Walmart Canada exploring possible sale of cannabis-based products

(Reuters) - Walmart Inc's WMT.N Canadian unit said on Tuesday it is exploring the possibility of selling cannabis-based products, but has no immediate plans to get into the business.

FILE PHOTO: A Walmart store is seen in Encinitas, California April 13, 2016. REUTERS/Mike Blake/File Photo

The company’s shares rose nearly 3 percent to $97.48 in afternoon trading.

Walmart is the first major retailer to show an interest in being a part of Canada’s burgeoning marijuana industry, as other big U.S. companies, mainly in the alcohol and beverage industries, begin to consider entering the market for cannabis-infused products.

Last month Coca-Cola Co KO.N said it was closely watching the marijuana drinks market for a possible entry, while Corona beer maker Constellation Brands STZ.N has invested more than $4 billion in cannabis producer Canopy Growth WEED.TO.

“Walmart Canada has done some preliminary fact-finding on this issue, but we do not have plans to carry CBD products at this time,” Walmart spokeswoman Diane Medeiros told Reuters.

Cannabidiol or CBD is the non-psychoactive chemical found in marijuana and does not cause intoxication.

The news comes as Canada is on the verge of becoming the first major economy to legalize recreational marijuana on Oct. 17, and shares in cannabis producers have rallied in anticipation.

New Cannabis Ventures’ global cannabis stock index has risen about 87 percent over the past year.

The legal cannabis market in Canada will target an estimated 32 million adults by 2025 and drive about C$10.4 billion in retail market sales, Roth Capital Partners analyst Scott Fortune wrote in a client note.

The move by Canada could spur other countries to legalize recreational marijuana use.

“An investment blueprint has been established in Canada that we believe will play out internationally very similarly,” Fortune said.

Several U.S. states have also legalized use of recreational or medical marijuana, but it remains illegal under federal law.

Reporting by Uday Sampath in Bengaluru; Editing by Shailesh Kuber and Arun Koyyur