Coke is getting in to the Cannabis game
Soft drink company, Coca-Cola is all set to tap into the fastest-growing cannabis market. Tthe soda giant, is reportedly in talks with Aurora Cannabis, a major Canadian weed company. Multiple credible resources reported discussions between both players to BNN Bloomberg.
Coke and Aurora are planning to brew drinks infused with cannabidiol (CBD). CBD is a collection of chemicals found in marijuana that makes the green useful for medical and therapeutic applications.(Notably, CBD is different to THC (tetrahydrocannabinol) which is what gives people the ‘high’ they feel when they consume Cannabis.)
Coke’s pot-enhanced beverages won’t make you high
Coke’s step is part of a trend. Last month, Corona beer brewer Constellation Brands Inc. announced to spend $3.8 billion for increasing its stake in Canopy Growth Corp. Canopy is a Canadian marijuana producer with a current market cap in excess of C$13 billion. Diageo PLC, the maker of Guinness beer, is having discussions with three Canadian cannabis producers about a possible deal to concoct cannabis drinks.
Coke’s approach is different. Previous deals have involved alcohol companies considering a horizontal step in to working with marijuana producers their aim is to make drinks that do get people high – offering effects more similar to inhaling marijuana.
Coca-Cola and Aurora, on the other hand would likely make beverages which provide their users medical and therapeutic benefits, targeting CBD towards functional wellness beverages for medical purposes, including easing inflammation, nausea, seizures, pain and many more. One example could be a sports drink that athletes consume after a workout to relax the body and reenergize their muscle fibers.
Following the BNN Bloomberg report, Coca-Cola issued a statement that they were embracing cannabis as a general move towards healthier beverages. The company made it clear that they’re not interested in marijuana as an intoxicant.
What is the CBD Coke would put in its drinks used for?
Many supplements and medicines already use the CBD. As a result, there is a great deal of evidence of marijuana/CBD’s effectiveness in relieving arthritis, anxiety and headaches. Additionally, the Food and Drug Administration (FDA) approved the use of weed for epilepsy treatment in June this year, part of a growing acceptance of marijuana in medical treatment.
Despite the noncommittal statements from both Coke and Aurora, the market spectators are taking the possibility of a deal very seriously. Aurora rallied more than17 percent Canadian trading Monday on the news, and Coke's share price was also slightly up.
What made Coca-Cola think about Cannabis?
Coke’s foray into the marijuana sector is the result of at least three incentives:
- Their core product is not growing as fast as it once was:
First, flattened sales of their core ‘soda’ products means they’re looking to revitalize their market. In this regard, marijuana can be positioned as a ‘trendy’ wellness ingredient, raising sales even as their traditional businesses slow.
- Cannabis is a growing market:
According to BNN Bloomberg, the CBD-infused edible market is expected to hit $2.1 billion by 2020.
- Third – social attitudes to Cannabis are changing:
Third is the ‘green wave’ the world is feeling as Cannabis gains greater respectability, and legalization occurs in more places around the world.
However, it’s worth noting that as of now, all sizable cannabis deals are taking place in Canada. The country serves as a staging ground for corporations interested in marijuana as pot is officially legal in Canada from the 17th October this year.
In the US, by way of contrast, Marijuana consumption is completely illegal at the Federal level. It means federal law enforcement could prosecute cannabis businesses and consumers at any time. Which makes it hard for even companies as big as Coke, to invest in.
Does it make sense for Coca-Cola to venture into cannabis when federal law prohibits pot?
Yes! The United States was the second nation, after Uruguay, to legalize recreational marijuana and will likely legalese it entirely, at some point.
Additionally, Coca-Cola has already stepped into the good-for-you ‘nutraceuticals’ sector. The iconic Georgia-based brand has also diversified into juices, coffee and tea followed by the flattened consumption of soft drinks. It is selling coconut water, considered as a recovery drink after a workout. Cannabis drinks are not so different.
Summing Up Coke’s Big Plan
According to Kris Krane, an advisor and expert on cannabis law, it’s unlikely that a top brand like Coca-Cola would offer CBD-infused drinks in the US until the Federal law changes.
Krane speculates that Coke would develop the product first for the Canadian market, preparing to muscle it into the US once cannabis become widely legal. Bonnie Herzog, an analyst with Wells Fargo says that cannabis-infused drinks could hit a $50 billion annual market in the US should CBD, and other marijuana products become legal.
Finally, Aurora Cannabis and Coca-Cola have not approved the reports and weed-coke deal yet. So, if you’re excited about the idea, just wait and watch what comes out!