U.S. CBD company Charlotte’s Web Holdings (CW) will pay Major League Baseball $30.5 million plus a 10% royalty on sales, and grant the professional sports organization 4% of the company’s shares in a landmark exclusive marketing deal announced this week.
Charlotte’s Web-branded products will become the “Official CBD of MLB” under the exclusive agreement, which marks the first time a professional sports league formed a sponsor partnership with a CBD company.
Increased exposure
Analysts said while the deal, which runs to 2025, won’t mean significant additional revenues for the company, it will increase the visibility of the CW brand, raise awareness of CBD products in general, and could spark similar deals in the sector.
Charlotte’s Web Holdings, which is traded over-the-counter in Canada, recorded a net loss of ~$138 million in 2021 as revenues grew just 1.0% to reach ~$96 million. That followed a loss of ~$30 million in 2020. CW stock jumped 44% on Wednesday, following the announcement Tuesday.
CBD is not approved by the U.S. Food & Drug Administration, but MLB said in a press release that it entered the agreement after CW’s products underwent independent testing by NSF International, a consumer safety and product-testing organization, through which it met the league’s scientific standards. The league also said the products are in line with its policies on banned performance-enhancing substances.
Sports line debuts
As part of the deal, Charlotte’s Web is set to release a sports-themed line of “Daily Edge”-branded tincture, gummies, topicals and oral sprays that will feature the MLB logo. The Daily Edge tincture launched via CW’s e-commerce platform yesterday, and the brand will further debut in retail sports and health and wellness sales outlets, CW said.
“We are excited about the possibilities this partnership offers as CBD becomes a more widely adopted part of the health and wellness regimen of our players and fans,” said Noah Garden, MLB’s chief revenue officer.
Relaxed rules
MLB has stood out among other professional sports leagues in its approach to cannabis. For example, it clarified in a 2020 policy memo that players will not be punished for using cannabis away from work. However, MLB players may not enter sponsorship deals with cannabis companies or hold investments in the industry, under league policy.
In an initial promotion, CW is giving away an all-expenses paid trip to this year’s MLB World Series later this month.
