Marijuana may be a Canadian obsession right now, but don’t expect your local Starbucks to be offering a bit of bud with your latte anytime soon. That’s according to CEO Kevin Johnson, who says that weed culture just doesn’t fit in with the Starbucks brand.
It’s Happy Cannabis Day across the country, an historic moment turning the page on 95 years of prohibition and in turn making Canada only the second country and the first G7 nation to legalize recreational marijuana use.
The day has been a long time coming not just on the political and legislative front but also on the business end, as the daily travails of Canada’s pot companies have been making headlines worldwide for some time now, what with those huge financing rounds, major acquisitions and volatile share prices climbing to dizzying heights, even more so over these last few weeks.
The sector has seen its share of outside interest, with everyone from beer and alcohol producers to pharmacy chains to vegetable growers aiming to get in on the nascent industry. Coffee, too, as evidenced by Canada’s Second Cup announcing earlier this year that it would be partnering with medical and recreational cannabis retailer, National Access Cannabis Corp, to convert some of its coffee shops in Western Canada and Ontario into weed stores. (At last report, the partnership has yet to get any stores up and running, with licensing permits still pending for a number of outlets.)
And in that vein, one might imagine that Starbucks, always aiming to stay ahead of the curve, would at least be kicking the tires on this one. But apparently not.
Starbucks marijuana plans? Nope.
“I’m aware of that but it’s not a thing we’re considering or pursuing,” said Starbucks boss Kevin Johnson, in conversation with BNN Bloomberg Tuesday. “I just don’t think it’s accretive to our brand and what our brand stands for. But we’ll monitor and watch what happens in the industry, as we always do.”
End of story.
In fact, even the topic of employee cannabis use doesn’t seem to elicit any more than a stock response from the CEO: “None of that’s been an issue. Our Starbucks partners use good judgment and we hire the kind of people that care about making a great connection with their customers, who care about creating that elevated Starbucks experience and we’ve got wonderful Starbucks partners,” says Johnson.
After a good half-decade of solid growth, SBUX has been effectively trading sideways since late 2015, although the stock just got a bump from news that activist investor Bill Ackman and his Pershing Square hedge fund had taken a 1.1 per cent stake in the company, worth over US$800 million. The stock has gained more than seven per cent over the last few days.
And while he may not be keen on cannabis, Johnson says his company is judiciously focused on creating shareholder value.
“If you look at the strategic priorities that we’ve outlined, we’ve been very clear on those priorities,” he says. “Number one is accelerating our growth and our targeted long-term markets in the US and China, second is leveraging the global coffee alliance that we’ve just established with Nestle to take our CPG and food services business globally and the third is sharpening our focus on shareholder value returns.”
“As we drive those, the expectation is that the stock today is undervalued and if we execute on those, we’re going to create significant shareholder value,” he says.
Too bad. A few pot brownies would look good next to those blueberry scones.