As legalization of recreational cannabis is becoming more prevalent, it is has become pretty common for other businesses to enter the fledgling market to make the most of its untapped potential. However, the news that we are going to share doesn’t involve just any other company. We are talking about here the biggest soft drink manufacturer on the planet.
Yes, it has been reported that the soda giant Coca-Cola is in talks with a Canadian marijuana manufacturing company Aurora Cannabis to produce cannabis-infused drinks. The news of the possible merger sent share prices of the latter through the roof. Within a single day, the share price experienced a 23 percent rise.
The news report mentions that the talks are now in a pretty advanced stage. It also asserts that Coke was also in talks with another Canadian cannabis company. However, that didn’t get past the preliminary phase. The source that shared the news also suggested that Coke would market the cannabis-infused product as a recovery drink.
Coca-cola and Marijuana
Coca-cola and Marijuana – Image powered by Rappler.com
As per experts, if the deal materializes then it will be a masterstroke from Coke given that Canada is going to legalize adult-use of cannabis from the next month. Coke already has the infrastructure required for marketing and distributing the drink throughout the country. On the other hand, the involvement of Coke will also help in mainstreaming the legalized and free-of-taboo consumption of marijuana.
It is interesting to note that both companies have declined to comment on any potential deal. Nevertheless, the statements issued by them suggest that they are mulling over the idea. For instance, Coca-Cola maintains that it is closely observing the sustenance of the non-psychoactive cannabinoid market like any other beverage company. The company admits the using CBD as an ingredient of functional wellness beverages is a proposition that can’t be ruled out.
Similarly, spokesperson of Aurora Cannabis, Heather MacGregor, has also declined to comment on any potential deal with Coca-Cola because the company doesn’t publically discuss any business proposition until it is finalized. Nevertheless, she confirms that the company is interested in exploiting the opportunities in a potential CBD beverage market.
Coke would market the cannabis
Coke would market the cannabis – Image powered by Nypost.com
Martin Landry is an expert of equity research at GMP Securities LP, a company offering several corporate financial services. Landry is of the belief that many companies dealing in fast-moving consumer goods are interested in entering CBD market, particularly after cannabis legalization has become rampant.
He also thinks the retail conglomerates will use the legal incubation of Canada to give their products a test run before eventually entering the more promising US market. Landry also expects that with the maturation of the cannabis industry, more retail giants will enter the market.
Keep in mind that the popularity and growth of legal cannabis will eventually cut down the market cap of alcohol businesses. Experts, however, think that sooner or later big players of the industry will accept and embrace the legal marijuana since it is pretty common for businesses to act upon the adage: ‘if you can’t beat them, join them’.