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Long Legal Road Ahead for Cannabis Sports Sponsorships
One of the next big hurdles for the cannabis industry and marketing firms is professional sports sponsorships.
As cannabis becomes more and more popular and less taboo, marketing efforts will be on the rise. Cannabis is a multibillion-dollar industry that has become a
major political issue as more states see the tax revenue possibilities. We are seeing an increase in various types of marketing, from billboards and magazine ads to organic content on social media platforms. It is a real possibility in the future to see pro athletes promoting CBD products for pain management or even a cannabis company naming a stadium.
Sports sponsorship is a major industry, and it makes sense that athletes might be natural brand ambassadors for a legalized cannabis market. However, there are obstacles unique in professional sports which means the road ahead will likely prove long to advertise during games or on team uniforms. Below are some considerations for cannabis brands looking into whether sport sponsorships could work.
The Current Climate
The current four major sports leagues in the U.S.the NFL, NBA, NHL, and MLB have all relaxed their rules related to cannabis and athletes. In 2019 MLS reached an agreement with the players' unions that allowed them to study the pain management benefits of marijuana, while the NFL announced last year they would no longer suspend anyone who tests positive and increased the THC limit allowed.
Sports leagues may consider cannabis and CBD sponsorship, especially after the huge losses during the pandemic. Athletes who suffer from debilitating pain want alternative treatments rather than strong pain medication that is often very addictive. They could pressure them even further as public perception shifts toward these treatments being appropriate for players' needs,
While there is less stigma around the cannabis industry, it is still complicated for businesses to operate like other companies. Even though the NFL, NBA, NHL, and MLB have all eased up on players' use of cannabis, they haven't embraced CBD sponsorships. They won't even allow athletes to seek CBD or cannabis sponsorship deals as individuals.
The most significant barriers to cannabis marketing and sponsorship are the lack of cohesive regulations from state to state, strict advertising rules, legality on the national level, and a lack of FDA approval. A lot of work needs to be done to clear these hurdles.
The industry is still developing, so cannabis companies need to be aware of the unique issues with sponsorship deals. Sports leagues are most likely waiting for federal approval for cannabis and FDA approval for CBD products before considering any type of sponsorship. Until the FDA approves cannabis, companies cannot claim any health benefits in their advertising.
State rules and regulations vary greatly from state to state in regard to cannabis advertisement. While some states like Massachusetts allow billboard ads, others don't even allow print ads.With so many different regulations, national marketing campaigns are problematic. In addition, the many legal and business issues generally applicable to sports sponsorships will likely change when dealing with cannabis and CBD.
Leagues often have strict policies in highly regulated industries that sponsors must adhere to. For example, sponsors must notify the team or league of any compliance issues, even if they don't directly affect them. Sponsorships can be terminated for even minor violations and often demand strict moral provisions. This allows them to terminate if they determine, at their discretion, that a sponsor might cause harm to their reputation.
Sponsorship of a sports team or league should never come at the expense of your company's ethical standards. There are certain things you can do that will help protect both sides, like demanding any morals clause be exercised reasonably and with good faith.
In conclusion, as cannabis becomes more and more popular and less taboo, marketing efforts will be on the rise. Cannabis is a multibillion-dollar industry that has become a major political issue as more states see the tax revenue possibilities.