Cannabidiol-Infused Water Company Sees Market Going ‘Mainstream’

(Bloomberg) -- As Canada gears for legalization of recreational marijuana on Wednesday, some beverage companies sees the potential for widespread consumption of cannabidiol-infused drinks.

“Do I just want to be a CBD player in the dispensary market? Absolutely not,” said Aaron Keay, chairman of Alkaline Water Co., in an interview. “I want to be a CBD player in the supermarket places, which we already dominate, and then branch out into more mainstream from there.”

Shares of Alkaline Water have surged almost 50 percent since its announcement last month of a new portfolio of beverages infused with the marijuana ingredient cannabidiol, also known as CBD, which is increasingly being used to treat medical conditions such as sleeplessness and anxiety. The Scottsdale, Arizona-based company plans to roll out a hemp-derived CBD-infused version of its trademark Alkaline88 water, followed by flavored versions. It will also test how cannabidiol and a higher pH fare in sparkling water.

Keay estimates up to a quarter of the company’s total revenue could come from its CBD products in the first year of sales. Alkaline Water reported about $20 million in revenue in its last fiscal year, and Keay said that tally could rise to $100 million in time.

Alkaline Water isn’t the only company betting that cannabidiol will taste good through a straw. New Age Beverages Corp. shares have risen more than 300 percent since the company teased its plans to enter the CBD space last month. Another small-cap player, India Globalization Capital Inc., has filed a patent application to treat fatigue and restore energy.

Smaller players’ success in the CBD beverage space is likely to attract the interest of bigger companies, Keay said. Shares of PepsiCo Inc. took a hit this month after the company said it had no plans for cannabis. Meanwhile, Coca-Cola Co. said last month that it was looking at the possibility of infusing CBD into “functional, wellness beverages around the world.”

“All of those guys are coming in it, it’s just going to be a matter of when and how do they do it,” Keay said.

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