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PepsiCo says no to pot (for now), and the market goes tumbling down

Though rumors are swirling, PepsiCo, like its rival Coca-Cola, is only in the early stages of examining a possible move into the cannabis industry. Chief Financial Officer for PepsiCo Hugh Johnston was mum on the company’s potential plans in a recent interview.

"I think we'll look at it critically, but I'm not prepared to share any plans that we may have in the [cannabis] space right now," he told CNBC's Squawk on the Street on Tuesday.

[IGC’s cannabis-infused energy drink leads to explosive stock gains]

PepsiCo, the maker of such brands as Pepsi, Tropicana, Quaker Oats, and Gatorade, made the announcement that their organization is taking a critical look at pot products as Canada gears up for recreational cannabis sales later this month. Still, Johnston said the company had no immediate plans to invest.

“I think the difficulties in investing in that category, particularly in the U.S., where federally these things are still not legal, are quite a considerable challenge. So we look at everything, but certainly no plans at this point to do anything,” Johnston concluded.

The declaration from PepsiCo comes in the wake of their chief rival, Coca-Cola, making a similar announcement in September.

After news of PepsiCo’s trepidation towards pursuing cannabis-infused products, marijuana stocks took a bit of a hit. Tilray, a medical cannabis producer and stock market weed equity, lost one-fifth of its value at one point. Aurora Cannabis, the pot production company rumored to be partnering with Coca-Cola suffered similar losses and fell 5 percent on the Toronto stock exchange earlier this week. PepsiCo, normally a stock market star, fell 1.8 percent on Tuesday as well.

[Experts debate why Canopy Rivers is down 50 percent post-RTO]

ROTH Capital Partners analyst Scott Fortune stated that cannabis stocks like Tilray could have a lot of trading action when news of potential partnerships between the business sector and the pot industry crops up.

“For Tilray, and a very limit amount of shares [sic], trading action is a lot of everyday news speculation, and it can move around the stock one way or another,” said Fortune in an interview with CNBC. “There’s still a lot of speculation in the space for partnerships, but I think it will take time to play out.”

Source: Bloomberg

Can a global company partner with the cannabis industry?

For potentially pot-shy global companies, there is past precedent for large companies partnering with cannabis producers. The partnership would just require a lot of legal legwork.

While cannabis is still considered a Schedule I drug in the United States, and confusion surrounding the legality of putting hemp-based CBD oil into foods for consumption has cropped up in California, food, and beverage companies are looking to cannabis for future growth opportunities.

[Why it’s time to leave Canada and invest in US cannabis stocks]

Corona beer maker Constellation Brands made a record-breaking $4 billion stake in Canopy Growth Corporation, a Canadian cannabis company. Lagunitas, a Petaluma-based brewery owned by Heineken, produces an IPA-inspired, cannabis-infused, sparkling water called Hi-Fi. Hi-Fi, which is both alcohol and calorie-free, is sold in dispensaries in California.

These global companies purposefully partner with pot companies that are licensed and operating in states or, more often than not, Canada that allows recreational cannabis-use. By partnering with licensed operators, and not distributing the product in areas where cannabis is not allowable, companies can pursue developing cannabis-infused products.

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