A new strain of philanthropy
Gifting and sharing cannabis is an integral part of its subculture, in the way that beer drinkers in a pub take turns buying rounds for their friends. But generosity, it turns out, goes far beyond just passing a pipe.
Bloom Farms, a Oakland-based cannabis manufacturer, recently announced it has donated one million meals to needy Californians since 2015. Harborside dispensary in Oakland has donated more than half a million dollars to area nonprofits and $250,000 worth of free cannabis to needy patients in the past decade. And Marley Naturals, another cannabis producer, has worked to expunge the records of people arrested for non-criminal cannabis offenses.
These milestones in munificence may come as a surprise to the mainstream, but those within cannabis culture know that charity has always been a big part of California’s medical marijuana movement. As cannabis businesses become part of the mainstream, several are acting the part, too, by trying to be good partners in the community — social responsibility is a key component of 21st century business. At the same time, cannabis providers say they are struggling to modernize so-called “compassion programs” amid steep new taxes and hundreds of pages of new regulations that came with legalization.
“There are endless amounts of amazing causes out there that need help and support and attention,” said Michael Ray, chief executive officer of Bloom Farms. “Food banks were personally a passion of mine, as I had grown up in a very poor community in Calaveras County.”
Bloom Farms, a Oakland-based cannabis manufacturer, recently announced it has donated 1 million meals to needy Californians since 2015.
For every product purchased at a dispensary, whether a pre-rolled joint or vapor pen cartridge, Bloom Farms donates one meal to a food bank in the vicinity, with six food banks participating as partners from Sacramento to Los Angeles, including the San Francisco-Marin Food Bank.
Bloom Farms declined to specify the total dollar amount donated, but called it “significant.” For example, the Redwood Empire Food Bank in Santa Rosa received $25,000 — the equivalent of 51,000 meals — from Bloom Farms after the Wine Country fires last fall. More money is on the way, said David Goodman, the food bank’s chief executive officer.
“We’re fortunate to be in California and in a community where the cannabis industry is thriving and fortunate that they are initiating these philanthropic efforts from the beginning,” Goodman said, “because so many companies big and small think it’s something they’ll do later on when they have more money. That it’s built into their DNA is really admirable.”
Although some food banks turned down Ray’s philanthropic entreaties, Goodman had no qualms about the offer.
“If this were illegal, it would be unacceptable,” Goodman said. “It is legal, so it’s perfectly reasonable to accept their philanthropy.”
HISTORY OF COMPASSION
Medical marijuana began with freebies. Individuals like Mary Jane “Brownie Mary” Rathbun and Dennis Peron became cause celebres for the civil disobedience of giving cannabis away to terminally ill AIDS patients in San Francisco in the 1980s and 1990s.
Their efforts led directly to voter-approved Proposition 215, also known as the Compassionate Use Act of 1996, which granted a medical defense in court to patients and caregivers. Senate Bill 420, which followed, provided for the formation of collectives that grow and dispense cannabis, laying the legal groundwork for modern dispensaries. Since then, non-profits like SweetLeaf have handed out free cannabis to terminally ill patients in recent decades. That’s because oftentimes the people that need cannabis the most — the terminally ill — are among the least likely to be able to afford it.
In 2014, Berkeley became the first city to mandate “compassion programs,” requiring dispensaries to provide free cannabis for very low income residents with medical needs.
Cannabis’ giving ethos predated by decades the mainstream business trend, where the likes of Levi’s, Starbucks and Ben & Jerry’s have begun to develop charitable foundations and encourage sustainable practices. Business schools like Stanford have launched “strategic philanthropy” courses. Last month, Larry Fink, the chief executive of BlackRock, the world’s largest investment firm (with a reported $6 trillion in assets), called on corporate leaders to develop social responsibility programs, hinting it would be a condition of investment.
“To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society,” he wrote in a letter to CEOs of the S&P 500, posted on BlackRock’s website.
In January, Privateer Holdings, a private equity firm in Seattle that specializes in cannabis industry investments, announced that along with raising $100 million in Series C funding, it would donate $5 million in equity to help communities harmed by cannabis prohibition. In a talk with GreenState, Privateer’s CEO Brendan Kennedy said the donations would support cannabis law reform, medical research, and public education on responsible use.
Because Privateer’s donations are in the form of equity rather than cash, Kennedy said their value could grow along with the firm. Kennedy encouraged the rest of the legal industry to get on-board.
“A lot of the companies in this industry talk about doing good. Our money is where our mouth is,” he told GreenState.
CANNABIS CORPORATE PHILANTHROPY
Bloom Farms and Privateer Holdings aren’t alone. The biggest operators in cannabis tend to be the most generous.
It’s been just over a decade since Harborside dispensary in Oakland made philanthropy a key element of its operations. Since its inception in 2006, the dispensary estimates it has donated a total of $500,000 to 58 community groups, including the United Seniors of Oakland and Alameda County and San Francisco AIDS Walk.
Since 2008, it has offered 20,000 hours of free holistic services to the surrounding community, and given $250,000-worth of free medical marijuana to needy patients under a Care Package Program.
“Our mission is to build a world that lives by the values cannabis teaches us and one of those is generosity,” said Kelly Quirke, community engagement coordinator for Harborside. “That grows with the recognition that we’re embedded in a community that supports us, and we’re inspired to support the community.”
Since its inception, The Apothecarium in San Francisco likewise has donated more than $350,000 to 31 local nonprofits including Maitri, Rooms That Rock 4 Chemo and The Harvey Milk Civil Rights Academy. It also offers a discount to veterans and people 60 and older.
“We started planning our philanthropic giving before we even opened our doors for the first time in 2011,” said its chief executive officer and co-founder, Ryan Hudson, in an email. “Giving back is a part of our DNA. Cannabis users tend to be a generous group. That’s one of the reasons giving is so common across the industry.”
Of course, there’s another incentive motivating any philanthropist: tax breaks.
In the world of cannabis, that’s a gray area. Although the federal Internal Revenue Code section 280E prevents cannabis businesses and others that traffic in Schedule I and Schedule II drugs from taking regular business deductions, some argue that a charitable contribution deduction is not a trade or business expense — and therefore not restricted under the law. The state of California treats incorporated cannabis businesses like any other, allowing them to deduct ordinary business expenses and charitable contributions. The result is that incorporated cannabis businesses can deduct their charitable contributions, according to Steve Fineran of Bregante + Company LLP, a Bay Area certified public accounting firm with experience in the field.
TAXING AND REGULATING “COMPASSION”
But in California, some forms of generosity are being curbed.
With California legalization under Proposition 64’s passage have come new licensing and distribution laws introduced Jan. 1 that largely prevent the sharing of commercial cannabis by non-profits — at least for now.
Under the new regulations, all commercially grown cannabis must be tracked and retailers must remit the full retail sales tax amount on any products they mark down to $0 to give away. That amounts to more paperwork and a bigger tax bill for retailers that previously handled compassion programs more informally.
Harborside will continue giving free cannabis to 250 recipients of its Care Package Program, said Quirke, the community engagement director. The difference as of Jan.1, he said, is that participants must prove financial need each time they pick up their medications at Harborside.
Also, roughly two dozen families with children in need of medical cannabis have lost free cannabis from Harborside’s family program, Quirke said. The dispensary is working on a discount program that would make it affordable for patients and comply with the new regulations.
Veterans are another group threatened under the new rules. In Nevada, Grow for Vets U.S.A., a Las Vegas-based nonprofit, is free to provide veterans with free cannabis as an alternative to prescription medications, and has given away a reported $1.5 million in cannabis to 50,000 vets since official launch in 2014.
But a similar effort Northern California effort is being stymied.
The San Leandro-based Operation EVAC (Educating Veterans About Cannabis), has cut off free marijuana to most of the 70 patients who attend weekly and bi-monthly meetings in five cities in the greater Bay Area, in conjunction with six partner dispensaries.
Operation EVAC’s meetings feature talk therapy and meditation — and before Jan. 1, included distribution of cannabis sprays and tinctures. Cannabis, said founder Ryan Miller, can help ease some suffers’ social anxiety, post-traumatic stress disorder and other issues related to transitioning back into civilian culture from military life, though it’s not a magic bullet for every vet and side effects do exist.
“At the Veterans Administration, opiates and antidepressants are free; cannabis is not,” said Miller. “It’s cost-prohibitive. Alcohol is often a cheaper solution.”
The difference between Harborside and Operation EVAC, said Miller, a 37-year-old Marine Corps veteran, is that Harborside has a state license to distribute cannabis. For non-profits like Operation EVAC, “There’s no pathway to a license,” Miller said.
Miller said some have suggested applying for a medical delivery license as a workaround, but he balks at the new costs and onerous rules. “It’s unsustainable to ask folks with non-profit fundraising models to pivot toward for-profit licensing requirement,” Miller said.
“We’re operating with a sense of emergency,” Miller said. “How many vets will commit suicide or overdose on opiods? How many terminally ill patients will die or take drugs that don’t allow them to enjoy clarity at the end of life?”
As a result, Miller has joined an emerging coalition which is working to resolve the issue. Leading the effort is San Francisco’s SweetLeaf; other participants include the Caladrius Network, which provides compassionate cannabis to sick children; the East Bay Cannabis Community, which helps support low-income citizens and seniors; and WAMM, the Wo/Men’s Alliance for Medical Marijuana in Santa Cruz, the oldest compassionate cannabis group in California.
This winter, San Francisco Supervisor Jeff Sheehy amended city cannabis rules to allow for compassion programs amid full legalization. More local and state legislative fixes will be needed.
In the long term, the hope is that compassion programs — like the industry itself — can weather the turbulence of new regulations, and ultimately become stronger and more stable under full legalization.