Caffeine inhibits and stunts plant growth if provided in large enough concentrations. The drug interferes with the plant's ability to regulate its cellular calcium levels.
While caffeine acts as a stimulant when consumed by humans, it does not cause the same reaction in plants. In humans, caffeine interacts with the adenosine receptors of the brain, heightening alertness. Plants lack the nervous system that makes such a response possible and instead undergo the other side effect of caffeine: interference with calcium regulation.
Like humans, plants require calcium. Caffeine can cause a plant to release its cellular calcium, inhibiting or slowing its cellular functions requiring the nutrient. Experiments have shown that some plants are able to withstand a small amount of caffeine, but at large enough concentrations, their seeds may be stunted or not germinate at all.
While caffeine itself can be toxic for plants, adding coffee grounds to the soil of a garden is not necessarily detrimental and has been shown to have positive effects for some plants. Grounds are a great addition to gardens or at-home compost because they add nutrients such as nitrogen and phosphorous to the soil. They also improve drainage, help keep out natural garden pests and give environmentally conscious gardeners a way to recycle their coffee grounds.