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Major League Baseball Opens Up To CBD
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Hey Friends,
Major League Baseball became one of the first sports professional sports leagues to remove cannabis from its “drugs of abuse list” in 2019. And now they are taking it a step further, officially approving CBD sponsorships for team jersey patches and more.
The news was first reported by Terry Lofton of Sports Business Journal, and there are two important distinctions — CBD sponsorships can only be sold if the company is certified by the National Sanitation Foundation, and the CBD products cannot contain psychoactive levels of THC. That’s the main compound found in cannabis.
"We've been watching this category for a while and waiting for it to mature to the point where we can get comfortable with it," MLB Chief Revenue Officer Noah Garden told SBJ. "... It's a good opportunity for us and the clubs. The last few companies that came to see us about this, the process of NSF certification was embraced. That gave us a comfort level to be able to move forward."
Currently, three to five brands are in the process of obtaining NSF certification.
$1.13 billion in sponsorship revenue generated
Agreements spanned nearly 1,000 unique brands
A total of 1,640 deals (including league & teams)
Ranks 3rd in pro sports (Behind NFL ($1.8B) & NBA ($1.46B))
So for those that don’t already know, CBD stands for cannabidiol. It’s the second most prevalent chemical compound in marijuana (out of more than 100), and it has become popular since the 2018 Farm Bill removed hemp from the Controlled Substances Act.
These products typically don’t contain any (or less than 0.3%) tetrahydrocannabinol (THC), and their most common use cases include: reducing stress, inflammation, anxiety, pain, nausea, and even treating diseases like epilepsy, Parkinson's, and more.
The easiest way to think about CBD is that it is nonpsychoactive, meaning consumers can still reap health benefits from the plant without the mental high found in THC.
So why did Major League Baseball decide to do this now? Well, some would just point to the money. The cannabis market is expected to grow from $28 billion in 2021 to nearly $200 billion by 2028—and the CBD market represents about 25% of that.
Combine that with the fact that Major League Baseball teams lost a combined $3 billion-plus during the COVID-19 pandemic, and that answer makes a lot of sense.
But this is also part of a broader shift that has been occurring over the last several years as cannabis laws are relaxed throughout the country. For example, cannabis is now legal in 3/4th of the United States (38 for medicine & 19 for recreational).
But that’s not all. Because virtually every pro sports league has also relaxed its rules:
The NBA hasn’t tested players for cannabis since 2020.
The NFL now allows players to use cannabis in the offseason, raised the threshold for a positive test, and replaced suspensions with fines.
MLB removed cannabis from its banned substances list. However, players are still subject to punishment if they use or possess marijuana illegally, distribute it, drive under the influence, show up high to a game, etc.
The NHL tests for cannabis but doesn’t punish players who test positive. It’s instead treated as a health matter like alcoholism.
And in addition to relaxing punishment on its athletes, some sports leagues are already signing deals themselves. The UFC has a 5-year deal with Love Hemp, a UK-based CBD company. The NWSL has at least three teams with CBD sponsors, and the United States Soccer League (USL) is in the middle of a 4-year deal with Synchronicity.
So my guess is that this is just the beginning. CBD has proven over the last few years to be a safe alternative to pain medication and prescription drugs that are commonly found throughout locker rooms in pro sports. But with leagues across the United States relaxing rules on cannabis itself, it feels like it’s only a matter of time before capitalism takes over and cannabis sponsorships become a 9-figure revenue stream.
Of course, as things inevitably change, I’ll be here to break it all down for you.
Have a great day. I’ll talk to everyone tomorrow.
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