Coca-Cola has jumped on the cannabis bandwagon, announcing plans to use the drug’s non-psychoactive ingredient in a new range of commercially-produced wellness drinks.
The world’s largest beverage company revealed it is in talks with Canadian marijuana producer Aurora Cannabis Inc. to develop products containing cannabidiol as a sideline to its traditional fizzy soft drinks business.
The drinks will be infused with CBD extracts and be designed to help ease a range of physical problems such as inflammation, pain and cramps.
It is not the first time that Coca-Cola has sought revenue outside of its line of soft drinks.
Last month, the company announced it was buying the Costa Coffee chain in a $7 billion deal underlining the growing appeal of the global coffee market.
The transaction was Coca-Cola’s largest acquisition in eight years and signalled its efforts to diversify away from fizzy drinks, which reportedly account for almost 75% of its annual sales.
Coca-Cola stressed the new drinks will not produce the high that comes from another cannabis-derived chemical known as tetrahydrocannabinol (THC).
THC is the mind-altering ingredient found in the cannabis plant and is responsible for most of marijuana’s psychological effects, as it clings to CB1 and CB2 receptors mostly found in the brain and alters their functioning, thereby creating the “high” effect the drug is known for.
CBD by comparison, is valued for its non-psychoactive and medical benefits and does not connect with brain’s receptors.
According to Health Canada, pre-clinical studies suggest CBD has anti-inflammatory, analgesic, anti-nausea and anti-seizure effects and appears to work throughout the body to provide health benefits, unlike THC which focuses on the brain and central nervous system.
Speculation on Coca-Cola’s interest in the cannabis market has been widespread and the company has still neither confirmed nor denied its link with Aurora.
In a statement to address its interest in CBD, the iconic company said it has “no interest in marijuana or cannabis” but that it is closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world.
It insisted “no decisions have been made at this time” and said it would not comment on further speculation.
For its part, Aurora – which closed up nearly 17% on the Toronto Stock Exchange after news of the planned beverage partnership broke – tried to downplay current interest in its business dealings with the soft drink titan.
“Aurora has expressed specific interest in the infused beverage space and we intend to enter that market,” it said in a statement.
“There is so much happening in this area right now and we think it has incredible potential… however we do not discuss business development initiative until they are finalised.”
A legal market
According to a beverage market report, soft drink sales worldwide are on the decline as consumers increasingly opt for healthier choices over sugary drinks.
In North America, the 2017 soft drink market fell to US$76.4 billion from US$78.3 billion in 2016, fuelled partly by deals with Canadian cannabis producers.
Cannabis will become legal in Canada next month and companies are flocking to take advantage of the new laws.
In August for example, Constellation Brands announced it would spend $5.25 billion to boost its stake in Canadian cannabis company Canopy Growth.
The makers of Corona Beer remained tight-lipped about the significance of the transaction, although rumour suggests it may be a prelude to the company offering a new range of cannabis-infused beers.
At the same time, Canada’s Molson Coors Brewing Co entered a joint venture with Quebec’s Hydropothecary Corporation to develop non-alcoholic, cannabis-infused beverages for the Canadian market.
And Guinness beermaker Diageo is in discussions with Canadian cannabis producers about a possible deal and Heineken’s Lagunitas craft-brewing label has launched a brand specialising in non-alcoholic drinks infused with THC.
Coca-Cola’s interest in the Canadian cannabis market has been reported to be “another indication of the growing acceptance of cannabis by established companies and of the importance of Canada to the development of those businesses”.