As Canada Goes to Pot… Are You Ready For It?

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With cannabis being legalized in Canada on October 17th there are repercussions for everyone including the charitable sector in accepting marijuana money.

Securing diverse revenue streams is imperative for the maintenance and growth of a charities mission. From quaint bake sales to grants to million-dollar donations, the variety of ways a charity raises money are almost endless.

For those small businesses and large corporations who do give back to their community, through support of charities for various reasons – all of them enjoy the positive PR and tax benefits for their donations.

In the next several years, marijuana will become an increasingly large business sector as we are discovering from the likes of Canopy Growth for instance, which has an extensive Corporate Social Responsibility page on its website.

With the growth of this legal industry, the question becomes, “Is your charity in a position to accept charitable contributions from these related businesses?”

What does your gift acceptance policy currently state and what possible discussion does your Board need to have?

As legal regulations governing cannabis are continually unfolding, it will be important for your charity to be as prepared as possible.

Vetting companies before gift acceptance will be critical, such that the funds only emanate from legal cannabis companies.

Essentially, the challenge of accepting contributions from cannabis companies is more of an ethical one than legal. It’s up to the Board of your charity to help finalize the ethical standards to which your charity adheres.

As long as your charity is not growing, selling or distributing recreational marijuana you will be in compliance with Canadian laws. There is no federal law prohibiting charities from accepting gifts from cannabis businesses.

Case in point, the tobacco business that wants to make a donation to a cancer related charity. The tobacco business is causing a big problem that is trying to be solved. One might ask why shouldn’t that company contribute to the solution? Essentially, the tobacco business is detrimental to the health of people as a whole and should not in any way be associated with a charity because it compromises its credibility and integrity.

Could the use or growing of cannabis adversely affect the work of your charity?

Might accepting a donation from a cannabis business cause your charity to lose the support of both donors and the public at large? Can you afford to lose in the court of public opinion?

Alternatively, if accepting a significant donation from a cannabis business will enable your charity to dramatically increase the number of people it serves, does one have an ethical obligation to accept it in order to do more good work?

Again, there is no single “right” answer that will serve all charitable organizations. It’s up to the Board of your charity to determine which answer best serves the men, women, children, plants, and/or animals who rely on your mission and programs.

Consider taking steps to understand what is motivating a cannabis business to make a donation to your charity. Is the cannabis business making a contribution in hopes of receiving brand exposure or awareness? If your nonprofit serves minors, promoting a cannabis business may present an ethical conflict. On the other hand, if the cannabis business is making a contribution in honor of an employee or friend who benefited from your program, no ethical conflict may exist.

It’s challenging to anticipate every unusual gift your charity may be offered, so be sure to outline conditions when legal counsel is sought for guidance and to ensure legal compliance.

Be careful to avoid risk – especially if your charity is exchanging goods or services for the gift i.e. tickets and/or promotion for event sponsorship.

Once your charity’s gift acceptance policy has been re-visited, it is often advisable to stick to it for consistency for the treatment of all benefactors. This may be particularly analogous to the alcohol industry.

Follow your charity’s mission – doing so will always protect your organization. To protect your charity from a potential or emerging risk, it is advised that the donated funds received are used for clearly defined mission-related activities and expenses. It is advisable to ensure restricted gifts for new programs or activities requested by the cannabis business donor are closely aligned with your mission or current strategic priorities.

As Canada goes to Pot… are you ready for it?

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