The NBA has joined MLB in removing marijuana from its banned substances list. Thanks to a collective bargaining agreement (CBA) recently hammered out by league and player reps, marijuana consumption will no longer be an issue. But there’s another part to the story: the CBA also gives the okay to investing in marijuana businesses.
Assuming the 7-year deal is formally ratified, the NBA will become the second major sports league to allow players to consume marijuana. But it will set the league apart by making it the first to green-light marijuana investments. And even without direct financial investment, the CBA gives NBA players the right to promote marijuana consumption.
This is good news for both NBA players and the marijuana industry as a whole. Star athletes have a lot of influence over American consumers, which is why they so often land incredibly lucrative promotional deals. The legal marijuana industry is probably salivating at the prospect of signing a couple of big-name players to start pushing products.
Investing In the Industry
It is probably safe to assume that at least a few players will soon look at investing in the industry directly. Expect some of them to put large amounts of money into the recreational market. Some may invest in the medical market, but investments in that segment might not be as lucrative. Regulation would see to that.
Medical cannabis programs tend to be more regulated than their recreational counterparts. Utah’s program is a good example. According to the owners of the Utah dispensary Beehive Farmacy, state law limits the number of businesses in the Beehive State. Thus far, lawmakers have only approved 15 pharmacy licenses. All 15 are taken.
Players could invest in cultivation, but the state also limits grower licenses. On the other hand, it is hard to imagine that growers would turn down an influx of cash from anyone willing to bankroll them. So perhaps that opportunity is there.
More Opportunity in the Recreational Market
Legal restrictions do not completely eliminate the medical market for investment purposes. But NBA players hoping to invest in marijuana would probably find more opportunity in the recreational market. They would invest in cultivation and retail operations in states like New York, Washington, Oregon, and Colorado. Oddly enough, one of the recreational states they would be wise to avoid is California.
Despite the largest state economy in the U.S., California is struggling to maintain is legal marijuana market. Operators in the legal market just cannot compete with their black market counterparts. A combination of high taxes and onerous regulations keeps them at a decided disadvantage that forces them to sell at much higher prices.
Investing in California marijuana companies will not make sense until state lawmakers find a way to level the playing field. Until then, black market operators will continue dominating. No amount of outside cash flooding into the legal industry will change that.
Who Will Jump First
The likelihood of the new CBA being officially ratified is pretty high. That being the case, it will be interesting to see who jumps first. A small but notable number of NBA players have been open about their views on marijuana since the league softened its stance at the start of the COVID pandemic. Now that the softer stance has essentially been codified in a CBA, it will not take much to encourage players to show their enthusiasm.
Player investments in the marijuana industry could start flowing very soon. We’ll wait to see who decides to jump and how much money they are willing to spend. It will be interesting.