As cannabis is legalized in more states, the industry continues to bring in billions of dollars, and support for nationwide legalization grows, nonprofits increasingly find themselves asking: is it ethical to accept donations from cannabis companies?  

Although recreational cannabis is legal in nearly half of the country, it remains illegal at the federal level. Some nonprofits flatly refuse donations from cannabis companies – if a nonprofit receives federal funding, they are not allowed to accept any funds from illegal activities – while others take a more nuanced approach.

Cannabis sales in Colorado alone are nearly $2 billion annually, so there are certainly funds to be donated, if nonprofits will take them.

In their study ‘Bridging the Divide: Exploring Nonprofits’ Perceptions of Cannabis Philanthropy in the Changing Legal Landscape in the U.S.,’ University of Colorado Colorado Springs (UCCS) researchers Jessica Berrett, Ph.D., Kate Quintana, Ph.D., and Michaela Steefel, MPA, explored how Colorado nonprofits feel about accepting those donations.

Berrett and Quintana earned their PhDs in Public Administration and Criminal Justice, respectively, meaning their work had a true interdisciplinary nature.

“There are a number of studies that look at the perceptions of cannabis; however, no studies have specifically looked at the perceptions of cannabis philanthropy from the viewpoint of the nonprofits themselves,” Berrett said. “The organizations who responded to our survey had an average revenue of $3 million and an average age of 26 years old, so they were larger and more established organizations.”  

Responding organizations offered a mix of missions, but most of the surveyed nonprofits offered human services.  

“Geographically, most were from the Front Range, but we did get some representation from around the state,” Berrett added.

The survey found that perceptions of the marijuana industry were largely positive, with 45% of respondents indicating they felt good about it. 23% of respondents had a neutral take, while just 13% had a negative take – the rest were mixed or had no perception.  

“For those who had negative perceptions, we asked them if their perception would persist if cannabis were legalized on a federal level,” Berrett explained. “20% said their views would stay the same, but 53% said that it would alter their perception, so there’s definitely some policy implications here.”

Then there was the question of if nonprofits viewed marijuana funds as ‘tainted.’

“Tainted money typically refers to funds acquired through socially or morally questionable means or illegal activity,” Berrett explained. “So, in the context of cannabis, this gets interesting because for some it may be considered socially or morally questionable, and then it’s legal at state level, but illegal at the federal level.”

Just 19% of respondents said that they considered the money ‘tainted,’ with an overwhelming 71% stating they felt it was not.  

Previous researchers in this area have argued that nonprofits should not refuse ‘tainted’ donations, as the money becomes morally neutral when donated, and have found that most people, including fundraising professionals, have accepted donations from morally ambiguous individuals.

Considerations nonprofits might make in the decision of whether to accept these funds include whether the organization receives federal funding, if the acceptance of the funds would conflict with the mission or the population they served, and if acceptance has implications for their other stakeholders, including board members and major donors.

“If the organization is open to it, they could consider engaging in policy advocacy related to cannabis legalization at the federal level,” Berrett said. “They can also play a role in informing stakeholders about the evolving landscape of cannabis philanthropy.”

Cannabis companies should be mindful of the types of nonprofits they reach out to, but research has found that the longer it is legal to sell cannabis in a state, the more favorable the perception comes – so philanthropic opportunities may arise that were not previously an option.

“Supporting federal legalization advocacy may become a mutual goal of the cannabis industry and the nonprofit sector,” Berrett said. “The cannabis industry has a chance to embrace corporate social responsibility where they can be profitable, but they can also make a positive impact in their communities.”

To further research in this area, Berrett and her team suggest a longitudinal study to track perspectives over time, as well as conduct comparative studies across countries to understand global perspectives on cannabis-related philanthropy.

The team is currently comparing the perceptions of cannabis philanthropy to that of alcohol, tobacco, gambling and pharmaceutical philanthropy. Starting this fall, they will explore the differences between nonprofits that will and will not accept donations from cannabis companies.

“As nonprofits are really concerned about how other donors would perceive them receiving donations from a cannabis company, we also think it would be really interesting to investigate public perceptions of cannabis philanthropy, gauging potential reputational risks or benefits for those nonprofits – especially with federal legalization potentially on the horizon,” Berrett added.