SmallCapPower | September 20, 2018: Aurora Cannabis (TSX:ACB) shares jumped as much as 17% on Monday after BNN Bloomberg reported that the cannabis producer was in talks with The Coca-Cola Company (NYSE:KO), the world’s largest soft drink maker, to develop CBD-infused beverages. Aurora Cannabis, one of the Canadian cannabis stocks, did not confirm the report but said that it has expressed specific interest in the infused beverage space and intends to enter the market.
Even if Coca-Cola’s interest was just exploratory, it shows how far cannabis has come in achieving mainstream acceptance.
If true, Coca-Cola would not be the first beverage company to invest in a cannabis producer, but it would be the first big non-alcoholic beverage name. After purchasing a 10% stake in Canada’s largest cannabis producer Canopy Growth Corp. (TSX:WEED) last year, Corona beer maker Constellation Brands invested US$4.0 billion in Canopy last month, increasing its stake to a sizable 38%. As well another brewer, Molson Coors, also announced a deal in August with HEXO Corp. (TSX:HEXO) to produce non-alcoholic beverages containing cannabis. Apart from deals with beverage companies, Canadian cannabis producers are also announcing agreements with other cannabis/process technology players. Some key deals included Canopy Growth’s licensing agreement with Isodiol International Inc. (CSE:ISOL) for the manufacture and distribution of Isodiol’s marijuana-infused “Pot-O-Coffee” and “Pot-O-Tea” branded products in Canada and internationally (July 2017) and WeedMD’s JV with cannabinoid-infused beverages maker Phivida Holdings Inc. to develop cannabis-infused beverages.
Although not legal until likely 2019 in Canada, the cannabis-infused products are legal in several states in the U.S. Once legalized, the potential for these products in Canada is expected to be significant along with the impending legalization for recreational cannabis for adult use in October 2018.
Aurora Cannabis is the second most valued cannabis company in Canada with a market cap of about $11 billion, behind Canopy Growth, which is valued at about $15 billion.
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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