Can weed companies sponsor sports teams and big games?

As cannabis legalization becomes more popular across America, legal cannabis has become an important aspect of American culture. The multibillion-dollar sector is now being discussed in politics, while consumers are now seeing increased marketing strategies from marijuana brands.

Cannabis advertising now ranges from magazine to billboard ads and organic content across various social media platforms. In fact, sooner or later, sports fans will see their favorite athlete pumping CBD products for pain management.

It’s been said that the next big step in marketing cannabis-based products is professional sports sponsorships, and that couldn’t be more accurate. It makes perfect sense that athletes will be the face of cannabis brands and the industry’s focus on mental health and pain management. However, there are obstacles characteristic of the tightly regulated marijuana market coupled with the strong legality propositions of sponsorship deals. This makes it a very long walk to achieve this feat.

Below are some of the top considerations for CBD and cannabis brands hoping for a future in sports sponsorship.

The present climate

Several leagues have already embraced cannabis and found sponsors with various CBD brands. All of the four pillar sports in the United States — Major League Baseball, the National Basketball Association, the National Football League, and the National Hockey League — have all received their rules and testing procedures regarding athletes and marijuana. In 2019, an agreement was reached between the players’ union and the NFL to explore the benefits of cannabis in pain management.

After several investigations, the NFL concluded in 2020 that players will not be suspended for testing positive for cannabis. In the same year, the limit of acceptable THC levels for positive tests was also increased. In fact, stars like Al Harrington, a former Denver Nuggets, and Rob Gronkowski have linked their retired names to CBD and cannabis brands.

After a huge drop in profits due to the Covid pandemic, the top four sports leagues are considering creating a new sponsorship space about CBD and cannabis. Additional pressure to create this sponsorship space could also come from athletes looking for alternative medications for anxiety and pain. Player pressure is known to move things in sports leagues, and the acceptance of marijuana products in those leagues may be one of them.

This development means that cannabis and cannabis-related products will experience less stigma. However, this also reflects the constant restrictions that have made it difficult for cannabis companies to operate like other companies. Although the NBA, NFL, MLB, and NHL have all relaxed the use of cannabis substances by players, they have not embraced CBD sponsorship like other leagues have. Currently, the leagues still do not allow players to make cannabis or CBD sponsorship deals as individuals.

Strict advertising rules, lack of FDA approval, piecemeal state legalization, and a permanent federal ban are the biggest obstacles facing the cannabis industry. While the top four leagues are not bound by the WADA Code, there will be no support for cannabis or sponsorship of Olympic athletes or sports anytime soon. Although WADA has banned in-competition cannabis use, it is now evaluating a scientific study on cannabis status in 2022. This certainly suggests that there may be further softening in the future.

Aside from the problems that regularly accompany sports sponsorships, cannabis companies still have a lot to evaluate when looking for sponsorship deals.

Threshold considerations for sports sponsorships related to CBD and cannabis

Regarding the threshold question, if sports leagues are going to allow marijuana sponsorships in the future, they’re most likely waiting for federal approval. And most importantly, waiting for FDA approval for cannabis and CBD products. The FDA has decided not to allow companies to advertise CBD as a dietary supplement. In the meantime, standard guidance may be a long way off as scientific and medical evidence either supports or opposes health claims about cannabis. As it stands, companies and their representatives cannot specify the health benefits of cannabis without FDA approval.

On the other hand, cannabis is still classified as a Schedule 1 drug and has been listed among the anti-doping bands for most leagues for a very long time. However, as mentioned earlier, the perception of cannabis now seems to be changing in a positive direction. While the change in public perspective is positive, cannabis taxes are very high and advertising rules are very strict, but they vary from market to market.

When cannabis was legalized in Connecticut last year, the state’s attorney general, William Tong, placed a billboard advertisement at dispensaries in Massachusetts. However, the ad was removed by authorities citing reasons including violating cannabis marketing restrictions within the state. National cannabis marketing in general today is a challenge given the constant web of conflicting and overlapping government regulations.

Game day cannabis marketing and the presence of many athletes nationally in the big four leagues will surely turn the tide. In this case, there could be a possible integration of different sets, advertising rules and multiple jurisdictions. But even if political decisions allow such sponsorship deals in the marijuana space, it remains unclear how and if cannabis sponsors will be able to take advantage of local broadcast rights.

Additionally, a variety of business and legal issues surrounding sports sponsorship deals related to CBD and cannabis will most likely take a different pattern. From a commercial point of view, it is crucial for any sponsorship deal whether or not a sponsor gets the exclusive rights to a section.

As such, sponsors must carefully analyze how a league could have diced and sliced ​​such a section. Without a careful understanding of how a section is defined, an oversight could result in branded space being shared with awkward neighbors.

Conclusion

Should the sports leagues eventually approve cannabis sponsorship deals, we should expect regulations mandating strict compliance with the commitments. And this in particular on the part of the sponsor. This type of regulation is constantly used in industries such as sports betting, casino and/or gambling. So it won’t be surprising if such an approach is used for cannabis sponsorship deals in the sports league.

READ MORE…

ATHLETES USING CANNABIS COULD BE GOOD FOR SPORT?