There is no doubt that the Cannabis/CBD business is slowly, steadily finding its way into the mainstream, and that of course includes the billion dollar business of sports. The latest and loudest salvo was fired early last week, when Major League Baseball and its teams opened up the door to do business with CBD brands, provided they have non-psychoactive levels of THC.
Teams can sell stadium signage, digital activations, and — starting next year — jersey patches to CBD brands. With societal tolerance changing rapidly and CBD legal in virtually every state, baseball is adapting to the times while creating a new revenue category which will probably be bisected as well.
Now this is not the first foray into sports by the industry, but it is the first time the big five leagues have opened a window. USA Triathlon became the first National Governing Body to join the partnership growth in 2019, announcing a deal with Pure Spectrum, which is based in Colorado and that sells products containing cannabidiol, or CBD. That deal was significant as it will begin to test the waters of the World Antidoping Association (WADA) on the banned substance list, and could signal an even wider shift in the sponsorship area than we have seen to date. Several properties, the PHF (since expired), the Big 3 and the UFC have been working with various companies in the CBD space for a while while Angel City FC in the NWSL announced their own deal just last week. Professional athletes turned CBD advocates include Hall of Famers Mark Messier and Brett Favre as well as other like Al Harrington and Kyle Turley. Messier in February signed on as an equity partner and “brand captain” for NXT Water, maker of Akeso CBD water, which contains 10 mg of broad-spectrum hemp-derived CBD. Another potential spender in the space is CbdMD which has deep ties into CrossFit connection. The brand was the official CBD partner of the 2021 NoBull CrossFit Games in Madison, WI last July and more recently was a sponsor of Wodapalooza, a four-day fitness festival for elites, beginners, masters, and adaptive athletes that is popular with the CrossFit community. At Wodapalooza, the company provided free product samples of its cbdMD and pet-focused Paw CBD brand as well as education materials and information about its affiliate marketing programs to competitors, gym owners, and coaches.
There are still conflicts and some confusion as things play out state by state on both the CBD side and the recreational Cannabis front.
Case in point, NASCAR allows limited sponsorship of racing teams for CBD, yet drivers cannot use the substance for pain relief. The PGA Tour allows players to endorse CBD brands, but the Tour itself will not yet allow overall sponsorships. The media restrictions also remain tight, with several companies looking to purchase space on arenas or game programs still being held back but teams and leagues, and broadcast rules still heavily restrict ads that can be run.
Now let’s be clear there is also a massive business growing in the legalized recreational cannabis business that will also impact sports. One of the first teams to adopt advertising for dispensaries was the Las Vegas Lights of the USL since cannabis is legal in Nevada. While we have seen some in fight sports sign on, few if any, other teams have taken the sponsorship plunge in the recreational space, but most experts in the field see it coming, and are carefully watching booth courts of law and courts of public opinion. One area of particular growth still is the infused drink marketplace, which has taken root (no pun intended) in California. Those involved in the market preach the less addictive side effects and the quicker recovery for the casual, legal user, than he or she would have with alcohol, which is of course a key revenue driver for virtually every sport on the planet where the demo is 18 and older.
Is it a fad which will go the way of ZIMA or wine coolers? Will there be a massive spend and churn impact like we saw recently with Crypto? How soon before a CBD brand starts turning out NFT’s for a team. All is a bit hazy, especially with state by state regulations still moving around. The UFC, a first adopter in the CBD space, sees the cannabis infused market as ready to explode. How big? Could it surpass beer when all the legalities are worked out. “Yes I believe it will,” said the UFC’s Paul Ascencio last year.
Now is this business still very hazy (OK another pun). Yes it is. Is the health and wellness space in sport growing like crazy? For sure. Will there be more fits and starts before we get clarity and massive business investment? Yes. Is it a business that will grow and all should be watching with probably more conventional and widespread upside that digital currency will have for years to come. It is tangible, accepted especially amongst a younger demo, and readily available in various products.
CBD, Cannabis are here to stay, lets see who lights the first match on the brand side, and then who joins in.
