After earlier indications that Coca-Cola might be looking to join the pot party, the beverage giant now seems to be putting a lid on cannabis, with CEO James Quincey saying that the science is still out on consumable marijuana.
Earlier this fall, Coca-Cola had reportedly stated its interest developing drinks infused with CBD, the non-psychoactive cannabinoid compound in marijuana often taken to treat conditions ranging from insomnia and anxiety to pain management.
And in the days before recreational legalization in Canada when interest in all things pot-related was reaching its peak, news broke that Coca-Cola had been in talks with Edmonton-based cannabis company Aurora Cannabis , which caused Aurora’s share price to immediately shoot up 17 per cent. The run prompted a halt in trading in ACB, while a Canadian regulator pushed Aurora into publishing a statement attesting to the fact that “no agreement, understanding or arrangement” had in fact been made with Coca-Cola.
The pre-legalization frenzy may have died down, but investor interest in cannabis companies remains solid, with many now looking beyond Canada to regions and companies within the US and Europe where marijuana is either legalized already or in the process of getting there.
And industry heavyweights have taken notice, most clearly evidenced by beer and alcohol giant Constellation Brands which in August re-upped its stake in Canopy Growth Corp to the tune of $5 billion, itself an event which triggered a buying spree Canadian pot stocks.
But Coca-Cola is firmly on the sidelines, says Quincey, citing the health and safety of his customers as the prime issue.
“I have a very simple way of thinking about ingredients, including CBD: is it legal, is it safe and is it consumable?” says Quincey, in conversation with CNBC’s Jim Cramer. “It’s not legal in the United States and it’s not even legal for beverages in Canada yet. The science is out [on safety].”
“We believe that our consumers want to trust us that our beverages are indisputably safe therefore we want to see consensus science behind any ingredient whichever one it is and we want to sell drinks that people can drink each day, so it’s not like something you have once, you have to be able to have [for example] one a day,” he says.
Buoyed by stronger sales for its diet soda, Coca-Cola Zero Sugar, the pop company posted earnings and revenue in its last quarter which beat expectations, coming in with revenue of US$8.25 billion and earnings of US$0.58 per share versus the consensus US$0.55 per share. Management predicted four per cent organic growth for the full fiscal year, while shares in KO have risen 13 per cent over the past month.