Shares of Canada-based Aurora Cannabis (ACBFF) jumped Monday on speculation following a report that it's in talks with Coca-Cola Co. (KO) about its interest in CBD beverages in the wake of other cannabis-based tie-ups between major companies and pot specialists.
Aurora is in talks with Coca-Cola to develop the drinks, according to BNN Bloomberg Television.
Aurora stock recently jumped 14% to $7.44. Both companies confirmed rising interest in CBD-infused drinks.
"Along with many others in the beverage industry, we are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world," according to a Coke's Monday statement. "The space is evolving quickly. No decisions have been made at this time."
Heather MacGregor, a spokeswoman for Aurora, said the company plans to enter the infused beverage market.
"There is so much happening in this area right now and we think it has incredible potential. As a rule, we do not discuss business development initiatives until they are finalized, however we have a responsibility to our shareholders to give proper consideration to all relevant opportunities that are presented," MacGregor said in an email.
Overall, the speculation around Coca-Cola reflects that "smart investors are getting into the sector and putting a premium on integrated companies with broad capabilities, a large international footprint, and that have established an early-mover advantage, like Aurora," MacGregor added.
A cannabis specialist recently commented about the potential for CBD and THC infused beverages.
Brian Athaide, CEO of The Green Organic Dutchman Holdings Ltd (TGODF) , said the Canadian company expects beverages to be the largest category in the cannabis space with products similar to Vitamin Water or nutraceuticals with CBDs, and more intoxicating beverages with THC.
"We are going after the social user who is not trying to get high," Athaide told TheStreet's Jim Cramer at the Green Market Report's Green Market Summit on Friday at the World Trade Center in New York City. "When you go out with friends, you'll go to get a drink, not eat [cannabis] gummies."
Athaide, a former Procter & Gamble (PG) executive who also worked in the wine industry, said interest around big consumer companies in the cannabis space started growing after Constellation (STZ) initially invested in Canopy Growth (CGC) late last year to develop cannabis beverages. Last month, Constellation upped its investment by $4 billion in the largest alliance to date in the space. Also, Molson Coors (TAP) teamed up with Hexo (HYYDF) for a beverage alliance.
But the potential tie-up between Coca-Cola and Aurora Cananbis could mark the first major U.S. firm to establish a line of CBD drinks. While CBD does not have any intoxicating effects, it's seen as an ingredient that could boost the health appeal of drinks. It could spark interest from consumers in a category that's been seeing sluggish growth.
While Aurora shares jumped on Monday, Coke stock edged up fractionally to traded at $46.01 on Monday.
