Coca-Cola is exploring entering the budding cannabis drinks business, as the iconic beverage company seeks new opportunities to offset slowing soda consumption.

Coca-Cola Co (KO.N) is in talks with cannabis producer Aurora Cannabis Inc (ACB.TO) to make marijuana-infused beverages. The companies would likely develop health-focused beverages that will ease inflammation, pain and cramping, the report said, citing sources familiar with the matter.

The world’s largest beverage group by revenue is “closely watching” the cannabis drinks sector, which uses the non-psychoactive chemical in marijuana (CBD) as an ingredient for wellness drinks that treats pain but doesn’t get you high, the group said in a statement.

Cannabidiol (CBD) — while not responsible for getting you high — is thought to be responsible for many of marijuana's therapeutic effects.

“The space is evolving quickly,” it said.

Coke is the latest in a series of mainstream consumer beverage companies to start focusing on the fast growing cannabis sector as it seeks to capitalise on the legalisation of weed in North America and Europe.

Its plans were first reported by BNN Bloomberg.

Corona beer maker Constellation Brands recently invested under $4bn into Canadian cannabis group Canopy Growth, lifting its stake to 38 per cent. Diageo, the liquor conglomerate behind Johnny Walker whiskey, has also been exploring investment opportunities in the cannabis sector in recent weeks, according to people close to the company.

The increasing interest in the sector comes a month before Canada legalises recreational cannabis use on October 17. More than a dozen countries have legalised weed for medical purposes, including Germany and Australia, and several others are evaluating decriminalisation.

Pot has been legalised in more than half of America’s 50 states, despite cannabis being illegal under federal law. Nine states, including California, Colorado and Massachusetts, as well as Washington DC, have approved recreational marijuana. Analysts with ArcView and BDS Analytics expect global cannabis spending to reach $32bn in 2022, up from $9.5bn last year.

Greater legalisation prospects have fuelled a wave of deals in the sector, including several acquisitions by Canopy, as well as Aurora Cannabis’s $2bn takeover of MedReleaf in May, which was the largest deal in the industry at the time.

Bloomberg reported that Coke held talks with Canada’s Aurora Cannabis, but a spokesperson for the Atlanta-based company said that no decision had been taken about a deal yet.

Cannabis-focused companies have seen their equity values reach record highs in recent months as consumption liberalisation has further brightened the prospect of growth.

Coke shares were up 0.4 per cent ahead of the bell.

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