Professional sports leagues big and small are looking for ways to offset the revenues lost (and revenues that will be lost in 2021) because of the coronavirus pandemic. But to date, none of the four major U.S. leagues has been willing to align with or permit medical marijuana or CBD brand sponsorships. The decision to remain on the sidelines and forego the potentially lucrative revenue stream—despite 33 states having passed medical marijuana legislation and 47 states having adopted regulations on CBD oil—is reminiscent of the leagues’ approach to sports betting prior to PASPA being struck down in May of 2018. But with Democratic vice president nominee Kamala Harris vowing to decriminalize marijuana at the federal level (and expunge marijuana-related offenses from criminal records) should a Biden-Harris administration reign, it’s fair to wonder if the 2020 election will be the catalyst for the big four leagues to finally open up medical marijuana and CBD as sponsorship categories.
Our Take: Michael Neuman anticipates the big four leagues will begin embracing medical marijuana and CBD partnerships within the next five years—a timeline that should allow both legislative and FDA approval processes to play out. The Scout Sports & Entertainment partner expects that Harris, if elected, will try to honor her word and decriminalize marijuana at the federal level. But he’s not convinced it’s “high up enough on the list of priorities” to be addressed in the early days of the administration. Neuman also said he suspects decriminalization would occur as “part of a larger criminal and social justice reform initiative” that will take time to construct.
Decriminalization at the federal level is certainly the first step to the big four leagues embracing medical marijuana as a sponsorship category. But a couple of things need to happen before Shawn Kemp’s Cannabis is sponsoring the “hit” of the NFL, NHL or MLB game. “[The leagues] will still need to make modifications to their respective collective bargaining agreements, because if [the substance] is prohibited for player use you’re not going to see the leagues trying to monetize it,” Neuman said.
The MLB CBA is slated to expire following the 2021 season, the soonest among the big four leagues. But Neuman doesn’t see Major League Baseball becoming the first league to open up the medical marijuana category—he believes the NBA ultimately will be. “I see a greater percentage of NBA players talking about the medicinal benefits, and the one thing the NBA stands for is listening to the needs of their players,” he said. The current NBA CBA expires following the ’23-’24 season, aligning nicely with Neuman’s timeline (however, COVID has forced every league back to the negotiating table; the deadline for NBA and NBPA to opt out of their existing deal is Friday).
While CBD is not illegal at the federal level, the big four leagues have been hesitant to embrace a supplement the FDA has yet to issue any real guidance on, either. Ken Cohn (chief marketing officer, cbdMD) said the industry is “not any further along than we were a year ago [with those four leagues].” The FDA is expected to release enforcement guidance on CBD within the next 30 to 60 days. But Lance Blundell (general counsel, cbdMD) explained that it’s unlikely to change the leagues’ position: “You have to keep in mind, it is only guidance; it doesn’t have the force of law.”
With that said, the FDA issuing enforcement guidance is viewed as the first step towards the organization’s eventual establishment of formal regulations around CBD supplements (which would open up the door to CBD brand sponsorships). The five-year timeline should give the FDA the runway needed “to get a comprehensive scientific and medical understanding of whether or not [CBD is] safe to consume,” Neuman said. Blundell acknowledged that with the FDA moving at a glacial pace, it’s possible the leagues will end up embracing medical marijuana before CBD.
Of course, the decision to open up new sponsorship categories isn’t the leagues’ alone. “Whether a television network accepts [the category] is a different story,” Blundell explained. His company would know. While cbdMD has done deals with BIG3, Bellator, SuperCross and World Surf League, insistence on integration within the television broadcast cost the CBD brand a partnership with the Premier Lacrosse League. It does need to be noted Cohn denied his company was ever engaged in conversations with the PLL.
“There is no doubt sports are ready for the next group of categories that will infuse new revenue,” Neuman said, adding that the beauty of adding medical marijuana and CBD is that the leagues can align with brands in those categories without cannibalizing existing partnerships. While the NFL, NBA, NHL and MLB wait for the legislative and FDA approval processes to play out, look for the leagues to embrace categories that have benefited from COVID-19. “Payment services clearly are one. Food delivery systems [like DoorDash and Uber Eats] and urgent care walk-in facilities like CityMD” are other categories Neuman expects to see leagues tap into.