New Age Beverages recently announced it intends to launch a line of CBD-infused waters, teas and other drinks in the United States. The company already makes Bob Marley-branded organic coffees and teas and Coco Libre coconut water and kombucha drinks. Investors couldn't be more pleased with the expansionplan: New Age's stock, which has been extremely volatile this year, is up nearly 125% in 2018.
CEO Brent Willis told CNN Business the company is already in conversations with many retailers about selling its potential line of CBD drinks.
But the plan depends on Congress passing the Farm Bill, which would make it legal to produce hemp and potentially open the door for more products containing cannabidiol, or CBD. Now that Democrats will control the House, excitement for its passage is growing.
Cannabis stocks rallied sharply Wednesday on that development as well as the news that Michigan residents voted to legalize recreational marijuana. It didn't hurt that Jeff Sessions, who has vocally opposed federal legalization of pot, was fired as attorney general by President Donald Trump the same day.
New Age Beverages (NBEV) got a huge lift along with the cannabis stock rally, soaring more than 20% on Wednesday. Shares were down 4% in midday Thursday trade.
CEO Willis, a beverage industry veteran who has also worked for Coca-Cola (KO) and Budweiser brewer Anheuser-Busch InBev (BUD), is optimistic the Farm Bill will pass soon.
He said New Age's move into CBD-based drinks is about health and wellness, not getting people stoned.
"We want to focus purely on healthy drinks," Wills said.
While CBD is also a component of marijuana, it does not have the psychoactive properties that cause users to get high. Willis said that there are physical benefits to CBD-drinks, too, particularly for pain management.
"The big question is, where do you put these beverages on the shelves?" Willis said.More CBD drinks coming to America soon?[Cronos CEO: 'Watershed moment' for marijuana]Cronos CEO: 'Watershed moment' for marijuana 06:11 Maybe a better question for Willis: Who's the competition? Coke was rumored to be interested in making an investment in Canadian cannabis firm Aurora (ACB) butCEO James Quincey recently shot down that talk. Pepsi (PEP) has said it's looked at the CBD space. Corona owner Constellation Brands (STZ) has a more than $4 billion stake in cannabis company Canopy Growth (CGC).
Meanwhile, Molson Coors (TAP) has a joint venture to develop cannabis beverages in Canada. And Lagunitas, a beer brand owned by Heineken (HEINY), is selling a cannabis-infused sparkling water brand in California. Big beverage makers may want a piece of the CBD actionThis trend is likely to continue, with other experts wondering if companies like Starbucks (SBUX) may want to eventually get in on the CBD action.
"All beverage companies, including coffee and soda makers ... will inevitably embrace CBD-infused drinks," Paul Rosen, CEO of Tidal Royalty, a financing firm for licensed cannabis companies, told CNN Business in an interview.
Willis noted that "smoking marijuana may diminish in popularity, and more conventionally consumed CBD products may become more popular."So does that mean New Age Beverages could be a takeover target?
Willis was coy. He acknowledged that the beverage industry is somewhat insular and that he knows most of the leading players from his time at Coke and A-B InBev. "It's a close-knit community, and we are a perfect fit for other beverage companies," Willis said, before quickly adding that he wasn't actively shopping New Age Beverages.
"We want to be a billion-dollar business. It may take a few years to get there but we don't see any major obstacles," he said confidently. "Competition and regulation can't stop us."
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