Psychedelic Drug Manufacturers Could Be Sports’ Next Big Partnership Opportunity

Psychedelic Drug Manufacturers Could Be Sports’ Next Big Partnership Opportunity

Psychedelic drug manufacturers may represent sports’ next big partnership opportunity.

Analysts are projecting psychedelic drugs will become a $10 billion industry by the end of the decade. There are already at least 50 publicly traded stakeholders competing for a share of the pie.

That concept may seem ‘far out’. But a growing number of experts believe existing laws and regulations governing the research, manufacturing, and consumption of this subclass of hallucinogenics could soon change.

Scientists, advocates (including several high-profile supporters, like Elon Musk and Peter Thiel), and educators have all gone on record touting the drugs’ potential benefits for conditions including, but not limited to, post-traumatic stress disorder, social anxiety, depression, and addiction. 

Investors have fueled the nascent category’s growth by pumping hundreds of millions of dollars into it. That list includes Steven and Alexandra Cohen, owners of the New York Mets. Their foundation supports the Multidisciplinary Association for Psychedelic Studies (MAPS), an organization which raises awareness and understanding of the benefits associated with using psychedelics for therapeutic purposes; particularly amongst medically underserved communities, first responders, and veterans.

MAPS’ pharmaceutical arm, recently rebranded as Lykos Therapeutics, announced a $100 million raise earlier this year. The Steven & Alexandra Cohen Foundation participated in the Series A round.

That investment is separate from (and unrelated to) the Cohens’ ownership of the MLB team.

And there is seemingly some momentum amongst lawmakers. Last July, a bipartisan group pushed to obtain more information on the subject. Two months later, California passed Senate Bill 58 legalizing the personal possession and use of certain natural psychedelics.

CBD, blockchain, and sports betting companies, now commonly accepted sports sponsors, once maintained similar profiles to their mind altering counterparts. While some were well-funded, all were operating in legally ambiguous environments hoping for legislative change. 

And many consumers did not understand, or value the differences between, their various product offerings. 

That began to change for those who aligned with sports properties. Charlotte's Web's partnership with MLB delivered more than 174 million digital impressions and gave the company a 38% lift in total sessions on its website. 

Newly “developed [and recently] legalized industries have found over the years [that] sports and entertainment provide a cost-efficient way to directly reach a large swath of potential consumers across all demographics,” Lou DePaoli (president, General Sports Worldwide) said. 

“Being able to leverage a sports property’s marks and/or [their] athletes [can also] provide instant credibility [to a new product],” DePaoli added. “It would be [logical and] advised that psychedelic [drug companies] follow the same path.”

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That path isn’t open to them just yet. Psychedelics, like cannabis, remain illegal under federal law.

However, the “legalization of psychedelics is likely [coming] through the pharmaceutical channel,” cannabis and CPG executive, investor, and advisor Harris Damashek said. “It will be interesting to see if it evolves from medical to recreational. That process could take a minimum of five years, even with the rapid acceptance of psychedelics anecdotally across the country.”

Sports leagues, entities, and federations that have outlawed the sponsorship category will also need to alter their bylaws.

If they want to maximize partner ROI and ensure the new revenue stream has staying power, they’ll approve the drugs for player use too. Consumers are more likely to engage with content, and ultimately purchase products, if they’re associated with high-profile users. 

“When Aaron Rodgers took the stage at Psychedelic Science 2023 to share his personal journey with ayahuasca, it sparked genuine interest and dialogue,” Kevin Cranford, Jr. (communication officer, MAPS) said. “The power of authentic engagement cannot be overstated: these moments foster meaningful connections and conversations that can lead to people seeking education and ways to join in the psychedelic movement.”

DePaoli, a 30-year MLB, NBA, and NHL team front-office veteran, anticipates that at least some properties will go down that route once permitted by law. Desire for revenue growth aside, many have prioritized mental health and would benefit from the association with a cutting-edge wellness trend.

San Francisco 49ers guard Jon Feliciano’s decision to promote MAPS on his cleats for ‘My Cleats My Cause’ highlights the growing appreciation athletes have for the potential benefits attributed to psychedelic drug use.

Damashek isn’t so sure. Remember, the NFL still has rules and guidelines restricting how players can endorse alcohol. 

While psychedelics present an intriguing opportunity, emerging partner categories inherently carry risk. Sports properties across the landscape continue to navigate the fallout of failed CBD, blockchain, and/or crypto deals done with companies that no longer exist or failed to deliver payment. 

And oftentimes, these new pools of sponsorship money dry up as fast as they arrive on the scene.

“Cannabidiol companies were at the leading edge of the spear [just a few years ago],” Damashek said. “As CBD has somewhat collapsed, you are not seeing nearly as much sponsorship [activity] coming into the industry.”

So, sports properties should be cautious about the category’s potential for growth.

Right now, private investment is flooding in. Rights owners would be wise to be paying attention.

About The Author: Adam Grossman founded Block Six Analytics. He is also a professor at Northwestern University Master’s In Sports Administration program and the co-author of The Sports Strategist: Developing Leaders for a High-Performance Industry. You can find him at [email protected].

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