Reading into Coca-Cola’s recently publicized interest in the cannabis market
*This Op-Ed written by Christopher Coggan was first published by San Diego Daily Transcript on Oct. 22nd
It was recently reported that Coca-Cola was eyeing the cannabis market. As one might expect, cannabis stocks saw a meaningful spike in value with the news of yet another giant international beverage company considering the move into cannabis. Unlike Constellation Brands before them, makers of the popular Corona beer who have recently invested billions in Canopy Growth, Coca-Cola’s inquiries seem more conservative and focused. Coca-Cola’s interest lies in the non-psychoactive Cannabinoid CBD (Cannabidiol), one of the over 100 active cannabinoids naturally occurring in cannabis. Studies show that this phyto-cannabinoid, CBD, is a powerful promoter of the body’s own endocannabinoid system comprised of a network of receptors that regulate an individual’s anti- inflammatory response.
In other words, these recent headlines, although exciting, are not telling the entire story (quite the contrary, they are supplementing the truth with media hype). The type of cannabis strain most commonly associated with CBD is not cannabis (aka marijuana), but rather industrial hemp. Although both hemp and cannabis share the Latin name of Cannabis Sativa, these two plant variations are treated as separate and distinct, that distinction primarily determined by the potency of psychoactive THC. If a cannabis sativa plant contains less than 0.3% THC, the plant is
considered industrial hemp. This is important because industrial hemp faces a varied and somewhat murky regulatory environment compared to the regulated state cannabis markets. The Drug Enforcement Administration (DEA) for example, the CBD that is derived from it a schedule I narcotic, much like THC. The California Department of Public Health has recently come out to
support that position, even though the unregulated hemp CBD market in California might even exceed $1 billion annually. The hemp round table, a consortium of hemp farmers and manufacturers, believes that hemp and it’s bi-products are protected by the 2014 Farm Bill. They also have the opinion that CBD is an unscheduled cannabinoid and should be treated like a nutritional supplement. Then of course, you have a handful of pharmaceutical manufacturers that are in various stages of the patent and trial process on CBD-based drugs. To muddy the waters further, the U.S. government owns a patent on CBD.
Clearly, Coca-Cola courting anything connected with marijuana is an incredibly telling sign of the times. Yet, even though their conversations with Canada-based Aurora Cannabis (ACBFF) seem indicative of the headlines born from these negotiations, their comments suggest that their focus is more on the potential of hemp-derived CBD beverages. And there is good reason for this. As a publicly-traded company on the New York Stock Exchange, Coca-Cola is regulated by the Securities and Exchange Commission (SEC) and is also governed by a host of other expectations dictated by the federal government. Consequently, their ability to engage cannabis directly in the U.S. is severely limited. Coca-Cola’s calculated engagement means a lot more than the headlines suggest, especially as it relates to the hemp CBD marketplace. The fact that one of the largest beverage companies on the planet is considering moving in this direction suggests a base line shift in the
perception of existing federal law and perhaps more importantly, a harbinger of anticipated changes in federal policy. The Senate’s version of the 2018 Farm Bill includes an amendment that would legalize hemp production, resulting in a clear divide between hemp and its psychoactive counterpart, cannabis. Coca-Cola’s interest
currently is no coincidence; new federal policy appears to be a forgone conclusion.
This Op-Ed was first published by San Diego Daily Transcript on Oct. 22nd
Founder/CEO Therapy Tonics & Provisions, Inc
Chairperson, CCIA Manufacturing Committee