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A Deal With Coca-Cola Could Make Aurora Cannabis the Real Thing

Coca-Cola (NYSE: KO) has had plenty of slogans throughout its long history. One recurring theme dating back to 1969 is “It’s the real thing.” Now a potential deal with Coke could make a top Canadian marijuana grower the real thing, too.

Aurora Cannabis (NASDAQOTH: ACBFF) is in serious talks with Coca-Cola to develop cannabis-infused beverages, according to a report by BNN Bloomberg TV. Could a deal with Coke and Aurora be even bigger news than Constellation Brands’ (NYSE: STZ) partnership with Canopy Growth (NYSE: CGC)?

Key Differences

There are some important differences between the potential deal between Coca-Cola and Aurora Cannabis than the one between alcoholic beverage maker Constellation Brands and Canopy Growth. One biggie is that the kind of cannabis-infused beverage Coke is contemplating might not be the same as what Constellation and Canopy are envisioning.

BNN Bloomberg reported that Coca-Cola wouldn’t comment on any discussions with Aurora. However, a company spokesman stated in an email to BNN Bloomberg that “along with many others in the beverage industry, we are closely watching the growth of non-psychoactive CBD [cannabidiol] as an ingredient in functional wellness beverages around the world. The space is evolving quickly.”

Canopy Growth CEO Bruce Linton has said that his company and Constellation plan to launch cannabis-infused beverages including zero-calorie drinks with mixtures of cannabinoids. He told CNBC’s Jim Cramer in an interview this summer, “We’re talking about going into a bar and having a tweed and tonic.”

Coca-Cola, on the other hand, appears to be interested in more-therapeutic cannabis-infused beverages targeting relief of cramping, inflammation, and pain. A source told BNN Bloomberg that Coke is looking to develop cannabis-infused beverages in the “‘recovery drink’ category.”

Also, Constellation Brands made two significant investments in Canopy Growth. In October 2017, Constellation partnered with Canopy and bought a 9.9% stake in the marijuana grower for around $191 million. Last month, Constellation invested another $4 billion in Canopy, upping its stake to 38%. It seems more likely that Coca-Cola would form a joint venture with Aurora instead of buying a big chunk of the company like Constellation did with Canopy.

A Huge Impact

No matter how you look at it, a deal with Coca-Cola would be huge for Aurora Cannabis. It would also be tremendously important for the cannabis industry overall.

After the Constellation-Canopy partnership was first announced last year, many (including yours truly) thought that it was important in large part because it helped further legitimize the cannabis industry. And when Molson Coors later picked its cannabis partner, I thought that was another step toward legitimization of the industry.

Like many others, I figured that the floodgates might open for other major companies to form alliances with marijuana growers. That appears to be what is happening. Reports have surfaced recently that Guinness brewer Diageo might be next among alcoholic beverage companies to forge a cannabis partnership. There’s speculation that big tobacco companies could jump into the fray as well.

But if Coca-Cola partners with Aurora, it would raise the level of legitimization of the cannabis industry more than any of the other deals, in my view. Coke is one of the most well-known and respected brands in the world. A Coca-Cola deal would also increase the likelihood that even more beverage makers, of both alcoholic and nonalcoholic drinks, could establish partnerships with marijuana growers.

Originally Posted on Yahoo >>

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