The Coca-Cola Company recently announced that it is strongly considering a business venture into the burgeoning legal cannabis industry. This news came as a surprise to millions, as risk-taking is not traditionally an adjective that investors use to describe the Coca-Cola company. The market for marijuana, as has become evident by the involvement of a billion dollar corporation, is proliferating as new states pass legislation allowing the sale of recreational and medicinal marijuana for their citizens. And because it is still illegal at a federal level, it will be fascinating to observe the legal battles that will ensue. Nevertheless, Coca-Cola has garnered tremendous media attention for this announcement, and the cannabis stock market was rocked to its core by this announcement. But until federal legislation is passed, it is impossible to predict the future of consumer cannabis products in America.
Coca-Cola’s sights are set on creating a beverage infused with CBD (the non-psychoactive part of marijuana) to provide consumers with the calming and medicinal effects of marijuana without the traditional “high” that may impair driving ability or motor functionality. The beverage company is reportedly “in serious talks” with Aurora Cannabis Inc., a Canadian cannabis producer headquartered in Edmonton, Alberta. Coca-Cola’s revenue has declined in 2018, causing executives to search for groundbreaking ideas to entice customers. Canada’s nationwide recreational cannabis legislation creates a new market for CBD beverages in Canada; but before Coca-Cola can take this venture to US markets, federal changes must be enacted. Most market predictions cite the early 2020’s as the expected date for cannabis consumer products to take off in the US.
The History of Cannabis Legality in America
Hemp growth in the United States began during the colonial period when tobacco became a huge export crop in the new world. The movement against marijuana began in the early 20th century and gained traction throughout the Prohibition Era of the 1920’s. Beginning in the 1930’s, Marijuana was classified as a drug at the state and federal level in the United States. The Nixon administration passed the Controlled Substances Act in 1970, constituting what many consider to be the beginning to the war on drugs. This policy regulated the manufacturing, import, possession, use, and distribution of Cannabis in the US. Colorado and Washington made history in November 2012 when they legalized recreational marijuana use, and since then several other states have followed suit. In 2018, more than half of the 50 states allow for medicinal cannabis use and many others have it decriminalized. It is clear that we as a nation are trending towards complete legalization on a federal level. Coca-Cola and many other companies surely will use this information in deciding whether or not to venture into the cannabis markets.