This morning it was reported that Coca Cola (KO.N) is in serious talks with Aurora Cannabis to develop a CBD based drink. According to BNN, ‘Coca Cola and Aurora (ACB.T) would likely develop beverages that will ease inflammation, pain and cramping.’
It’s highly likely that Coca Cola are in talks with multiple cannabis companies.
We wrote a piece last week about Aurora’s share price needing big news for it move, with 944 million shares outstanding, many feel as though this stock is too diluted to touch. From the news this morning it looks as though this could be the indicator for Aurora’s next bull run as the market reacted in a buying frenzy
Aurora is up $1.36 on 74,224,000 shares traded as of 1:20 PM EST.
It even outshined LIFT’s (LIFT.T) IPO this morning.
Buy On News
The market loves this kind of news. On the day of the Molson (TAP.N)/HEXO (HEXO.T) announcement in August, Hexo jumped $0.48 CAD on the same day Aphria (APH.T) (another thought to be Molson target) released impressive financials,it dropped $0.94 CAD. In August, when Constellation Brands announced its 5 billion investment in Canopy (WEED.T), the stock shot up $10.05.
The catalyst for the major cannabis bull run of 2017 happened in November when Canopy (WEED.T) announced they received a $245 million CAD investment from big alcohol player Constellation Brands (STZ.N) in exchange for 9.9% equity in Canopy. I
When that news originally hit, everyone believed that Canopy and Constellation would be creating cannabis beverages together, and that may still happen although there has been no official word of it in the last 10 months.
Nowadays, many investors believe Constellation’s invest into Canopy is a hedge against a potential drop in sales from their alcohol brands. Georgia State University found that alcohol purchases decreased by 15 % in counties in states where marijuana was made legal. State counties where cannabis could be legally obtained had 20% drop in alcohol sales.
CBD > Cocaine
This wouldn’t be the first time the company delved into the drug industry. It’s no secret that until 1903, Coca Cola actually contained trace amounts of Cocaine, an estimated nine milligrams of cocaine per glass. However, in a day and age where health is more talked about now than ever, Coca Cola wants a much healthier substance infused in its products.
The evidence shows that people know the dangers of drinking soda, but elect to do it anyways. There are 39 g’s of sugar in a 355 ml can of Coke. For people who embrace a keto or paleo diet, that is likely more than a weekly amount of sugar in 1 can. With the invention of a CBD drink (if it isn’t caked in sugar) Coca Cola could be diversifying their product line greatly.
Here is what Coke does to your body within an hour:
Despite health being all the rage, Coke’s stock has performed well over the years, it’s even highly endorsed by Warren Buffett, Berkshire Hathaway (BRK-A.N) owns 400,000,000 shares, which translates to 9.4% stake in the company, Buffetts third largest investment.
It’s unsure whether or not Aurora and Coca Cola will strike a deal. A company the size of Coca Cola can book appointments with anyone. Aurora’s scale does seem to be a good potential fit, although, there are other companies such as Tilray and Aphria who could also fit the bill.
We will continue to cover this story as it develops.