For the purposes of our SportsCannaBiz articles, we will use cannabis and marijuana interchangeably. These are products that are often known as “pot” or “weed,” contain the compound tetrahydrocannabinol (THC), have psychoactive effects that give the ‘high’ sensation and are recreationally legal in 11 states and medicinally legal in 28 states.
Additionally, we will refer to products containing cannabidiol (CBD) as CBD or hemp-derivative products. These products are non-psychoactive, which is to say they do not product the “high” associated with THC, and have exploded in interest due to a tendency to relieve pain and anxiety. It should be noted that different types of cannabis may also contain CBD.
TMR is taking a look into the cannabis landscape, how CBD is impacting the sports sponsorship industry and how it may continue to grow, develop and change. We dig into existing deals, how leagues and associations are approaching their ties to cannabis and CBD, and offer our thoughts on what could be still to come based on the opportunity that exists.
This is Part II of an ongoing #SportsCannaBiz series. We recommend that you read Part I of the series before continuing on to this article.
Part II: Team Trailblazers
If you live in a community where cannabis is a part of the culture, you have probably had little reaction to new ways both cannabis and CBD are being marketed in your city. You likely don’t even have to dig all that deep in your mind to come up with cities like Denver, Portland, Las Vegas, and, despite any potential aversion to the university housed there, Ann Arbor.
What’s interesting though is, while cannabis and CBD are substantially different in what they do to the body, one of them (in spite of the efforts of my childhood D.A.R.E. counselor) can be a gateway to the other.
But that’s not in usage, it’s in terms of social acceptance. As teams and partners work to alleviate any notion of taboo, first of CBD, then cannabis, as a part of their sponsorship deals, consumers are less likely to think of “Mary Jane” as the “Devil’s Lettuce.”
That said, there remains much work to be done in public perception. Of particular note are PGA Tour golfers who have to deal with the disconnect of their ability to use CBD and accept CBD endorsements, while still potentially being punished for using medical cannabis in states where it is legal.
Just days ago, golfer Billy Horschel noted in a New York Times article, “There’s still not enough correct information out there, but that weed-smoking image that is out there–just because people haven’t had the correct information–is being torn down.”
To date, there have been only a handful of sponsorship deals with professional teams that have come together in either category, with most coming as a bigger surprise outside of their home market rather than within it.
Teams out in front
The Portland Pickles, a summer collegiate baseball wood-bat baseball team that has risen to the top of the sports zeitgeist in the last few years by embracing being first and proactively building the Pickles–and now Gherkins–brand off the field, announced the first CBD partnership in baseball with Portland-based Lazarus Naturals in 2019.
As a member of the West Coast League, the team operates entirely independent of Major League Baseball, unlike Minor League Baseball clubs. This allows WCL teams greater freedom with their marketing partnerships.
That freedom, combined with more states decriminalizing cannabis, sparked a discussion of CBD and cannabis partnerships at the WCL’s annual meetings in Nov 2018. “Someone said ‘If anyone’s going to do it, it’s Portland,’” chuckles Pickles GM Ross Campbell. And they weren’t wrong.
While this was a CBD deal, not around the more controversial cannabis, it’s important to note that Oregon was the first state to decriminalize cannabis all the way back in 1973. The state also passed laws allowing for medical cannabis in 1998 and in 2014 approved Measure 91 which established the groundwork for recreational use.
As WCL Commissioner Rob Neyer explained to TMR, “For the league, it wasn’t an issue at all. Everything the Pickles were looking to do was perfectly legal, just like having a bar selling mixed drinks. I always thought it was a great initiative.”
Another market that has moved on from “Devil’s Harvest” movie misconceptions is, of course, “Sin City,” Las Vegas.
“Cannabis is a seamless part of our culture here in Clark County and Nevada,” explains Brett Lashbrook, Las Vegas Lights FC owner & CEO, of the Light’s 2018 deal with NuWu Cannabis Marketplace and the Las Vegas Paiute Tribe. “This had more of a shock value outside of Clark County than within it.”
During the 2019 season, the Lights added a deal with Two Roots, a San Diego-based “cannibeer.” As part of the deal, Two Roots made the non-THC alcohol version of the beer available to fans at Lights games while sponsoring a 150-seat VIP seating area that included complimentary beer and snacks, as well as “Happier Hour” a post-game event at the stadium.
Sponsorship is sponsorship
What might be most interesting about this category–and what the Lights and Pickles should be commended for–is that they’re not treated differently than other sponsors.
Sure, the category may be sexier to some, but at the end of the day, these are business partners, paying for a set or marketing assets. Consumers can argue that beer is much cooler than banking, but to those of us in sports business, we know our job is to understand the goals and objectives of our partners and make them our own.
“It’s about finding companies that you can really help out with their spend,” said Campbell. “What are their goals, what is their marketing [strategy] and how can we tie that into what we’re doing in the park?”
Most in sponsorship would argue this is the baseline for a healthy partnership.
Lashbrook notes the importance of finding partners who align with your beliefs. “NuWu are our neighbors, four blocks away from the stadium, investing millions of dollars into Las Vegas, just like we are–we are For Vegas, By Vegas, Of Vegas.”
“Having a partner like the Lights, their athletes have been in the store, their merchandise is in the store” said Dave Colvin, Tribal Attorney for the Las Vegas Paiute Tribe, the operator of the NuWu Cannabis Marketplace. “This opened up that we are a part of the community and that we want to reach out and welcome people in [to the store].”
Lashbrook also notes that NuWu provides CBD for the players and coaching staff in the locker room, which has been “incredibly well received.”
One of the other advantages that the Lights and Pickles had the independence to operate and chase deals without governing-league interference. “I knew that I had the flexibility to do deals that were permitted under state law,” adds Lashbrook. That flexibility even allowed them to showcase the inside of NuWu Cannabis Marketplace in the partnership announcement, a feat that is often difficult for a myriad of reasons for many dispensaries, but that took careful planning and facilitation to pull off.
The Lights/NuWu partnership also included well thought out assets and platforms as you would expect in any strong sponsorship deal. Additionally, the Lights supported the Las Vegas Paiute Tribe, hosting community members at games throughout the season as well as a “National Night Out” for tribal members and families, according to Steve Pastorino, who spearheaded the deal while the Lights’ VP, Corporate Partnerships (he is now US Integrity‘s SVP & Head, Partnerships).
NuWu honored ticket stubs for retail discounts following Lights games and played host for visits from players and the team’s mascot for events throughout the year. When asked of concerns around players being on site at the dispensary, Pastorino notes, “We would not ask any player to be involved with NuWu if they weren’t comfortable with it.”
The best competitive advantage that these organizations had in going after this category, though, was arguably their leadership that wanted to remove stigma from both CBD and cannabis as a part of these deals.
We previously covered how important educating consumers is as a part of activating these deals. “We wanted to play a role in de-stigmatizing cannabis is in Las Vegas,” said Pastorino. When asked if there were any season ticket holders that objected and chose not to renew, the response was “literally one or two.”
“There is no one going to a Lights game who thinks ‘Oh my goodness’,” says Lashbrook. “They’re investing in our communities and there is nothing nefarious going on.”
“A selling point was that we wanted to be the first team in baseball to do this,” explains Campbell of the Pickles’ deal with Lazarus Naturals. The deal would end up garnering an explosion of national press well beyond most local partnership announcements and changed how Lazarus would approach their marketing.
“Before the deal, they were mostly doing social media marketing,” notes Campbell.
Lazarus Naturals tied into programs such as the “Patriot Program,” which allowed members of the community to nominate a veteran for five free tickets to a game, a concert series every Friday night titled “Rocking the Walk” plus the obligatory banners hung around the ballpark.
An in-stadium activation booth, staffed by Lazarus employees in an area near the right field corner, educated curious consumers, provided CBD information and sold CBD tinctures and balms at nearly every Pickles home game.
Per the team, Lazarus Naturals sold “thousands of dollars” of product thanks to their display. TMR was unable to reach Lazarus for further comment and it is currently unclear if the company will renew for the 2020 Portland Pickles season–in whatever form it takes on.
TMR Crystal Ball: What does this mean for deals going forward?
The biggest step to alleviate challenges limiting more deals from coming together is simply going to be the ability of cannabis businesses to have access to the proper financial services and tools required to business in 2020 and beyond.
Until the SAFE Banking Act that was introduced in 2019, or a similar deal, comes to fruition, we’re unlikely to see seven- or eight-figure deals with the New York Yankees or Dallas Cowboys come to life. Without any such legislation in place to remove cannabis as a Schedule 1 substance from the U.S. Controlled Substances Act, teams just don’t have a way to accept payments without risking intervention from federal authorities.
If we can get over this necessary, yet achievable, hurdle (your move, Congress), we can move from projecting what the growth of this category will look like–based on the work that has already been done by the Lights and Pickles with NuWu and Lazarus, respectively–to actual implementation of cannabis and CBD category partnerships.
Can there be an equilibrium between cannabis and CBD categories and other traditional sponsorship categories? Yes.
To get there, four critical benchmarks of progress are:
- Minor/challenger leagues (e.g., MiLB, AHL, ECHL) remove CBD as a restricted substance and pave the way for their member clubs to widely approach this category for sponsorship.
- Minor/challenger leagues (e.g., the above plus USL) remove cannabis as a restricted substance, providing their member organizations opportunities to sell sponsorship in states where cannabis is legal.
- All of the Big 5 leagues (MLB, MLS, NBA, NFL, NHL) remove CBD and cannabis as prohibited substances for players in their respective collective bargaining agreements (CBAs).
- A Big 5 league or team inks the first sponsorship deal with a publicly-traded cannabis brand.
While benchmark No. 4 might seem like a large jump from No. 3, it’s likely that only the largest brands–those with the financial wherewithal to properly fund these marketing efforts–would be feasible for a deal of this size.
Additionally, while we don’t truly know how long this will take, it’s important to look at how long sports gambling took to ingrain itself as a core sponsorship category.
“Once sports gambling was legal at the federal level, it took two years for these deals to start to exist,” notes Lashbrook.
Finally, while the peak of exposure from announcing a partnership might have sailed with the first movers who have paved the way for these deals, the ceiling is still incredibly high compared to traditional sponsorship as it relates to the press generated from a traditional sponsorship category announcement.
What does this mean? There is still opportunity for smaller CBD and THC brands to get a piece of the pie. As emerging brands are often challenged to have enough capital to expand into new markets and new states, localized deals–those that capitalize on a strong association between a team and hometown brand–present the best chances of happening.
Now that we’ve seen the baseline of what works and what is acceptable by local law, we should expect savvy sports marketers to challenge to the gray area and push the boundaries of what is acceptable for activation around a CBD or even cannabis partnership.
It’s been the case on both the brand and property side for as long as sponsorship has existed, and there is no reason to believe marketers will politely sit back and be told what they are allowed to do before they do it.