, eliminating the black market of untested, potentially harmful products currently available online and in certain independent stores," he explained.
Major pharmaceutical companies like Novartis (NVS) , as well as big time brewers like Constellation Brands (STZ) , have already made big splashes in the green stuff, but even cannabis leaders like Canopy Growth Corp. (CGC) and Tilray (TLRY) have not been able to break the glass ceiling guarding the soft drink and coffee industry.
Only the rumor of Coca-Cola (KO) taking a stake in Aurora Cannabis (ACB) has even hinted at the possibility.
For those taking Wallin's bullish stance, the hope is that as industries acclimate to acceptance and the cannabis trade becomes more transparent, the reticence of CEOs like Starbuck's Johnson to cash in on the market is likely to be alleviated.
The question that will remain is, if Starbucks will not be first in the traditional beverage space, who might be the mainstream player to open the flood gates?
To hear more about how CBD might transform the beverage space and beyond, check out Katherine Ross' interview with New Age Beverages (NBEV) CEO Brent Willis.
