05 Jun The First CBD Pro Sports Sponsorship Was a Huge Gamble
Eagle-eyed viewers of the recent Indy 500 saw the Defy logo on two of the lightning-fast cars, marking the first time a CBD-infused sports drink had made its way into one of racing’s most celebrated events.
But it wasn’t the first CBD product to hit the track at 200 mph. That distinction goes to Craft 1861, a wellness startup that took its own laps at Indy after breaking into professional racing months earlier in Austin, Texas.
The privately owned brand, with revenue this year estimated north of $25 million from products like its popular ingestible CBD strips, sponsors the up-and-coming drivers on the Carlin racing team, getting its first national exposure Memorial Day weekend on the well-watched Indy 500 live broadcast on NBC.
That day was nine months in the making, according to Craft 1861’s co-founder and principal Eric Lujan, whose Indy alliance for his tinctures, creams and lotions could now be paving the way for other cannabis-adjacent brands.
Lujan, a former pro triathlete whose existing marketing stresses all-important phrases like “triple tested,” “non-psychoactive” and “non-habit forming,” spoke to Adweek about the complexities of sports sponsorship for a CBD company, the importance of the Farm Bill and the agony of (potential) defeat.
Adweek: Why did you target professional car racing?
Eric Lujan: It was a simple understanding of what we call “the new cannabis consumer.” It’s a Whole Foods shopper, a healthy, active lifestyle consumer. We analyzed all sports and their fan bases, and for motor sports, the demographics were there. Of the 57 million active IndyCar fans, more than 65% match for these attributes. We realized this could be our opportunity.
Why was it important to be a first mover?
We wanted to break ground and start building for the future. Indy had already been approached by many cannabis companies and they’d declined all offers. We wanted to see if it was even possible since there was no precedent.
Walk us through some of the approval process.
We started working with the Carlin race team and then reached out to Indy, which is required for sponsorships of any driver or team, no matter the category. We had to be able to show that it would be legal to put our logo on a car in 15 states and Toronto, Canada (where IndyCar races are held). That meant an analysis of city, regional, state laws and federal regulations. And Indy had no policy for companies like ours, so they had to create one. At any point, they could’ve said no. NBC also had to approve. It was very difficult.
How do you fight preconceived notions from potential sponsors around these products?
There’s still such a stigma, and we address that with tech, manufacturing and testing. Everything has to be scientific and regulated and proven. For instance, we meet the World Anti-Doping Agency standards (which oversees the Olympics) and contain zero THC. We need to help educate people and really change the conversation, focusing it on how these products can fit into a healthy lifestyle. We think natural medicine is the future.
Were there times when you thought the deal might not happen?
There was no guarantee. So, as we were going through these exhaustive legal reviews and spending significant amounts of money, we didn’t know if it would actually be approved. All the while, we were thinking how much the industry needed this, and the fans were telling us they wanted it. And then CBS set a precedent by turning down a Super Bowl ad That was a major sports league saying no.
Were there other marketing hurdles along the way?
Any marketer doing a sports sponsorship with a substantial investment wants to spool an entire program around it, with on-site activations and production teams, press releases, social media and influencers, maybe as far as a year out. We couldn’t say or do anything until we had full approval, which was about 14 days before [the Indy 500 race].
What impact did the Farm Bill, which legalized hemp-based CBD products with less than 0.3% THC in all 50 states, have on the industry?
When we started working on this in the fall of 2018, the bill hadn’t gone through yet and CBD was still federally illegal. No sports team could touch it. When it passed, it was massive for us. It was really what we needed. But other regulatory bodies still have a say, like the FDA, and we welcome regulation.
What can we expect next from Craft 1861?
The response so far has been overwhelming. We had no idea we’d get so many people reaching out directly, like other professional sports organizations here and internationally, event promoters, venues for sports and music. For one, we plan to be very involved in the Indy 2020 season. And we’ll branch out into other sports, globally and in the U.S., beyond racing.
T.L. Stanley is a senior editor at Adweek, where she specializes in consumer trends and pop culture, brands and creativity.