Can NIL Prospects Go Even Higher?

In today’s college sports landscape, it seems as though nearly every athlete and every company is involved in some sort of Name, Image, Likeness deal. However, a recent deal shows perhaps there are industries yet to be tapped into.

Last week, CBS Sports reported that University of Southern California has struck a sponsorship deal with highly regarded cannabis company “Cookies.” This move comes on the heels of the NCAA removing cannabis from its banned substance list as well as the FDA looking to move Marijuana from Schedule I to Schedule III(Schedule III substances are those with moderate to low potential for physical and psychological dependence).

In its press release, Vice President and General Manager of USC Sports Properties, Drew DeHart, said the following:

"With the decision to open this category, it was our goal to find the right partner for USC Athletics, and we did just that with Cookies. Cookies is the global leader in CBD but also an innovative brand deep in life-style culture and wellness," DeHart said. "We are excited for the Trojans to be a leader in collegiate athletics on and off the field, and today's announcement continues to showcase just that."

While it sounds as though this partnership is focusing on the CBD capabilities on the company, it raises questions in other states considering the potential of future sponsorship deals pertaining to CBD. On its face, it seems as though it would be cut and dry, as cannabis has been removed from the Banned Substance list. With this, should we expect a proliferation of CBD NIL deals in the near future? Well, it might not be that simple.

CBD NIL deals nationwide could create a slippery slope for the still unsettled landscape that was created by the advent and inconsistent regulations around the NIL of student-athletes.

Some states, such as Pennsylvania, have a “vice-clause” in their legislation regarding the ability of student athletes to be compensated for the use of their NIL. Such clauses may prohibit gambling, alcoholic beverage, and other lifestyle/wellness companies (including CBD) from entering into deals with student-athletes. However, with NIL regulations being left to the states, there is not a comprehensive or even consistent regulatory landscape. While states such as Pennsylvania have vice clauses, other states do not. For example, N’Kosi Perry, a former Florida Atlantic University Quarterback, signed a deal with an alcohol company in 2021.

In addition, it’s important to keep in mind that while some states may not have specific vice clauses, each academic institution may have their own policy surrounding the types of companies student-athletes can contract with for NIL purposes.

With the NCAA and Federal Government taking the steps it has, it remains to be seen if states will begin making tweaks now or wait for Federal action. Making adjustments now would require states to re-visit their NIL laws. While not impossible, this would be a tall task.

As of the writing of this article, the Cookies sponsorship deal is only between USC and the wellness company. Moreover, there doesn’t appear to be a sponsorship or NIL deal between a wellness company such as Cookies and a student-athlete at the moment. However, such a deal may not be so far off.

It’ll be interesting to watch how this deal creates a precedent for other institutions and to see who might emerge as a trailblazer by inking a deal between such a company and a student-athlete in relation to their NIL.

Stephon Burton is a second-year associate working at Motion Law Immigration in Washington, DC. He additionally is a Volunteer with the DC Bar Non-Profit and Small Business clinic. He can be reached via Twitter/X @StephonBurton3 and Linkedin.