Regulations freezing the drone delivery business, for now: Oppenheimer analyst

The drone economy

Delivery company UPS began testing delivery drones this week, but Oppenheimer analyst Andrew Uerkwitz said Friday there are several concerns with drones delivering packages.

Uerkwitz told CNBC's "Power Lunch" the regulatory environment isn't ready for self-flying drones delivering packages, yet.

"When it comes to package delivery, we're kind of negative on that," Uerkwitz said. "Aside from just weight concerns and automation, [there are] privacy concerns."

Federal aviation regulations do not permit commercial drones to fly over people not involved in their operations. They also require drones to remain within the line of sight of their operators at all times.

"For drones to get...$60 billion added to the economy, you really need self-flying drones and so forth," he said.

Still, Uerkwitz says federal restrictions on commercial delivery doesn't mean other industries aren't exploring other possibilities.

"Agriculture, mining, real estate…there is a number of other opportunities out there," he said.

—CNBC's Morgan Brennan contributed.