Published: Tue, September 18, 2018
Finance | By Kristine Clayton

Coke eyes cannabis-infused drink market

Coke eyes cannabis-infused drink market

The world's largest beverage company, based in Atlanta, is in "serious talks" with Canadian cannabis producer Aurora Cannabis Inc to develop cannabis-infused drinks, sources familiar with the matter told BNN Bloomberg. The investment follows a deal a year ago in which Constellation acquired a almost 10 per cent stake in Canopy and the two companies agreed to collaborate on the development of cannabis-based drinks.

Coke stock gained slightly on a NY market weakened by concerns over trade tariffs.

It did not confirm or deny the link with Aurora Cannabis, which was first reported by Canadian broadcaster BNN Bloomberg.

Beer makers Constellation Brands (STZ.N), Molson Coors (TAP.N) and Heineken (HEIN.AS) are all playing in the market for cannabis products.

Although Canada is gearing up to legalize marijuana for recreational use on October 17, beverages infused with the plant's active ingredients won't be legal until sometime in 2019.

Coca-Cola says it's monitoring the nascent industry and is interested in drinks infused with CBD.

Kent Landers, a spokesman from Coca-Cola, declined to comment about Aurora.

The news comes as more US states move to legalize marijuana for recreational use and as Canada, where Aurora is based, prepares to fully legalize the recreational use of cannabis next month.

The logo of Dow Jones Industrial Average stock market index-listed company Coca-Cola (KO) is seen in Los Angeles, California, U.S. April 4, 2016.

Back in June, Canada became the second country in the world to legalise recreational marijuana.

Coke said in a statement Monday that it is "closely watching" the growth of CBD, a non-psychoactive component in marijuana, as an ingredient in what it called functional wellness beverages. Reuters calls it a "testing ground" until the USA comes around to legalization.

Cannabidiol is one of hundreds of molecules found in marijuana plants, and contains less than 0.1 percent of THC.

Moving into this area carries little reputational risk for Coke, said Liberum's von Stackelberg.

"It's going to be more of the "recovery drink" category", the source added.

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