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Uber just bought the parent company of a marijuana company! Is it possible for Uber to enter the marijuana industry?

2021/02/04|Industry news

On February 2, 2020, Uber (Uber), a world-famous Silicon Valley technology company, announced that it had reached an agreement with drizly. Uber acquired drizly with about US $1.1 billion in shares and cash.

Drizly is a leading alcohol distribution service company in the United States, providing alcohol distribution services in more than 1400 cities in most states of the United States. The company has provided competitive beer with high quality beer, wine and Baijiu, and has won the support of the vast number of consumers in the United States.

Upon completion, drizly will become a wholly owned subsidiary of Uber. Drizly's alcohol distribution business will eventually be integrated with Uber eats application, while retaining a separate drizly application.

As we all know, Uber started from taxi service and once entered the Chinese market to compete with didi in China. So why buy an alcohol distribution service company that has nothing to do with its main business? On this point, Uber's management obviously has its own considerations.

As a company which starts with taxi service and is famous all over the world, its taxi business is gradually facing an embarrassing situation. Since leaving the Chinese market, Uber has also met strong competitors in Europe, Australia, India, Southeast Asia and other regions, and has been losing ground in the global market. In the U.S. domestic market, Uber also met the rising star LYFT to catch up.

Affected by the epidemic situation, Uber's taxi service revenue dropped sharply in 2020. In the last quarter, Uber's taxi service revenue dropped by more than 50% year on year. However, Uber eats, another business of Uber company, has witnessed a gratifying growth, with revenue increasing by 125% compared with the previous year!

Uber eats is the company's take away service. It is reported that Uber's revenue from its food distribution business exceeded that of its old bus business for the first time in the second quarter of 2020. On the one hand is the taxi business with declining competitiveness and declining revenue, on the other hand is the takeout business with broad prospects and rising revenue. Obviously, it is a wise decision to acquire and integrate drizly company which is growing. Uber shares rose 6.5% to $56.20 as of Tuesday after the deal was announced.

Interestingly, drizly, the acquiree of the deal, also owns a marijuana company called "Lan tern".

In May 2020, the company was founded by the founder of drizly, a completely independent hemp subsidiary. As a medical marijuana distribution service platform, LAN can provide marijuana products and marijuana distribution services for those medical marijuana patients in need in the United States. Currently, the company has operations in Boston and Detroit, and will expand to more states in 2021.

So the question is, is this marijuana company affiliated to drizly also acquired by Uber?

In an interview with US media CNBC on Tuesday, Dara kosrosasi, head of Uber, said that Lan tern is not within the scope of Uber's acquisition, because the company is not actively interested in the marijuana industry and marijuana distribution services at present, but it may change in the future. It can be seen from the words of the person in charge that Uber is likely to enter the marijuana field in the future, but now is not the time.

Since it has not been acquired, the employees and core products of this hemp subsidiary will remain unchanged, and it will continue to operate independently to explore more medical hemp market. Drizly's founder, investors and board members will serve as a strategic adviser to LAN.

In recent years, more and more large companies have set foot in or invested in the field of industrial marijuana and medical marijuana. For example, as early as the beginning of 2019, conbe group, which is a household name in China, set up the industrial hemp business division, which is located in Yunnan, and launched industrial hemp beauty products through its consumer brands.

For another example, alcana, the North American liquor retail giant, established the hemp brand "nova cannabis" to sell hemp products through its huge offline retail network. The sales of hemp even exceeded the sales of alcohol products in the same period.

Although the industrial marijuana industry will cool down in 2020, thanks to the continuous introduction of international laws and policies favorable to the marijuana industry, as well as the steady development of domestic industrial marijuana industry in Yunnan, Heilongjiang and other places, it is believed that in 2021, both domestic and foreign, this industry will usher in a brighter future.

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