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- An increasing number of beverage companies are rapidly investing in the marijuana space as the drug gains legalization in more jurisdictions.
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Coca-Cola is 'closely watching' the cannabis space — and is reportedly eyeing a deal with one of Canada's biggest producers (KO)
An increasing number of beverage companies are rapidly investing in the marijuana space as the drug becomes legal in more jurisdictions.
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Coca-Cola is said to be in discussions with Aurora Cannabis to develop beverages infused with CBD, one of the nonpsychoactive compounds found in cannabis, Bloomberg News reported Monday.
While neither company confirmed the talks, Coca-Cola said it was "closely watching the growth of nonpsychoactive CBD as an ingredient in functional wellness beverages around the world."
"The space is evolving quickly," the Coca-Cola spokesman Kent Landers told Bloomberg. "No decisions have been made at this time."
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Aurora was up more than 15% in early trading Monday following the report. Through a representative, the company said it intended to enter the beverage space but could not confirm Coca-Cola talks.
"Aurora has expressed specific interest in the infused beverage space, and we intend to enter that market," the spokesperson told Business Insider. "There is so much happening in this area right now and we think it has incredible potential. As a rule, we do not discuss business-development initiatives until they are finalized; however, we have a responsibility to our shareholders to give proper consideration to all relevant opportunities that are presented."
On Tuesday, the Investment Industry Regulatory Organization of Canada requested information from Aurora regarding media reports of its potential beverage partnerships. "The company does confirm that it engages in exploratory discussions with industry participants from time to time," Aurora said in a response. "At this time the company confirms there is no agreement, understanding or arrangement with respect to any partnership with a beverage company."
Coca-Cola's potential foray into marijuana beverages follows a two investments by Constellation Brands, the conglomerate behind drinks like Corona and Svedka, totaling more than $4 billion, into Canopy Growth, the largest publicly traded marijuana firm.
Molson Coors has also entered the marijuana space through a joint venture with Canada's Hydropothecary Corporation to make nonalcoholic cannabis-infused beverages.
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Monday's report also catalyzed a rally in other marijuana stocks. Tilray was up about 7%, while both Canopy Growth and Cronos Group were up about 2%. Coca-Cola was higher by about 0.4%.
Despite Monday's pop, shares of Aurora are down 25% this year.
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