🌿 Making green on legal weed is tough

Happy Weed Wednesday. Thanks for checking out the newsletter that makes you smarter about weed in 4 minutes and 20 seconds or less. Here’s what we got for you this week:

  • Legal weed economics: Making green on legal weed is not easy

  • Business highlights: Weed prices haven't been impacted yet by inflation, Aurora Cannabis is laying off 12% of its workforce, weed cafes are popping up across California

  • MLB + CBD: CBD baseball sponsorships coming to a city near you

  • Pot Politics: US Embassy makes huge a mistake, new cannabis rules are being proposed in California, candy makers are looking for ways to stop cannabis copycats

Best of social media

Before we get to the news, here's the funniest thing we saw on social media this week. The whole neighborhood was probably high after this.

Making green in the legal weed business

thegrowthop.com

Based on the optics, it looks like legal weed businesses are crushing it. If you drive by a cannabis store here in Northern California, it looks like Costco on a Saturday afternoon minus the hot dogs and churros. The parking lot is full, lines are long and people just keep coming back for more. However, two economists from the University of Davis are questioning how much green legal weed businesses can actually make.

Impacts of the Illegal market

In their new book, Can Legal Weed Win? The Blunt Realities of Cannabis Economics, Daniel Sumner and Robin Goldstein outline a few obstacles that legal weed businesses face, including the illegal weed market.

For many weed fans, they’ve had a person supplying them the good stuff for years before it became legal. You know, the friend of a friend that can be kind of sketchy but always comes through when you need them. In addition to being pretty reliable, the OG neighborhood weed person usually has better prices than legal weed businesses. Legal weed businesses have a bunch of additional expenses like permits, licenses, rent and taxes. Your local neighborhood dealer pretty much just pays for some plastic baggies and gas. Although gas is at all time highs, you can still get high for much cheaper by avoiding the legal businesses.

Success stories

Although it’s been tough to compete with the illegal market, there are definitely some success stories. Just check out what Gilbert Milam Jr. (aka Berner) has been able to accomplish with Cookies. They are reportedly the first billion dollar weed brand in the country.

Eaze is another company that has been able to scale their business in the legal world. Although they’ve had some difficult moments along the way, they were reportedly worth over $700 million in 2021.

We highly doubt there are any neighborhood weed dealers worth that much money, so hang in there if you’re operating a business in the legal world.

Business highlights

Major League Baseball is welcoming CBD

CBD may be what Major League Baseball (MLB) needs to help fans sit through boring games. THC would be ideal, but CBD is a good start for now. With all the potential munchie revenue, we're confident THC will be in MLB stadiums at some point in the future. Until then, we'll focus on CBD.

What's new

There won't actually be any CBD for sale in stadiums quite yet, but sponsorships will likely be popping up soon. During a conference call on June 21st, the league gave teams permission to sign sponsorship deals with CBD brands. Per Sports Pro Media, the league announced that partnerships will only be approved if the CBD brand is certified by the National Sanitation Foundation (NSF) to not have psychoactive levels of THC. You know, the stuff that would actually make a three hour baseball game more fun to watch.

Blazing the way

Up to this point, CBD sponsorships have not been allowed in many sports leagues, including the National Football Association (NFL), the National Basketball Association (NBA) and the Professional Golfers Association (PGA).*

The Ultimate Fighting Championship (UFC) is the only major sport where you'll see CBD sponsorships. They signed a multi-million dollar deal with Love Hemp back in March 2021. Additionally, athletes such as Rob Gronkowski and Bubba Watson* have signed individual sponsorship deals with CBD companies over the last couple years.

Revenue potential

It's hard to say how much the MLB will make from CBD partnerships but it is definitely a growing category. According to SBJ, this year the CBD market is worth as much as $4.9 billion worldwide, potentially increasing to $47 billion in 2028.

With this type of growth potential, it's highly likely that other sports will soon open the door for CBD sponsorships. We're really just hoping they open the door for THC sales as well.

*Assumes golf is a sport and golfers are athletes. Kidding... kind of.

Pot politics

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Quick hits

Meme of the Week

Before we go, here's the best meme we saw on social media this week. Good luck getting through the rest of your work day.

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