Marijuana Business Magazine July 2018

REASSURING NONPROFITS N ot all charities are eager to accept donations from the marijuana industry. Using and selling canna- bis remains illegal at the national level, and a nonprofit could be put in jeopardy if federal laws about aiding and abetting drug sales and money laundering were enforced. “We tell our clients, ‘Everyone is at tech- nical risk,’” said Tom Downey, a director at Ireland Stapleton Pryor & Pascoe. The Denver-based law firm counts nonprofits and cannabis companies among its clients. Practically speaking, nonprofits that accept donations from law-abiding canna- bis companies operating in states where the drug is legal likely face lower risk, Downey said. There is not a precedent for holding a nonprofit group criminally liable, and no organization has lost its 501(c)(3) tax- exempt status for working with the mari- juana industry. “Everyminute that goes bywithout federal enforcement gives security to those in and around the indus- try,” Downey said. “Every day that goes by that a nonprofit has not lost its 501(c)(3) status for accepting money gives heart to others who are interested in doing so. They have more confidence in accepting these dollars.” Still, before a cannabis company cuts a nonprofit a check, the business should make sure the organization has created a strong gift-acceptance policy. That way, a nonprofit is less likely to encounter blowback from any members and other donors. Downey said Ireland Staple- ton’s nonprofit clients will poll members or discuss the topic with board leaders to decide whether to work with marijuana companies. The firm advises nonprofit clients to be particularly cautious if they are receiv- ing funding from federal grants, because government agencies may be directed or decide to cut funds to organizations that receive money frommarijuana businesses. “Even if no one touches your 501(c)(3) status,” Downey said, a government agency can cut off federal grants if it learns a non- profit is working with a marijuana business. Not all nonprofits are a good fit for cannabis companies, even if an organi- zation is not receiving or worried about federal funds. Groups that support minors or those providing substance- abuse treatment might decline outreach opportunities. The consulting firm KindColorado urges officials from nonprofits and cannabis com- panies to meet face-to-face to discuss part- nership opportunities, goals and concerns. The Denver firm helps cannabis companies in Colorado strategize how to connect with neighborhood groups and nonprofits. Both KindColorado and Downey advise nonprofits to steer clear of cannabis companies that have broken the law or have a bad reputation in the community. For that reason, marijuana executives should be ready to show they are in good standing in their community and have proper licensing documentation. “Forget it’s marijuana. If someone is in trouble, and they want to buy goodwill, you don’t want to get caught up in that,” Downey said. – Adrian D. Garcia Tom Downey is a director at Ireland Stapleton Pryor & Pascoe. The majority of his legal practice consists of advising and representing corporate clients with liquor licensing, legalized marijuana and licenses governed by the Colorado Department of Regulatory Agencies. Photo courtesy of Tom Downey If the efforts are not hitting those benchmarks, companies may need to work with fewer nonprofits, look for new needs in their communities or make other tweaks. “From the community perspec- tive, what we are looking for isn’t just outputs but outcomes,”Mathis added. “An output is pounds of food donated, dollars raised, coats collected or meals served. But the outcome we’re hoping to have is: There is reduced food insecurity in their neighborhoods, and there is increased health.” The Case of HWY420 In 2016, Dope Magazine named HWY420 the Most Charitable Can- nabis Store in Washington state. Each month, the company donates $1,000- $1,200 to rotating charities and causes, forgoes tips for its “karma jars” and donates $222 to the Olympia chapter of 22 Too Many, a grassroots group trying to end suicides by veterans. In addition to growing the potential customer base, Atkinson, HWY420's CEO, and others believe a strong corpo- rate social responsibility assists in attract- ing and retaining talented employees, fostering customer loyalty and distin- guishing brands from competitors. One way Atkinson hoped to stand out was by closing both her stores on one of the biggest days for cannabis 42 • Marijuana Business Magazine • July 2018