Coca-Cola has been eyeing the cannabis industry to possibly manufacture drinks infused with CBD – a non-psychoactive ingredient of marijuana that does not get one high. Coke has been in talks with Aurora Cannabis Inc. to develop the beverages, according to BNN Bloomberg.
“We are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world,” said Kent Landers, the spokesperson for Coca-Cola in an email to Bloomberg News. “The space is evolving quickly. No decisions have been made at this time.”
Landers did not comment on Aurora. Aurora declined to comment on business initiatives as well, but added, “Aurora has expressed specific interest in the infused beverage space, and we intend to enter that market.” There is still no guarantee that the talks between Aurora and Coke will be successful, or if a public agreement will be made.
Estimates vary, but the consumer CBD market is estimated to grow to US$2.1 billion by 2020, from $202 million in 2015, according to a recent report in the Hemp Business Journal.
“They’re pretty advanced down the path of doing a deal,” according to one source who has direct knowledge of the talks between the two companies. “It’s going to be more of the ‘recovery drink’ category,” the source added.
“There’s a lot of interest from [consumer-packaged goods], and liquor and tobacco [companies] to look at cannabis as a new growth vector,” said Martin Landry, managing director of equity research at GMP Securities LP, in an interview with BNN Bloomberg. “What’s happening is that the cannabis industry is still in its infancy and there’s not a lot of partners to dance with.” Coke is one of the first mainstream beverage companies that seeks to capitalize on the increasing legalization of marijuana. Their possible foray into the marijuana industry may have been in response to competitors investing in marijuana infused drinks, and slow business in general.
Molson Coors Brewing Co. is starting a joint venture with Quebec’s Hydropothecary Corp. to develop cannabis drinks in Canada.
Diageo PLC, maker of Guinness beer, is holding discussions with at least three Canadian cannabis producers about a possible deal, BNN Bloomberg reported last month. Heineken NV’s Lagunitas craft-brewing label has launched a brand specializing in non-alcoholic drinks infused with THC, marijuana’s active ingredient.
Over a dozen countries, including Germany and Australia, legalized marijuana for medical purposes and others are evaluating decriminalization. And in America, more than 5 states have legalized marijuana despite it still being illegal under federal law; there is growing acceptance for it to treat illnesses such as epilepsy and anxiety. Nine states, including Washington DC, California, Colorado and Massachusetts, have legalized recreational use of marijuana. Marijuana stocks Tilray Inc., Cronos group, and Canopy Growth gained in pre-market trading Monday in response to Coca-Cola’s interest.
Tilray jumped 6.8 percent, adding to its 40 percent gain last week, Cronos rose 3.1 percent and Canopy’s U.S. shares climbed 2.9 percent. Last month, Corona beer brewer Constellation Brands Inc. announced it will spend $3.8 billion to increase its stake in Canopy Growth Corp., a Canadian marijuana producer with a value that exceeds C$13 billion ($10 billion). But we do know that Coca Cola’s shares rose marginally in premarket trade on Monday.
