Canadian Charities and Cannabis Report FINAL AT FEB 12 2020...Synopsis At the same time that cannabis companies are under ... awareness of the existence of regulatory restrictions

T H E C A N N A B I S I N D U S T R Y

| 2019 |

A report on the implications of philanthropic support from cannabis interests to Canadian charities.

C A N A D I A N C H A R I T I E S &

CANADIAN CHARITIES AND THE CANNABIS INDUSTRY: REPORT 2019

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Introduction In 2018 Canada became only the second country

in the world to legalize cannabis for both medical

and recreational usage, and is the first G7 and G20

nation to do so.

The Canadian market for legal recreational and medical cannabis

is estimated to be worth C$2.6 billion to C$6.13 billion. While

2019 saw significant turbulence in financial markets and cannabis

industry valuation, the legalization of edibles and drinks opens up

new growth potential in the market.

“ There will be missteps, delays, and frustration. This is to be expected in an industry that just launched and is becoming more adept at navigating the need to balance consumer education and consumer experience while operating in a tightly regulated market.” — DELOITTE ”Nurturing new growth | Canada gets ready for Cannabis 2.0”

report by Deloitte’s Global Cannabis Practice Team, 2019.

Cannabis Industry


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About this study From February through September 2019, consultants representing

Bloom Non Profit Consulting Group and NATIONAL Public Relations

undertook a study exploring:

• the policy position and perspectives of Canadian charities with

respect to gift acceptance and donor recognition of cannabis

industry related donors, and

• the environment and context within which cannabis companies in

Canada are emerging as prospective financial supporters of

charitable causes.

Over the course of several weeks during the summer of

2019, a regionally diverse random sampling of

Canadian charities was invited to participate in an

online survey.

The survey was offered in both official languages.

A data set comprising 77 full and complete responses resulted from the

online survey.

Additionally, in-depth telephone interviews were conducted with several

of the survey respondent organizations, as well as with some of Canada’s

cannabis industry representatives. The findings were presented in

November 2019 to attendees at the Association of Fundraising

Professionals (AFP) Toronto Congress. At that presentation approximately

55 professional fundraisers representing charities from across Canada

were in attendance. The session fostered extensive discussion about the

issues facing charities who are evaluating the philanthropic potential of

the emerging cannabis industry; relevant points emerging from that

roundtable are additionally incorporated in this report.

Over the course of the study, legal opinions were sought on several

occasions, in order to better understand the regulatory framework within

which cannabis companies must operate.


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Cannabis Industry On October 17, 2018 Canada embarked on a massive

economic and social experiment as it became the first

G7 and G20 country to legalize recreational cannabis

nationwide – at the federal, provincial/territorial and

local levels.

Public officials continue to balance health, safety and

revenue as they strive to make a dent in the illegal

black market, ensure a safe and controlled supply, and

keep cannabis out of children’s hands.

Many organizations and institutions continue to

navigate the new realities of cannabis in post

legalization Canada. There is still a great deal of

uncertainty about the industry and its future.

By the numbers*

- The Canadian market for legal recreational and medical cannabis is estimated to be worth C$2.6 billion to C$6.13 billion.

- Recreational cannabis accounts for C$1.81 billion to C$4.34 billion of that potential market, with medical cannabis accounting for C$0.77 billion to

*”Nurturing new growth | Canada gets ready for Cannabis 2.0”

report by Deloitte’s Global Cannabis Practice Team, 2019.


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Charitable Sector There are over 170,000 charitable and non-profit organizations in Canada; 85,000 of these are registered charities. These organizations span a wide spectrum of purpose, from education and health care, to social and community services,

international aid, the arts, and environmental causes, to name only a few.

Government funding accounts for only 20% of charities’ revenue; most depend on some form of fundraising to fulfill their missions. Canadians

donate an estimated $10.6B annually to charities. Support from companies and corporations, through financial and in-kind donations, and sponsorship, also comprise a major stream of financial support that charities rely upon.

“The charitable and non-profit sector contributes an average of 8.1% of total Canadian GDP, more than the retail trade industry, and close to the value of the mining, oil and gas extraction industry.“

—IMAGINE CANADAReport on sector impact of the charitable and non-profit sectors,

http://sectorsource.ca/research-and-impact/sector-impact




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From a philosophical standpoint,

the overwhelming majority of

charities are accepting or agnostic

about cannabis usage. Many have

examined the policy implications

of cannabis usage as it impacts

their operations, either through

human resource or other

administrative policies like

smoking/vaping.

Accepting and recognizing

donations from the cannabis

industry are, however, decidedly

different matters. While three-

quarters of the charities who

participated in this study indicated

that, on a regular basis, they have

to make“source”-related donation

decisions, less than half (42%) are

currently willing to consider

Synopsis At the same time that cannabis companies are under

growing pressure to improve their corporate social

responsibility, Canadian charities are considering issues

associated with accepting the industry’s financial support.

The Cannabis Act has implications for

how this industry partners with

charities.


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donations and sponsorship from the cannabis industry donor.

For most charities, accepting donations from — and offering public

donor recognition to — cannabis-related donors falls into the perceived

“controversial” donor category, which includes alcohol, tobacco, and

gaming (gambling) corporate interests.

When compared to these other categories of “controversial” donor,

cannabis industry donors generally rank as more acceptable than

tobacco industry support, but less acceptable that donations from the

alcohol and gaming (gambling) industries.

The majority of charities willing to accept gifts from alcohol and gaming

(gambling) industries are also willing to publicly recognize those

donors. On the whole, charities are less comfortable in offering public

recognition for cannabis and tobacco industry donors, even though

some charities are willing to accept financial support from these

industries.

As well, even though a charity may be willing to accept and recognize a

donation from the cannabis industry, that fact alone doesn’t necessarily

mean the charity has a relevant written policy for acceptance and

recognition in place. More than 53% of respondents have no policy in

place covering any of the categories of cannabis, tobacco, alcohol, or

gaming (gambling) industry donors. Clearly, many charities are making

these gift acceptance decisions on an ad hoc, as-needed basis.

And finally, charities provided feedback indicating some general

awareness of the existence of regulatory restrictions on the cannabis

industry donor. These regulatory restrictions impact the ability of

cannabis companies to accrue brand awareness through charitable

sponsorship and/or recognition for donations. Few charities expressed

familiarity with the regulatory framework, and what it implies for working

with cannabis industry donors in forging a philanthropic partnership.

As for the cannabis industry, on the whole, contemplating philanthropic

priorities and devising a charitable investment strategy have not yet

made it onto the radar of a fledgling industry still trying to find a stable

footing. That said, many cannabis companies are open to the idea of

charitable giving in some form, with a relatively low expectation of

public recognition at this time. There is evidence of early and creative

philanthropic partnerships between this industry and the charitable

sector, that have respected the letter of the regulatory framework.


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Charities spanning the spectrum of charitable

mission, from across Canada, were represented

in the data set resulting from the online survey.

Issues explored were:

• What ‘position’ do charities take on the issue

of cannabis, in general?

• Are charities willing to accept donations from

cannabis companies…and recognize them

publicly?

• Do charities’ gift acceptance policies

consider this new industry?

• Do charities make distinctions between

corporate gifts, individual gifts, gifts of stock,

etc., when sourced from the cannabis

industry?

Selected charities who indicated they have

already established a formal gift acceptance and

donor recognition policy were contacted for

more in-depth background through follow-up

telephone interviews.

Charities & issues examined

BY TYPE OF CHARITY (SURVEY RESPONSES))


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With respect to charities’ general

position on cannabis usage, the

overwhelming majority (~90%)

“accept” cannabis usage as legal or

have no position on the matter.

Two health related charities indicated they

advocate for cannabis usage, and four charities

(from the post-secondary sector and the arts

and culture sector) indicated that they actively

discourage its use.

Representative comments from respondents on

the issue of cannabis usage follow:

• “We discourage it (cannabis usage) as it

would interfere with work and safety.”

• “Not permitted in the workplace unless with

stated medical reason.”

• “Amended our HR policies so that cannabis

can’t be used recreationally at work (like

alcohol).”

• “Governed by our drug and alcohol policy.”

• “Governed by our (on site) smoking and

vaping policy.”

• “Our policy indicates that employees should

not be working under the influence of

cannabis."

• “[sic] medicinal use is permitted and (we)

adhere to human rights legislation

regarding consideration of a request for

accommodation.”

• “We beefed up our HR policies around

cannabis and alcohol, to stipulate you can’t

be impaired, and you can only accept

packages of product at the office if you

store (the product) out of sight.”

• “We have a practice, not a policy.”

Many charities indicated that while

they are “agnostic” on cannabis

usage in general, they have

addressed the matter of cannabis

usage at their locations, and

cannabis usage by employees, in

their organizational policies.

What position do charities take on cannabis usage?


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POST-SECONDARY

K-12 EDUCATION

HEALTH SERVICES

HEALTH SUPPORT

SOCIAL SERVICES

ENVIRONMENTAL

ANIMAL

INTERNATIONAL

ARTS & CULTURE

Deciding on gift acceptance.

Two health related charities

indicated they advocate for

cannabis usage, and four

charities (from the post-

secondary sector and the arts

and culture sector) indicated

that they actively discourage

its use.

Charities were asked

which industries they

are willing to accept

donation and/or

sponsorship support

from.

BY TYPE OF CHARITY

75% OF CHARITIES INDICATED

THAT THEY REGULARLY MAKE

DECISIONS ABOUT ACCEPTING

DONATIONS, BASED ON THE

SOURCE OF THE GIFT.

MOST CHARITIES VIEW

ACCEPTING A DONATION FROM

THE CANNABIS INDUSTRY AS

PREFERABLE TO THE TOBACCO

INDUSTRY.

MOST CHARITIES VIEW

ACCEPTING A DONATION FROM

THE ALCOHOL OR GAMING

INDUSTRIES AS PREFERABLE TO

THE CANNABIS INDUSTRY.

ALL CHARITIES


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Donor recognition.

Charities were asked

about their willingness

to offer public donor

recognition to donors

deriving from the

cannabis, alcohol,

gaming (gambling),

and tobacco industries.

Willingness to publicly

recognize a cannabis donor

is most common with arts,

environmental and social

services sectors. And most

charities view recognizing a

donation from the alcohol or

gaming (gambling)

industries as preferable to

the cannabis industry.

Charities were asked which industries they are willing to publicly recognize as donors/sponsors.

ACCEPT A GIFT PUBLICLY RECOGNIZE

VERSUS

ALMOST 55% OF CHARITIES SAY

THEY ARE WILLING TO RECOGNIZE

CANNABIS INDUSTRY STAFF OR

BOARD DIRECTORS AS DONORS.

ALMOST A THIRD OF ORGANIZATIONS

DON’T KNOW WHAT TO DO.

ABOUT 50% OF CHARITIES ARE

WILLING TO ACCEPT THE DONATION

OF CANNABIS-RELATED CORPORATE

STOCK. BUT ALMOST 40% OF

CHARITIES DON’T KNOW HOW THEY

WOULD VIEW THIS GIFT

OPPORTUNITY.

FEWER THAN 20% OF CHARITIES

HAVE A WRITTEN GIFT ACCEPTANCE

POLICY THAT ANTICIPATES THE

CANNABIS INDUSTRY DONOR.

MORE THAN HALF OF CHARITIES HAVE

NO WRITTEN POLICY ADDRESSING

ANY OF THESE INDUSTRIES.


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We conducted interviews with a selection of

charities who had indicated their organizations

had formulated a policy position to address

donors from the cannabis industry.

Summary recommendations appear at right, and

representative quotes appear below.

• “We would be willing to entertain a donation from a

medical producer, but not a recreational one.”

• "We accept donations of alcohol for our (event

auction) glass turkeys. We would need to consult with

the board about accepting cannabis products in that

way, but I think they would be open to it.”

• “Because of the regulatory framework we would not

accept a gift…we have underage youth (here).”

• "We are more tolerant of alcohol (donors) because the

wine industry is big (here).”

• “Edibles are coming and the study of the biology of

that might open up minds about accepting donations.

But the science has to come first.”

• “We view (accepting donations from licensed cannabis

producers) not as endorsing usage, but in helping us

advance our mission.”

• "Many of us don’t understand that usage and the

industry are viewed as so much more acceptable by

the younger generation.”

• “Cannabis is as legal as alcohol. If you accept

(donations) from one, you should accept from the

other. Maybe it’s time to challenge our assumptions.”

• “This is a contentious area that many charities are

struggling with.”

What charities said.EVALUATE MEDICAL AND

RECREATIONAL SEPARATELY.

ASSESS RISK TOLERANCE

(REPUTATION, USAGE AT GOLF

TOURNAMENTS, AUCTION ITEM,

ETC).

PUBLIC ACCEPTABILITY IS

SWAYED BY MANY FACTORS,

INCLUDING

▪ ORGANIZATIONAL CULTURE

▪ EXTERNAL STAKEHOLDERS

▪ WHO YOU SERVE

▪ DONOR DEMOGRAPHIC

GIFT ACCEPTANCE AND

RECOGNITION POLICY SHOULD

ALIGN WITH YOUR MISSION AND

VALUES, AND YOUR CULTURE.

HOW DOES IT SQUARE WITH YOUR

HR VIEW OF CANNABIS?

IF YOUR DONOR IS INVESTING IN

RELATED SCIENCE RESEARCH OR

PROGRAMMING (EG., POST-

SECONDARY EDUCATION), THAT

SHOULD BE EVALUATED

DIFFERENTLY

CANNABIS, ALCOHOL, TOBACCO,

GAMING, ETC. DIFFER FROM EACH

OTHER IN THEIR IMPLICATIONS.

ONE SIZE UMBRELLA POLICY

POSITION CAN’T FIT ALL.

HYPOTHETICALS NEED TO BE

CONSIDERED, AND A PROCESS

FOR DEALING WITH DECISION

MAKING ON A CASE-BY-CASE

BASIS NEEDS TO BE IN PLACE.


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“Unlike other emerging sectors in the past, the timeline

appears to be shorter for cannabis companies to measure and

report their environmental, social and governance (ESG)

performance and targets, amid greater scrutiny from

investors.” — Brenda Bouw, The Globe and Mail

In order to access the readiness of the cannabis sector to

participate in the giving sector, we heard from a handful of

Canada’s largest licensed producers (LPs) and cannabis

companies. We supplemented this research with extensive

industry knowledge garnered from several years working in

the space.

Our industry findings confirm, more broadly, that Canada’s

newest industry still has a way to go when considering

charitable donations.

CANNABIS HAS OVER 100

CHEMICAL COMPOUNDS CALLED

CANNABINOIDS,

▪ THC IS PSYCHOACTIVE

(GETS YOU “HIGH”)

▪ CBD IS NON-PSYCHOACTIVE,

BUT IS BELIEVED TO HAVE

ANTI-INFLAMMATORY, ANTI-

NAUSEA AND OTHER

THERAPEUTIC PROPERTIES

THERE ARE MANY METHODS

OF CONSUMPTION,

▪ INHALATION

▪ ORAL (TINCTURE SPRAY)

▪ INGESTION (FOOD OR

BEVERAGE)

▪ TOPICAL

BOTH MEDICAL AND

RECREATIONAL CANNABIS ARE

NOW LEGAL IN CANADA

▪ RECREATIONAL CANNABIS

CAN BE PURCHASED ONLINE

OR IN PERSON AT PROVINCE-

SANCTIONED CANNABIS

RETAIL STORES.

▪ A PATIENT MUST HAVE A VALID

RECOMMENDATION FROM A

DOCTOR TO CONSUME

MEDICAL CANNABIS.

▪ ONCE REGISTERED WITH THE

LP, A PATIENT MAY BUY

MEDICAL CANNABIS AND WILL

RECEIVE THEIR ORDERS

THROUGH THE MAIL.

“Cannabis companies are under growing pressure to improve their corporate social responsibility— everything from environmental footprints to boardroom diversity—as they solidify positions in the mainstream investing world.”

- Brenda Bouw, The Globe and Mail

Cannabis industry.


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What LPs said. 100 Percent

…of Cannabis companies either don’t know or do not have a process through which their companies determine which charities to support.

80 percent

…of Cannabis companies do not have an expectation of public recognition.

Yet, anecdotally, it seems companies are still split on whether they would consider making an anonymous financial contribution to charity. 60 percent

…of Cannabis companies are interested in giving to charities that support health services, social services, arts, and community causes.

As the industry progresses, ESG (environmental, social and governance) is increasingly watched by investors.

But what does this mean for Canada’s charities?


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Cannabis legal framework & key questions to consider

What follows is an excerpt from Miller Thomson, Key Considerations When Accepting Donations and Sponsorships from Cannabis Companies.

Advertising activities covered by the federal legislation are broad - promotions are prohibited unless they fall within limited exceptions.

Promotional communications about cannabis, accessories and services are permitted, but with strict limits.

A key restriction is that promotions must not be accessible to young people or appealing to young people.

The requirements and restrictions apply when “promoting” cannabis, which is broadly defined as making a representation “for the purpose of selling…by any means, whether directly or indirectly, that is likely to influence and shape attitudes, beliefs and behaviours about the thing or service.”

To avoid non-compliance with these restrictions, any recognition of a donation must be non-promotional in nature.

To avoid the recognition becoming “promotional,” it must be conducted such that it is not likely to directly or indirectly influence or shape attitudes, beliefs or behaviours about the donor.

Alternatively, the recipient could recognize the donation in a manner that does not reference either the cannabis donor’s brand element(s) or the name of an entity that is licensed to produce, sell, distribute or provide the cannabis, accessory or service.

Any reference to another entity would have to reflect the actual sponsorship arrangement, and the third party would have to be sufficiently separate from the regulated entity such that it would not be “reasonably associated” with it—or else it could be considered a “brand element” of that regulated entity.

WOULD YOU BE RECOGNIZING

THE GIFT BEHIND AN AGE GATE

(19+ EVENTS, BEHIND AGE GATE

ONLINE)?

IS THE PARTNERSHIP

INFORMATIONAL IN NATURE?

IS THE GIFT FOR RESEARCH

BASED INITIATIVES OR A CLINICAL

STUDY?

ARE YOU AN ORGANIZATION THAT

ONLY DEALS WITH 19+

POPULATIONS?

WOULD YOU BE COMFORTABLE

IF THE LP ANNOUNCED IT ON

YOUR BEHALF?

IS THE CONSUMER CANNABIS

BRAND DIFFERENT THAN THE

CORPORATE BRAND?

WOULD YOUR ORGANIZATION

ACCEPT A CASH DONATION IF

THERE WAS NO REQUIREMENT

FOR PUBLIC RECOGNITION?


CONSIDER ENLISTING CANNABIS

EXECUTIVES TO ITS GOVERNING

BOARD?

DOES YOUR DECISION ABOUT

CANNABIS COMPANY DONATIONS

HINGE ON CANNABIS USAGE OR

ACCEPTANCE BY YOUR

CHARITIES’ BENEFICIARIES? ITS

DONORS?


ACCEPT FROM MEDICAL BUT

NOT RECREATIONAL?

It’s a judgement call. The most important thing to do is to consult with your legal counsel when considering whether to recognize a gift from a cannabis company. Below are some of the partnerships and sponsorships we’ve seen over the past year.

Tweed + MADD Canada + Uber

MADD Canada, Tweed and Uber partnered for a program aimed at making drivers more aware of the risks of driving while impaired by cannabis.

Canopy + Canadian Aids Society

Canopy’s partnership with Parent Action on Drugs ("PAD") and Canadian Students for Sensible Drug Policy ("CSSDP") which will see PAD launch two new digital tools to help youth along with their parents, adult caregivers, and influencers, on how to make responsible decisions about cannabis use.

Tokyo Smoke + Hot Docs

Tokyo Smoke partnered with Hot Docs, North America’s largest international documentary festival, to sponsor a film screening series called High Minded that featured profound, psychedelic cinematics. Hot Docs is a national, charitable organization dedicated to advancing and celebrating the art of documentary.

Aphria + Drug Free Kids

Aphria and Drug Free Kids are united by their shared values of keeping cannabis out of the hands of children and youth and raising awareness though effective educational campaigns. The Agreement is expected to produce new market research and cannabis health and safety campaigns, with a focus on protecting children and youth.


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AUTHORS

Anne Coyle Melanson, BPR, CFRE

President

Bloom Non Profit Consulting Group Inc.

www.bloomfornonprofits.com

Diana McLachlan, MA

Vice President and Chief of Staff

NATIONAL Public Relations

www.national.ca

http://www.bloomfornonprofits.com

http://www.bloomfornonprofits.com

Documents

Canadian Charities and Cannabis Report FINAL AT FEB 12 2020...Synopsis At the same time that cannabis companies are under ... awareness of the existence of regulatory restrictions