MLB Approves CBD Sponsorship After Crypto Crash, But...

On June 22, 2022, Major League Baseball officials announced that teams could now sell CBD sponsorships.

According to Sports Business Journal, the CBD products must first be certified by NSF International (an organization dedicated to product testing and safety for sports leagues), and teams will also require authorization from the office the MLB commissioner.

As reported by Marijuana Moment, MLB Chief Revenue Officer Noah Garden seemed quite excited by the development during a conference call with team marketers earlier in the week.

“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,” the MLB official said. “Our fans are very much the kind of customers they are looking for, and we like being first. It’s a good opportunity for us and the clubs.”

Garden went on to explain that potential sponsors embracing the NSF certification process is what really made the MLB comfortable enough to move forward.

Why the Sudden Shift?

The fact that CBD is now an “approved category” for MLB sponsorship is no surprise.

For one, the MLB has already pivoted to more sensible drug policies around cannabis and other substances.

The real surprise could be the delay. What took so long?

Maybe it has something to do with the recent downturn cryptocurrency market, which had invested heavily in sports sponsorship over the past year and must now cut costs.

Also, last November, it was reported that crypto companies were forced to pay a premium for sports sponsorships compared to more established industries, so it will be interesting to see if that happens with CBD sponsors in baseball.

In fact, some argue that CBD isn’t even a real industry due to the fact it is largely unregulated. This has led to a dearth of inferior products, putting the onus on consumers to find CBD products that actually work.

The MLB shows good diligence here by introducing the NSF certification process, but will the primary focus just be on keeping THC levels in check, or is the NSF actually prepared to screen CBD products for overall quality and assurance?

Now that MLB sponsorship is a reality, interested CBD companies would also do well to make sure they get the most out of any finalized deals with the major sports league.

What About Cannabis Sponsors?

We’ve long had alcohol sponsorships in baseball with the likes of Coors Field and Busch Stadium, so when will sports teams really open to up to cannabis sponsors?

The biggest hindrance here is obviously cannabis’s erroneous status as a schedule I controlled substance (which should have never happened in the first place).

This federal status makes it hard for the entire cannabis industry to operate like any other industry.

In fact, if a sports league did allow weed sponsorships, cannabis companies would not be able to write off the expense due to IRS tax code 280E, which prevents them from deducting any expenses except for cost of goods sold.

CBD companies are not subjected to 280E ever since the passage of the 2018 Farm Bill. That doesn’t change the fact that the CBD industry is a hot mess on the regulation side, and by default CBD companies are generally not as well organized as licensed cannabis operators.

This could create headaches for ball clubs down the line and perhaps even expose some of the festering warts in and around the CBD space.

Or it could propel both cannabis and CBD to greater heights of legitimacy and sensible regulation.

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