December 8, 2020

What nonprofits need to know about accepting cannabis cash on Colorado Gives Day

Dec 8, 2020, 8:17am MST 

When Ripple launched a new line of cannabis dissolvables in brightly colored limited-edition packaging earlier this year, the Commerce City based company wanted to donate 5% of its profits to a charitable cause.

The first nonprofit it approached wouldn't accept its money. The second would accept a gift, but only in the form an in-kind donation. And when Lightshade opened its ninth location earlier this year on the border of the Central Park and Montbello neighborhoods, a representative of the Denver dispensary chain had to approach a half-dozen charities before she found one that would work with it on its corporate social responsibility initiatives. 

It's a day in the life of Colorado cannabis companies attempting to straddle the line between being federally illegal operations and upstanding citizens when corporate social responsibility is all the rage and the state suffers a year riddled with wildfires, a pandemic and severe unemployment. 

It's not easy being green 

"When you are a cannabis company, it is still obnoxiously hard to donate to a nonprofit and it shouldn’t be," Courtney Mathis, co 1/6 founder of Cannabis Doing Good, told Denver Business Journal. 

Cannabis Doing Good is a platform founded to help cannabis companies that want to be good corporate citizens connect with nonprofits that will take their money. Separately, it just launched the Cannabis Impact Fund, which is working to partner with cannabis companies that will donate 1% — of their revenue, shares, product or equity — toward the movement for Black lives, a force elevated in 2020 and one focused on matters of social justice and remedying injustices of the U.S. Drug War, which is widely disdained by the cannabis industry. 

And cannabis companies face a sort of conundrum: Their federally illegal status means they often pay effective tax rates as high as 70% because they can't claim tax deductions and it also puts pressure on them to prove their value and good standing to their community. 

Yet some nonprofits, nearly a decade after Colorado voters approved Amendment 64 legalizing the sale of recreational marijuana, are leery of accepting their money for fear of losing their 501(c)(3) status, the possibility of losing federal grants or offending influential board members and donors. 

"We in the cannabis industry are always being pressed to do more," Ripple Senior Brand Manager Nikki Kujawski told DBJ. " ... So when we give a donation, it is a big commitment to us." 

While Ripple was thrilled to be able to provide a dozen Macbooks to LGBTQ-focused Youth Seen as an in-kind gift, it ran into similar issues with other small nonprofits in the area for its next limited edition series, which focused on the arts. 

"It’s been really unfortunate because it’s meant that we can’t work with some incredible organizations," Kujawski told said. 

Cashing in 

"There are so many groups out there that, No. 1, won’t take the money and don’t want to talk about it," Tom Downey, director at Denver-based law firm Ireland Stapleton who partners with Cannabis Doing Good to educate nonprofits on the risks and rewards of working with cannabis companies, told DBJ. "There are 2/6 

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others who will take the money but don’t want to talk about it. There are others that are very happy to take the money but they really, really don’t want to talk about it. And the reason is reputational." 

Accepting money from cannabis companies, he explained, is illegal at the federal level, just like operating a marijuana business. And promoting a cannabis company is technically aiding in the execution of a federal crime. But the rules aren't enforced in states where the plant is legal and all state laws are followed to the letter. He points to cannabis companies that participate in the Clean Colorado adopt-a-highway-type program. 

"Colorado Department of Transportation is putting their name and logo [on signs travelers can see]. They are promoting the business and taking their money. It’s not just that they’re generally aiding and abetting them, but it’s promotion, and promotion is a key word in the criminal code," Downey said, adding: "Nobody at CDOT has ever been criminally charged and I've never heard a whisper about CDOT being investigated." 

And nonprofits have little to fear when it comes to losing grants or their charitable status by accepting marijuana money, he said. 

"To date, I’m not aware of any 501(c)(3) licenses that have been revoked merely for engaging in marijuana-related businesses," Downey said. 

"We did finally find a nonprofit who was more than happy to work with us, but I had to really sit down and talk with the executive director and give him a little information about why this is important to Lightshade," Lisa Gee, director of marketing and corporate social responsibility at the chain, told DBJ. "We’re not just checking a box — it’s part of our entire mission. It is a value system we try to integrate into the whole company." 

Corporate social responsibility is a key element in many cannabis companies' missions. And they'll move metaphorical mountains to make it happen. 

The Green Solution, the largest Denver-area cannabis company when ranked by number of employees, took matters into its own hands years ago. After a long search for a nonprofit partner, the 3/6 

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veteran-owned business tracked down an organization that would work with it: Colorado Veterans Project. 

TGS CEO Steve Lopez called the challenges his company faced finding a nonprofit that could accept cannabis dollars without fear of federal repercussions "hypocrisy." 

"They [tax collectors] are at our door if we're a day late with that money," Lopez said. "They can take the money, but we can't give it to a nonprofit to help people." 

With or without you 

And it's not just Cannabis Doing Good sparking partnerships. Veritas Fine Cannabis is teaming up several other cannabis companies and the umbrella parent of Denver restaurants BarDough and Señor Bear, Culinary Creative, to get meals to the hungry this winter. 

Veritas' philanthropic group — which calls itself "Friends in Weed" — intentionally "compartmentalized" the process to avoid complications it's run into in the past with nonprofits declining their help, Veritas Partner and Head of Marketing and Sales Jon Spadafora told DBJ. 

"It’s become a little easier — we’ve learned somethings about how to create our own opportunities," Spadafora said. 

And companies like Boulder-based Wana Brands, Denver's Terrapin Care Station, Denver-based Native Roots and the Stanley Brothers, who founded CBD powerhouse Charlotte's Web, have teamed up to raise close to $1 million for food pantries and other causes. 

"Most organizations we come across are more than happy [to take our money]. They’ve realized that not only has the sky not fallen but that good cannabis companies have good relationships with their consumers and are a great way to reach a new audience," Wana Brands Chief Marketing Officer Joe Hodas told DBJ. 

He said that the edible giant's CSR programs are having a real impact on the company's mission and employees, pointing to its rapid expansion and low employee turnover. 4/6 

"In all the excitement of legalization with tax dollars, and just that people can go out and purchase cannabis, a lot of people lost sight of the fact we are capable of becoming an important part of the communities," Hodas said. 

It's still a risk 

Denver-based nonprofit Tennyson Center for Children, which serves abused, neglected and abandoned children, won't accept cannabis dollars. And it's not because CEO Ned Breslin has a problem with the sector. 

"I think the cannabis industry is very community and philanthropic minded — I think they’re a player," Breslin said. "They might not be a player for somewhere like Tennyson, but they could be a player for other places." 

In fact, Tennyson Center turned down what Breslin says was likely a considerable amount of money from one unnamed cannabis company. 

He pointed to a combination of stigma and uncertainty when it comes to both his own organization's hesitancy and that of its peers. And says that the uncertainty has, in some ways, created a an excuse for some nonprofit boards not to have a real conversation about the role of this burgeoning industry. 

"Would you actually lose your 501(c)(3) status? Would you actually lose your federal funding if you took cannabis money? I think the answer is, 'We don’t know,'" Breslin said. " ... I think the lack of clarity has created the opportunity not to talk about it. Once that confusion is cleared we’re going to have a different conversation in nonprofits." 

"If you’re a local nonprofit and you need resources, as we’re sure that you’re do, consider that one of the most courageous things you could do is open your doors to a cannabis business," Cannabis Doing Good's Mathis said. "At the same time, be realistic — the tax revenue you see coming out of this industry is not indicative of the revenue they have to give." 

She said charities should research the cannabis company to ensure aligned values, poll donors, know the board and not to expect an 5/6 immediate windfall. 

"It is new, it is nascent — so with your expectations, know that you’ve done all this homework, your first check might only be $500, the second might be $2,000 … with the industry growing, if you can foster that relationship like you can with any other donor I think the payoff will be substantial," Mathis said. 

Jonathan Rose 

Associate Editor 

Denver Business Journal

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