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Report: Coca-Cola Is Canna-Curious

September 17, 2018 9:30 am
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Report: Coca-Cola Is Canna-Curious

Just weeks after alcoholic beverage maker Constellation Brands, Inc. (NYSE:STZ) confirmed a new partnership with cannabis company Canopy Growth Corp (NYSE:CGC), beverage giant The Coca-Cola Co (NYSE:KO) is reportedly shopping for a deal of its own.

What Happened

Coca-Cola is in "serious talks" with Aurora Cannabis Inc (OTC:ACBFF) to jointly create a cannabis-infused beverage, BNN Bloomberg reported early Monday morning. Sources close to the talks told the Canadian publication that discussions are focused on developing drinks to ease inflammation, pain and cramping, rather than giving consumers a "high."

Why It's Important

The beverage jointly produced by Coca-Cola Co and Aurora Cannabis may be infused with cannabidiol, or CBD, a non-psychoactive chemical that is found in marijuana plants, the report said. The market for CBD products is projected to grow from $205 million in 2015 to as much as $2.1 billion in 2020.

Martin Landry, managing director of equity research at GMP Securities LP, told BNN Bloomberg there is "a lot of interest" from consumer packaged good companies in partnering with the cannabis sector. Encouragingly for cannabis investors, the sector is "still in its infancy and there's not a lot of partners to dance with," he said. 

What's Next

Coca-Cola's interest in Aurora could be part of a calculated longer-term strategy, Landry also told BNN Bloomberg. The beverage maker could use Canada as a "test market" to develop and perfect products before eventually entering the U.S. market when "it's more appropriate to do so."

Related Links:

Cowen: Constellation Brands Stakeholders Have Reason To Be Confident In Canopy Growth

Canaccord: Constellation Brands Investment A 'Transformational Event' For Canopy Growth

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