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Volume 22 No. 14
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Going to pot: Keep an eye on cannabis being a future category

Like everyone in the sponsorship business, we’re always looking for new money. Having survived and chronicled the flood of marketing dollars in the late 1990s that accompanied the initial internet boom, followed later by E.D. drugs and spirits, we know that the eternal question across the industry is still “What’s next?”

 

Gambling is the easy answer and we don’t want to minimize that opportunity. However, there’s still only a handful of states where it’s legal to bet on sports and it’s regulated: Delaware, Nevada, Mississippi, New Jersey and West Virginia. It’s coming, but until more states are on board, any national deals will be extraordinarily complex, if not impossible. So where does that leave potential league sponsorships and national TV deals in the embryonic legal bookmaking industry?

 

While all that is being sorted out, we want you to keep a close eye on cannabis. Every sports marketing agency we speak with is trying to assess the opportunity there. Nine states have legalized recreational use of the drug; 31 have approved medical use, and weed becomes legal across Canada next month.

 

Accordingly, sponsorship offers have already started north of the border. Industry sources tell us that a multiyear, low-seven-figure-per-year deal for a Canadian Football League sponsorship has been on the table for months. The offer is from Aphria, a Canadian cannabis producer that has a market cap of more than $2.7 billion U.S. How’s that for opportunity?

 

CFL ownership can’t quite come to terms with being the first league to authorize pot sponsorships. Whether that will change after recreational marijuana is legalized in Canada on Oct. 17 is an intriguing question. Someone will adopt what’s perceived as a first-mover advantage. The noise is only getting louder. Formula Drift President Jim Liaw is fervently trying to pitch marketers his conviction that Drift, which involves racing cars, mostly sideways, is the best and only “bridge between action sports and motorsports, with a really elusive audience of 18- to 34-year-olds.”

 

Photo: getty images

Drift team sales types have asked him about cannabis sponsorships, but Liaw, who co-founded Drift in 2004, has the same concerns as any other established property. “We’re playing the conservative card, because we just don’t know how our current partners would react,” he said. One of those sponsors is the U.S. Air Force, concerned with an altogether different way of getting high.

 

There’s already been some music sponsorships from the cannabis industry. One big difference: Musicians aren’t required to pass drug tests. It’s a different story for pro athletes.

 

“It’s going to be impossible for leagues to take sponsorship dollars when they have a CBA that bans the substance,” an industry insider said. An interesting side issue: What would a league want during collective bargaining in exchange for eliminating testing for marijuana?

 

Another impediment to growth: The nascent cannabis industry’s inability to form banking relationships (experts differ on the legal issues there) is hindering its ability to scale and thus afford things like sports marketing. There’s also the not-unrelated issue that marijuana is still illegal under federal law.

 

Still, we note that beer brands, long the biggest buyers of sports sponsorship inventory, have made huge cannabis investments, including Corona parent Constellation Brands and Molson Coors.

 

Most industry types we spoke to said we’re three to five years away from cannabis being a viable category, and closer than that in Canada.

 

“Like gambling, until it’s legal everywhere, you won’t see much activity,” said Marc Bluestein, president of Aquarius Sports & Entertainment.

Stay tuned.

 

HOSPITALIZED: Scout Sports & Entertainment has triumphed in an agency shootout, winning the account for New York-Presbyterian Hospital, one of the nation’s largest. It’s the first sports agency for the hospital, which has assets including sponsorships with the New York Giants and Yankees, NYCFC and Lincoln Center. Community and on-site activation programs are being developed.

 

The review was at the behest of Hernando Ruiz-Jimenez, who came on as the hospital’s new CMO around a year ago. New activation programs are hoped for before the end of this year.

Terry Lefton can be reached at tlefton@sportsbusinessjournal.com.