Coca-Cola is in talks with a major Canadian cannabis company about creating a non-psychoactive cannabis-infused beverage. Multiple sources with knowledge of the discussions told BNN Bloomberg that the 132-year-old cola company is in "serious" talks with Aurora Cannabis, a large marijuana company headquartered in Vancouver, Canada.
According to these sources, Coke is not interested in creating a drink that would get people high, unlike some other big beverage companies. Instead, like Pepsi, the company is responding to the lessening popularity--and growing taxation--of traditional soft drinks by expanding its product lines into decidedly more healthy beverages. Some of these healthier beverages could someday contain cannabidiol, or CBD, a substance found in marijuana that does not make you high, but appears to reduce inflammation, nausea, and seizures. According to BNN Bloomberg, products containing CBD are expected to become a $2.1 billion industry by 2020.
After the BNN Bloomberg report appeared, Coca-Cola issued the following statement:
"We have no interest in marijuana or cannabis. Along with many others in the beverage industry, we are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world. The space is evolving quickly. No decisions have been made at this time."
Maybe not, but Coca-Cola appears to be pretty close to a decision in favor of CBD-infused beverages, sources told BNN Bloomberg. One who has direct knowledge of the talks said the cola maker was "pretty advanced down the path" to a deal. And the company is interested enough in selling CBD beverages that it also held talks with Aphria, another Canadian marijuana producer about two months ago, insiders told Bloomberg, although those negotiations apparently fell apart at some point. (It could be that Aphria drives too hard a bargain--the company also lost out to another cannabis company, Hydropothecary Corp., for a nonalcoholic beverage deal with Molson Coors.)
Despite Coke's noncommittal statement, the stock markets are taking the possibility of a deal very seriously. Aurora shares were up more than 16 percent on the news at close of trading on Monday, and Coke's share price was slightly up as well.
There are certainly good reasons why it would make sense for Coca-Cola to offer a drink containing CBD and to work with a Canadian company to produce it. The country became the second nation--after Uruguay--to legalize recreational marijuana, a law that goes into effect next month. Meantime, here in the United States, marijuana is in an odd legal limbo--legal in some states, illegal in others, legal for only certain medical uses in others. It's still illegal at the federal level, which means federal law enforcement could prosecute cannabis stores or users at any time, although so far they've mostly tolerated CBD products. To complicate matters further, CBD can also be derived from hemp, although experts say that version is less effective and in any case growing hemp is also illegal in the United States, at least for now.
Also, Coca-Cola has already boldly stepped into the good-for-you nutraceuticals market. Among other things, its sells coconut water, prized by many as a recovery drink after a workout. A CBD-infused beverage with its anti-inflammatory properties would also make sense as a recovery drink, and one of the sources who talked to BNN Bloomberg said that's exactly what Coke is planning.
Given the growing market for CBD products, the shrinking market for soft drinks, and the general move toward healthier products, a CBD-infused beverage would make a lot of sense for Coca-Cola. It would also be very fitting, considering that the original Coca-Cola formula contained a small amount of cocaine. It would give a whole new meaning to the company's old ad slogan, "Have a Coke and a smile."