SportsCannaBiz: The Role of Brands

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 III of TMR’s ongoing #SportsCannaBiz series. We recommend that you read Part I and Part II before continuing on to this article.

Part III: Brands

In sponsorship, it often seems as if change happens not at all and then all at once.

Thanks to the reality of how truly small the industry is, once a property sees success with an initiative, every other team is right behind them trying to get a piece of the action.

The actions of one property essentially validate the decision for another to take action. Why? It’s easier.

There’s comfort in numbers. And less risk from the lack of attention, and potential negative press, that comes from being the second in many instances.

Unfortunately, by being the second mover, the impact of a deal and announcement loses caché–and organic value that comes from being the first mover.

A famous Harvard Business Review article explored this first-mover advantage as it relates to tech companies, but there are parallels worth noting, primarily in both the advantages and disadvantages that exist. If you haven’t read it already, here’s our key takeaway to save you some time: “First-mover status can confer advantages, but it does not do so categorically. Much depends on the circumstances.”

This statement is core to the point of this third part in our “Sports CannaBiz” series: there is currently no categorical path to implementing CBD and cannabis sponsorships across North American teams, leagues and properties.

The truth still stands that these deals are few and far between and we don’t expect that to change any time soon.

As Las Vegas Lights FC owner & CEO Brett Lashbrook explained in Part II of our series, “Once sports gambling was legal at the federal level, it took two years for the deals to start to exist.”

Even after legalization, it has taken a while for all the circumstances to come together and make a deal happen.

For both brands and properties, it’s imperative that these circumstances are right or they risk implosion of the deal from the very beginning.

West Coast League Commissioner Rob Neyer, whose teams include the first baseball team to sign a CBD deal, the Portland Pickles, isn’t aware of any future deals in the WCL, for example.

“I haven’t heard of anything else in the works, which kind of surprises me,” Neyer tells Team Marketing Report. “Now, it might just be that there aren’t suitable local CBD partners that match up with our other markets.”

Brand perspective
Rachael RapinoeMendi

Rachael Rapinoe, CEO & Co-Founder of CBD brand Mendi, has a different take on what these partnerships mean to the brand.

“We absolutely need the influence and voice of athletes and leagues,” Rapinoe says, speaking to the importance of the role these partnerships play in their organization.

Mendi currently has deals with two National Women’s Soccer League (NWSL) teams, Utah Royals FC and the North Carolina Courage, which were both announced earlier this year. Mendi’s roster of athletes also includes WNBA superstar Sue Bird, as well as her wife, U.S. Women’s National Team hero and OL Reign player Megan Rapinoe — Rachael’s fraternal twin.

Will Mendi’s sponsorship portfolio continue to expand? You can bet on it.

“We definitely have deals in the pipeline,” reveals Rachael Rapinoe. She declined to give specifics, as each agreement has yet to be finalized, but adds that they are speaking with both teams and leagues.

What is important to the Mendi brand for a partnership to come together?

“We’re looking to align with thought leaders who advocate for the long-term care of athletes,” says Rapinoe.

On the other side of the continent is another brand focused on serving athletes and utilizing sports marketing to grow their awareness and sales: cbdMD. Based in Charlotte, N.C., cbdMD has numerous deals together including  exclusive CBD partner of Life Time, Inc., and their events. Endorsement deals in place include numerous action sports athletes as well as U.S. Olympians, pro golfers and retired football players such as:

  • Lolo Jones, former Olympic hurdler and bobsledder
  • Kerri Walsh Jennings, Olympic beach volleyball player
  • Bubba Watson, PGA Tour player
  • Jonathan Stewart, former NFL Carolina Panther
  • Steve Smith Sr., former Carolina Panther and NFL Baltimore Raven

“Our sponsorships of both individual athletes and promotions have played an important role in our success,” explains cbdMD CMO Ken Cohn. “Partnerships of this variety align perfectly with our messages about CBD’s potential for anyone who wants to live a healthier life.”

From concept to reality

Coming back to the idea of making sure that circumstances are right for a deal to come together, the concept is not far off from regular partnership. Intermingled between both CBD and THC-related cannabis deals are two key elements: education and public perception.

“The only reason the plant is stigmatized is because of mis-education,” Rapinoe says of the challenges they face in perception. “Education is going to be the single most important aspect of this industry maturing. That comes with research and with having more data.”

The ongoing need for data and research is important for both Mendi and the athletes they look to gain as customers.

Why? She says athletes are “all looking for that one percent margin that separates them” from competition.

Rapinoe appears perfectly suited to lead the CBD charge.

Her soccer career was cut short by multiple injuries and surgeries and prescribed painkillers numerous times. She hated the way opioids made her feel and saw addiction consume others. In response, she searched for more natural ways to heal and saw the light of CBD’s pain management and recovery powers. The entrepreneur co-founded Mendi to produce hemp-based CBD recovery products with the research to back each up as a natural, healthier way to improve athletes’ lives.

Of special note, Mendi’s offerings are all 100 percent THC-free, as THC is not approved by most sport governing bodies and could result in a failed competition drug test. As further proof of acceptance and relevancy with world-class athletes and trainers, USA Triathlon became the first U.S. National Governing Body to announce a CBD partnership with Pure Spectrum CBD.

cbdMD’s Cohn echoes Rapinoe in stressing the importance of education, “Since CBD products are still new to the market, consumer education is the foundation for everything we do on the marketing side. Partnerships provide the unique ability to activate and engage at live events, provide in-person information and gather essential consumer information.”

“They also allow sports fans to see CBD and cbdMD products in the proper context, as a tool for fitness, wellness, and the clear choice for athletes,” continues Cohn. “For us, there’s little or no separation between brand and education plays because our goal is to make cbdMD synonymous with CBD. Our education and branding efforts always intersect.”

TMR Crystal Ball: What does this mean for brands going forward?

Again, we take a gander into the TMR Crystal Ball, hoping we do not wear it out from overuse…

We want to examine how companies are going to be able to find authentic, meaningful partnerships to build their brands.

First off, obviously, sports and sports business needs to normalize. Without question, teams and leagues are going to have to address the impact of the COVID-19 shutdown on each sponsorship, particularly any sponsor claw backs.

Until sports business is back standing on solid ground, we must use this pause to evaluate the big picture.

Next steps include Black Lives Matter action opportunity

As we were about to publish Part III, George Floyd died at the hands of Minneapolis police and massive protests erupted nationwide. Sport’s racial issues–particularly Colin Kaepernick‘s 2016 kneeling protest about just such police brutality–took center stage.

The latest count shows 118 of 123 teams (96%) across MLB, NBA, NFL and NHL issuing statements, along with all four league offices. In the long-term, each will be judged on their resulting actions, not their words.

We must not forget: most professional teams and leagues feature Black athletes and serve Black communities. They must address the collective concerns of their Black fans and players first and foremost before profiting further. Especially from an industry with a “special history” in its relationship with race.

Why? Because racial issues are deeply at the heart of the cannabis debate, yet so very rarely addressed.

For one, Black Americans have been largely kept out of the legal marijuana industry.

In addition, Black people are four times more likely to be arrested for cannabis than white people–even though usage rates are roughly equal according to research from the American Civil Liberties Union (ACLU).

As Bruce Barcott wrote last week for Leafly, “Cannabis has a special responsibility because cannabis has a special history. American laws constructed around this product put millions of Black people in jail, denied them jobs and housing, and stripped them of their right to vote. To pretend otherwise is to perpetuate America’s 400-year crime.”

Pretty heavy, right? You bet, but that doesn’t make it less of a truth.

However, we look at today as an opportunity for sports business to both monetize a new sponsor category while taking anti-racism action. (Need a hand getting started? Here’s a comprehensive list of 363 cannabis businesses owned by people of color.)

Understanding how current protests could impact future action, it will be difficult in the near future for the majority of teams and leagues to move onto the discussions with cannabis and CBD brands that aren’t Black-owned or run. Frankly, it’s already difficult from the lack of diversity in the industry.

But think about the impact of a league like the NBA or NFL making this a core of their sponsorship sales and vendor management process.

It’s not about affirmative action or checking a box. It’s about the factual history that must be addressed when rolling out a category with the history of cannabis.

Lee Williams is a pseudonym for an experienced sports marketing professional currently working in an organization that forbids cannabis interactions—no marketing engagement, no financial partnerships and no recreational use by employees. S/he has worked to become a subject matter expert inspired in part by the life-changing medicinal use of cannabis and CBD for chronic pain several years ago.