According to Bloomberg, Coca-Cola is expressing interest in teaming up with Marijuana producer ‘Aurora Cannabis’ to create a new health drink with cannabidiol, a “non-psychoactive” compound found in the plant.
“Along with many others in the beverage industry, we are closely watching the growth of nonpsychoactive CBD as an ingredient in functional wellness beverages around the world” says Coke spokesman Kent Landers.
The CBD compound that Kent is referring to can be extracted as an oil and is commonly added to everything from hand lotion, to dog food, to drinks.
The purpose of this beverage is to focus on the health inducing proprieties of the plant to ease with “inﬂammation, pain and cramping.”
— CBS News (@CBSNews) September 17, 2018
Thus far, no explicit decisions have been made and Coca-Cola Inc. said it won’t comment on any further speculations.
In a separate statement Aurora said they won’t discuss the business development until it is done.
The only statement issued by Heather MacGregor, the spokesperson for Aurora, was that “Aurora has expressed speciﬁc interest in the infused beverage space, and we intend to enter that market.”
Following this report, Aurora Cannabis Inc. stocks soared to nearly 17 percent on the Toronto Exchange market.
First ever endeavour in this ﬁeld
The partnership between Coca-Cola and Aurora would mark the ﬁrst ever endeavour from a major manufacturer of non-alcoholic beverages transitioning into the market for cannabis related products.
This news comes after the continuous efforts of some U.S. states to legalize Marijuana for recreational use. Canada where Aurora Inc. is based prepares to fully legalize recreational cannabis by next month Oct. 17.
Since marijuana remains illegal at the federal level in the U.S. cannabis related companies have ﬂocked to Canada to raise funds and start their businesses here.
Earlier this year, Molson beer company suggested that it will make the drink with Hydrothecary, while the Constellation Brands, a mammoth spirits company that owns Corona, invested 4 billion into Canadian medical cannabis producer Canopy Growth.
Concerns and reservations
Due to recent legislation barring Canadians involved in the Cannabis sector from entering the US, there may be some legal ramifications for the company during the development and promotion of the product. Even a loose association with the product, such as being an angel investor, could result in lifetime bans for Canadian citizens.
However, this shouldn’t expressly affect the development of the product although it will be likely be on the mind of Coca Cola executives. The main issue at hand will be properly addressing US consumer beverage trends.
According to Dibadj a senior analyst at Alliance Bernstein who specializes in U.S. beverage and snack food companies: “the company has been caught ﬂat-footed in the past in not keeping up
with trends in beverages. They missed the energy drink phenomenon, they missed — and then had to buy into — the functional waters like Vitamin Water and coffee,” “But testing the waters of cannabis-themed drinks could backﬁre,” he said. Many Americans aren’t intimately familiar with the cannabis plant and might not understand that CBD has no psychoactive properties.
“I think you have to be very, very careful with this as a large brand. There are different viewpoints on a product category, and you don’t want to offend too much,” Dibadj said. “You don’t want to be too far ahead on any curve.”