U.S. Markets closed

A Deal With Coca-Cola Could Make Aurora Cannabis the Real Thing

Keith Speights, The Motley Fool

Coca-Cola (NYSE: KO) has had plenty of slogans throughout its long history. One recurring theme dating back to 1969 is "It's the real thing." Now a potential deal with Coke could make a top Canadian marijuana grower the real thing, too.

Aurora Cannabis (NASDAQOTH: ACBFF) is in serious talks with Coca-Cola to develop cannabis-infused beverages, according to a report by BNN Bloomberg TV. Could a deal with Coke and Aurora be even bigger news than Constellation Brands' (NYSE: STZ) partnership with Canopy Growth (NYSE: CGC)

Shadow of dollar sign on top of pile of marijuana leaves

Image source: Getty Images.

Key differences

There are some important differences between the potential deal between Coca-Cola and Aurora Cannabis than the one between alcoholic beverage maker Constellation Brands and Canopy Growth. One biggie is that the kind of cannabis-infused beverage Coke is contemplating might not be the same as what Constellation and Canopy are envisioning.

BNN Bloomberg reported that Coca-Cola wouldn't comment on any discussions with Aurora. However, a company spokesman stated in an email to BNN Bloomberg that "along with many others in the beverage industry, we are closely watching the growth of non-psychoactive CBD [cannabidiol] as an ingredient in functional wellness beverages around the world. The space is evolving quickly."

Canopy Growth CEO Bruce Linton has said that his company and Constellation plan to launch cannabis-infused beverages including zero-calorie drinks with mixtures of cannabinoids. He told CNBC's Jim Cramer in an interview this summer, "We're talking about going into a bar and having a tweed and tonic."

Coca-Cola, on the other hand, appears to be interested in more-therapeutic cannabis-infused beverages targeting relief of cramping, inflammation, and pain. A source told BNN Bloomberg that Coke is looking to develop cannabis-infused beverages in the "'recovery drink' category." 

Also, Constellation Brands made two significant investments in Canopy Growth. In October 2017, Constellation partnered with Canopy and bought a 9.9% stake in the marijuana grower for around $191 million. Last month, Constellation invested another $4 billion in Canopy, upping its stake to 38%. It seems more likely that Coca-Cola would form a joint venture with Aurora instead of buying a big chunk of the company like Constellation did with Canopy. 

A huge impact

No matter how you look at it, a deal with Coca-Cola would be huge for Aurora Cannabis. It would also be tremendously important for the cannabis industry overall.

After the Constellation-Canopy partnership was first announced last year, many (including yours truly) thought that it was important in large part because it helped further legitimize the cannabis industry. And when Molson Coors later picked its cannabis partner, I thought that was another step toward legitimization of the industry. 

Like many others, I figured that the floodgates might open for other major companies to form alliances with marijuana growers. That appears to be what is happening. Reports have surfaced recently that Guinness brewer Diageo might be next among alcoholic beverage companies to forge a cannabis partnership. There's speculation that big tobacco companies could jump into the fray as well.

But if Coca-Cola partners with Aurora, it would raise the level of legitimization of the cannabis industry more than any of the other deals, in my view. Coke is one of the most well-known and respected brands in the world. A Coca-Cola deal would also increase the likelihood that even more beverage makers, of both alcoholic and nonalcoholic drinks, could establish partnerships with marijuana growers. 

One especially applicable Coke slogan

There have been many slogans for Coca-Cola through the years. I think that one of those slogans is especially applicable in the discussion about a potential deal with Coke and Aurora: "Make it real." I bring up that old Coke slogan from 2005 for a couple of reasons.

First, there isn't a deal yet. BNN Bloomberg reported that Coca-Cola met with another top Canadian marijuana grower, Aphria, a couple of months ago, but those discussions didn't go anywhere. It's possible that talks between Coke and Aurora could fizzle out as well. It's not real until a deal is done.

Second, for investors considering Aurora Cannabis or other marijuana stocks, make it real when you evaluate these stocks. It's easy to get caught up in the giddiness of big deals with big companies and the rapid growth of cannabis markets across the world. But remember also that marijuana stock valuations reflect a lot of this growth. Some might argue that the stocks reflect a lot more growth than is likely to be experienced over the next few years.

However, shares of Aurora Cannabis soared on the news about the possibility of a partnership with Coca-Cola. And for good reason. It looks like the Coca-Cola slogan that's most relevant of all might be this one: "Have a Coke and a smile." 

More From The Motley Fool

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of Molson Coors Brewing. The Motley Fool has a disclosure policy.

  • Tesla Stock Is Up 10.2%: What’s Helping It Defy Gravity?
    Finance
    Market Realist

    Tesla Stock Is Up 10.2%: What’s Helping It Defy Gravity?

    Tesla (TSLA) stock appears to be defying gravity today and is rallying despite the broader market sell-off. Today at 1:08 PM EDT, Tesla stock was up 10.2% from the previous session’s closing price. Earlier today, Citron Research—one of the Tesla bears—surprised the market by turning positive on TSLA for the first time.

  • 2 More Marijuana Stocks Are Moving to the NYSE
    Business
    Motley Fool

    2 More Marijuana Stocks Are Moving to the NYSE

    This year, we've witnessed GW Pharmaceuticals gain approval in the U.S. for the first cannabis-derived drug, and we watched as Vermont legalized recreational marijuana use entirely through the legislative process. This began with Cronos Group at the end of February, when it chose to list its shares on the Nasdaq. It was followed just a few months later by Canopy Growth Corp., which became the first marijuana stock to list on the NYSE.

  • News
    MarketWatch

    American Electric Power boosts dividend 8.1% to push yield above utilities sector's

    MARKET PULSE American Electric Power Co. Inc. (aep) said Tuesday it will raise its quarterly dividend by 8.1% to 67 cents a share from 62 cents a share. The new dividend will be payable Dec. 10 to shareholders of record on Nov. 9. The

  • Companies Say They're Ready to Move Supply Chains From China
    Finance
    Bloomberg

    Companies Say They're Ready to Move Supply Chains From China

    U.S. President Donald Trump imposed a 10 percent tariff on $200 billion of Chinese imports in September -- following an earlier round of tariffs on $50 billion of goods -- and promised to raise the duty to 25 percent in January. "We’re pro-actively taking action," Todd Bluedorn, chief executive officer of the Texas-based HVAC company, told analysts during an Oct. 22 earnings call.

  • Why Investors Are Paying a Premium for These 3 Biotech Stocks
    Business
    Motley Fool

    Why Investors Are Paying a Premium for These 3 Biotech Stocks

    Amarin stock exploded in September because it looks like Vascepa will become the next go-to drug for this enormous population. During the 8,179-patient Reduce-It trial, patients given Vascepa in addition to their normal statin treatments were 25% less likely to suffer a major cardiovascular event such as a heart attack. Over the past year, Amarin Corporation actually lost $92 million because sales of Vascepa just haven't kept pace with operating expenses.

  • Aetna (AET) Q3 Earnings Preview: How Are Events Shaping Up?
    Business
    Zacks

    Aetna (AET) Q3 Earnings Preview: How Are Events Shaping Up?

    Wall Street expects a year-over-year increase in earnings on higher revenues when Aetna (AET) reports results for the quarter ended September 2018. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on October 30.

  • 5 Deeply Discounted Value Stocks That Haven't Been This Cheap in at Least a Decade
    Business
    Motley Fool

    5 Deeply Discounted Value Stocks That Haven't Been This Cheap in at Least a Decade

    October has been a wake-up call for investors that the stock market won't go up in a straight line, even if we'd like it to. Sure, Bank of America (NYSE: BAC) has seen its stock catapult higher from its Great Recession lows, but its forward P/E of 9.8 would represent a more-than-decade low for the stock.

  • Business
    CNBC

    Here's the tax bite on $1.6 billion Mega Millions and $620 million Powerball jackpots

    Strategies can be employed to reduce the amount of your win that is taxed, although they are best explored with the help of an experienced tax advisor. While it's anyone's guess who will end up winning the Mega Millions and Powerball jackpots, there's at least one guaranteed recipient of a chunk of the loot — the IRS. With the Mega Millions jackpot at $1.6 billion and Powerball's top prize at $620 million, that tax bill will be hefty even if the winner employs strategies to reduce their taxable income.

  • MARKETS: Here's why stocks are selling off right now and what a bottom would look like
    Business
    Yahoo Finance Video

    MARKETS: Here's why stocks are selling off right now and what a bottom would look like

    Live from the floor of the New York Stock Exchange, Yahoo Finance's Jared Blikre joins Seana Smith to discuss the latest market moves.

  • Suze Orman missed the point of retirement, and that’s why she went back to work
    News
    MarketWatch

    Suze Orman missed the point of retirement, and that’s why she went back to work

    Suze Orman did a smackdown of the FIRE (Financial Independence/Retire Early) movement on Paula Pant’s podcast. Coach Carson posted a balanced, informative response, appreciating Suze’s admonition to be sure you have enough for a risk-free retirement. Suze enumerated a string “what can go wrong” scenarios as evidence that early retirement (on less than $10 million) leaves you vulnerable when life hands you lemons — a whole tree of lemons.

  • The stock market's 'dead cat bounce' is over and the rolling bear market is making a comeback, Morgan Stanley says
    Business
    Business Insider

    The stock market's 'dead cat bounce' is over and the rolling bear market is making a comeback, Morgan Stanley says

    The stock market may have bounced back from its sharp sell-off at the beginning of October, but Morgan Stanley says the selling will pick back up soon. The firm expects the S&P 500 to slide back below the 200-day moving average, a key technical level. Tread carefully in tech and consumer discretionary, Morgan Stanley warns.

  • News
    CNBC

    Here's how much money you should have saved by 50

    Fidelity, the nation's largest retirement-plan provider, recommends having the equivalent of six times your annual salary saved. To get to that number, Fidelity recommends saving 15 percent of your annual income. Make sure to invest these funds instead of leaving them in a traditional low-interest savings account.

  • Why Nektar Therapeutics Crashed 17.2% Today
    Business
    Motley Fool

    Why Nektar Therapeutics Crashed 17.2% Today

    After delivering a disappointing update on NKTR-214 in cancer patients this summer, Nektar Therapeutics' (NASDAQ: NKTR) shares have been struggling. The company didn't report any news today, so a negative report issued by Plainview LLC this month may be to blamed for its 17.2% tumble today. In February, Bristol-Myers Squibb (NYSE: BMY) inked a blockbuster deal to license rights to NKTR-214 following positive data last year for NKTR-214's use alongside Bristol-Myers' Opdivo.

  • Business
    Motley Fool

    Parsing Visa's Big Quarterly Dividend Hike

    The ubiquitous financial services player Visa (NYSE: V) isn't exactly an income stock -- its dividend yield has fairly consistently been below 1% for years. Which raises two interesting questions for MarketFoolery host Chris Hill and senior analyst Jason Moser. In this segment from MarketFoolery, they discuss Visa's cash cow structure, its stock repurchases, and the M&A possibilities it thus far seems to be ignoring.

  • Why These 3 Top Marijuana Stocks Slumped Today
    Business
    Motley Fool

    Why These 3 Top Marijuana Stocks Slumped Today

    With earnings season hitting a crescendo this week, investors are looking closely at the specific prospects for certain corners of the market, and that's contributing to disparities among the various major benchmarks followed most often by investors. Amid the crosscurrents, marijuana stocks took particularly hard hits, and New Age Beverages (NASDAQ: NBEV), Tilray (NASDAQ: TLRY), and Canopy Growth (NYSE: CGC) were among the worst performers on the day. All three of these stocks have given back some of their gains following the long-awaited legalization of recreational cannabis in the Canadian market last week. In the month leading up to the Oct. 17 start date for legal cannabis sales, New Age Beverages tripled in value, while Tilray had more than doubled since the end of August, and Canopy Growth had seen more modest gains of between 10% and 20%.

  • Business
    Benzinga

    Morgan Stanley: 6 Ways Caesars Entertainment Can Create Value

    Gaming operator Caesars Entertainment Corporation (NASDAQ: CZR) boasts multiple upside catalysts that imply the stock is undervalued, according to Morgan Stanley. The Analyst Morgan Stanley's Thomas Allen initiated coverage of Caesars Entertainment 

  • Trump’s Tax Push to Help Middle Class Could Help Top Earners Too
    Politics
    Bloomberg

    Trump’s Tax Push to Help Middle Class Could Help Top Earners Too

    It’s still unclear how Trump will propose to reduce the tax burden on middle-class Americans, but one of the most straightforward ways would be to lower rates by 10 percent for single filers making up to $82,500. U.S. income tax rates are graduated and income dollars get taxed in chunks as they move up through the brackets -- which means wealthy Americans would also get to apply the reduced rate on their first dollars of income. “A millionaire gets the same size tax cut,” said Kyle Pomerleau, an economist at the conservative Tax Foundation.

  • These stocks may be sacrificed in a cold war with China
    COL
    CNBC Videos

    These stocks may be sacrificed in a cold war with China

    Jim Cramer says the escalation in the United States' trade war with China could end in an outright cold war that debilitates parts of the stock market.

  • Is the New Energy Transfer LP a Buy?
    Finance
    Motley Fool

    Is the New Energy Transfer LP a Buy?

    Last week, Energy Transfer LP (NYSE: ET) emerged on the scene after the former Energy Transfer Equity completed the acquisition of its affiliate Energy Transfer Partners in a unit-for-unit exchange that simplified this complex midstream franchise. The transaction also created a much stronger company that has the financial resources to fund a significant slate of expansion projects. The new Energy Transfer is a behemoth in the midstream sector.

  • What the Market Missed in Kinder Morgan Inc.'s Results
    Business
    Motley Fool

    What the Market Missed in Kinder Morgan Inc.'s Results

    Kinder Morgan (NYSE: KMI) can't seem to catch a break these days. Despite its completing what management dubbed a "momentous" quarter, shares of the natural gas pipeline giant barely budged this week. It was a head-scratching outcome considering that its financial results came in well above its guidance, which the market seems to have completely missed.

  • Caterpillar's Q3 beat expectations, shares tumble
    Finance
    Yahoo Finance

    Caterpillar's Q3 beat expectations, shares tumble

    A Caterpillar Inc. equipment is on display for sale at a retail site in San Diego, California, U.S., March 3, 2017. Global construction equipment giant Caterpillar (CAT) announced quarterly results that were a bit better than expected. Caterpillar’s construction industries business segment sales grew 16% to $5.7 billion.

  • Business
    Benzinga

    A Preview Of Juniper Networks Q3 Earnings

    Juniper Networks (NYSE: JNPR) releases its next round of earnings this Tuesday, Oct. 23. Here's Benzinga's essential guide to Juniper Networks' Q3 earnings report. Earnings and Revenue Juniper Networks EPS will likely be near 44 cents while revenue will

  • Dow tumbles nearly 550 points at lows amid corporate outlook, China selloff
    News
    MarketWatch

    Dow tumbles nearly 550 points at lows amid corporate outlook, China selloff

    It was a punishing start for stocks Tuesday as investors reacted negatively to quarterly results from a handful of blue chips and the cessation of a two-day rebound for China’s embattled stock market, reviving fresh questions about global economic growth prospects. The Dow Jones Industrial Average (DJIA) 548.62 points at its low and remained was recently 460 points, or 1.8%, at 24,862. The S&P 500 (SPX) fell 55 points, or 2%, to 2,696, retreating below a psychological and technical mark at 2,700, while the Nasdaq Composite Index (COMP) slid gave up 177 points, or 2.4%, to 7,291.

  • What to Expect from Bristol-Myers Squibb’s Q3 Earnings
    Finance
    Market Realist

    What to Expect from Bristol-Myers Squibb’s Q3 Earnings

    Bristol-Myers Squibb (BMY) is expected to report its third-quarter earnings on October 25. Analysts expect Bristol-Myers Squibb’s revenues to increase 8.87% from $5.25 billion in the third quarter of 2017 to $5.72 billion in the third quarte of 2018. In the last four quarters, Bristol-Myers Squibb’s revenue growth has been 3.93%–10.89%.

  • 4 Things Aurora Cannabis Did Right Before Its NYSE Debut
    Business
    Motley Fool

    4 Things Aurora Cannabis Did Right Before Its NYSE Debut

    Aurora Cannabis (NASDAQOTH: ACBFF) (TSX: ACB) has sought to make it even easier for U.S. investors to buy its shares by arranging to have its shares listed on the New York Stock Exchange. Beginning tomorrow, Oct. 23, Aurora will join the elite group of cannabis companies whose shares trade on major U.S. exchanges. Getting ready for the increased exposure that a NYSE listing brings takes time and effort, and Aurora Cannabis hasn't wasted any time.