Cannabis and the law have long been bitter rivals—but more and more states are reevaluating medical and recreational cannabis use. In California, legislators and activists continue to normalize and support medical cannabis.
One network of licensed cannabis companies called “Dear Cannabis;” (yes, the semicolon is part of the name) has launched compassion projects to eliminate costs for patients in need under California Senate Bill No. 34, The Dennis Peron and Brownie Mary Act (CA SB-34). Legacy operators, advocates, and politicians have worked hard to eliminate tax liability on donations throughout the licensed supply chain, and that has created an opportunity for these advocates to step up and support patients who need help.
We talked to Dear Cannabis; co-founder Kellie Carlton to better understand the mission behind compassionate cannabis legislation and the impact of CA SB-34.
What does CA SB-34 allow exactly? What is its significance?
As of March 1, 2020, CA SB-34 (The Dennis Peron and Brownie Mary Act) grants licensed retailers the right to donate free cannabis and cannabis goods to qualified medical patients and their caregivers. SB-34 rectified Prop 64’s oversight on compassionate gifting by eliminating the tax liability on donated cannabis goods throughout the supply chain.
Under SB-34, items designated for donation may only be provided to a medicinal patient or primary caregiver through a licensed retailer; however, licensed cultivators, manufacturers, distributors, and retailers may all designate cannabis or cannabis products in their inventory for donation. These donations must move through the licensed supply chain in the same way cannabis products that are for sale do, meeting all applicable requirements for cultivation, manufacturing distribution, laboratory testing, packaging, and labeling, etc.
As long as all Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) and state cannabis regulations are met throughout the supply chain, the donated goods can be provided to patients at no cost and are exempt from cultivation, excise, sales, and use tax. All donated materials (raw or finished product) must be designated as a donation package in METRC (the state track-and-trace program) and additionally documented along the supply chain with a Cannabis Donation Certificate that is maintained by transferring parties.
It is important to note that there is a 5-year limitation on SB-34. What we’re able to collectively accomplish as an industry within this timeframe will be paramount in defining a need for legislators to extend this bill so operators can continue serving those in need.
How can donations remain compliant to CA SB-34?
In order for donations to remain compliant, all MAUCRSA and California state regulations must be met throughout the licensed supply chain, must be designated as a donation package in METRC, and have a passing C.O.A. (Certificate of Analysis).
All participating parties will be responsible for filling out and maintaining the Cannabis Donation Certificate when transferring custody of the donation package. This certifies that the donation will not be sold by the accepting party and must be kept in the transferring party’s records for seven years. If the donation is sold at any point, the package will be stripped of its gift designation and the entire participating supply chain would be liable for taxes on that specific batch.
As the disseminating party, California retailers have specific guidelines to follow from patient verification, management, and reporting. In efforts to expand compassion programs, our organization compiled all legislative/bulletin requirements from the three regulatory oversight bodies (BCC, CDPH, CDA) to create a comprehensive operations protocol/guide on how to establish a compliant donation program. Our Plug of the People Retail Compassion Toolkit provides a road map for licensed retailers to set up a compliant, plug-in compassion program at no cost.
Our goal is to create more compassionate resources, so we help coordinate more projects that utilize the resources of our network. That would allow our team to manage every step in the project, from cultivation to retail, ensuring that donations are compliantly moving through the supply chain and meeting all regulatory standards.
We do encourage all operators to check in with their legal and compliance teams before participating in compassionate gifting.
“Just like our licensed partners, we’re inspired and humbled by patients’ stories… It is through these stories that we get to see the positive impacts cannabis products are having, and they continue to fuel our passion to create access for those in need.”
—Kellie Carlton, Co-founder of Dear Cannabis
What future legislation do you hope CA SB-34 leads to?
With the five-year limitation of CA SB-34, our organization is pushing to make a measurable impact that clearly defines and demonstrates the need for a long-term legislative solution to establishing and maintaining cannabis compassion programs not only for California, but across the nation.
As discussions of Federal reform progress, we want to safeguard access for patients within the developing legislation. It is our hope that we will have tracked enough donation data through METRC to justify the need for national compassion programs. Additionally, we believe donating cannabis companies should receive tax deductions for their contributions, not just exemptions for the services they are providing the community. If we can adjust the language to exempt these actions from tax law 280E, we believe it will create a stronger incentive for companies to step up and provide support to compassion programs.
How did the compassion program start?
Our organization’s goal is to create free, clean, and quality cannabis products specifically for donation through industry collaboration.
As friends and colleagues in the commercial cannabis space, we bonded over our love and respect for the plant. Like most people, we spent 2020 reflecting on our personal values and what truly matters to us. The more discussions we had, the clearer the picture became: patients were being left behind in the cannabis industry and we wanted to make them a priority again.
Through these conversations, we were introduced to CA SB-34 and the work of Senator Weiner’s office (District 4) to re-establish compassionate gifting programs for qualified patients. This became our call-to-action and an opportunity to put our professional network to good use. By June of 2020, Dear Cannabis; was founded and our first compassion project was off the ground.
Today, our network is unifying the cannabis supply chain to sustain retail compassion programs across the state. By utilizing in-kind and gift donations from our partnered license holders, we coordinate each company’s unique supplies and capabilities to co-produce compassion SKUs at no cost to qualified patients and their caregivers. Our process provides licensed companies an opportunity to step in and contribute available resources to a project, rather than shouldering the entire production and cost which traditionally has been a major roadblock. Ultimately, this removes the burden of operations on an individual company by dividing the responsibilities among several license-holders while creating a platform for cannabis operators to step up and give back to patients in need.
As co-founder and CEO Melissa Burgstahler explains, “Dear Cannabis; is my love letter to the industry and the people who it was built for, the patients. As a child I lost my mother to breast cancer and as an adult I realized the impact cannabis had in providing her comfort during her illness. Now, I get to give back to patients just like my mom in honor of her.”
In addition to being the inspiration behind our organization, Mrs. Burgstahler’s mother’s handwriting is our logo and placed on every Dear Cannabis; compassion product, continuing her legacy with each and every donation. We’re motivated to ensure that patients just like her can have easy access to clean and high-quality products now—and in the future—without the additional stress of how to obtain them.
To date, Dear Cannabis; has coordinated seven compassion projects, yielding and donating over 12,500 products including RSO, tinctures, and pre-rolls. Since June, our network has grown by over 30 partners licensed in cultivation, manufacturing, distribution, and testing facilities across California. In addition to our supply chain partners, we have over 25 retail partners providing these donations to their local patient base, making sure they end up in the hands that need them the most.
Why are compassion programs so essential to those in need?
As professionals in the cannabis space, we saw firsthand how Prop 64 created barriers of access for patients. Overnight, the new law prohibited license holders from legally donating cannabis despite building off the Compassionate Use Act of 1996, Prop 215.
Those who built their companies to serve patients during the 215-era were forced to operate out of pocket or break the rules, risking their license to continue supporting their patient base. New, burdensome regulations and taxations across the supply chain furthered a shift in focus to day-to-day operations, compliance and bottom lines. Simultaneously, counties started mandating closures of medical dispensaries leaving cannabis deserts while imposing excise taxes on existing shops that priced out the majority of disabled or low-income patient groups. Together, these factors unintentionally pushed the most vulnerable populations out of an industry that was created ultimately to serve them.
We watched as Prop 64 started to unravel the work done to establish safe access for at-risk populations through Prop 215. As a result, patients turned to the traditional market, risking ingestion of adulterated products (molds, powdery mildew, heavy metals, etc.) just to find relief.
This was unacceptable. Cannabis prohibition ended to facilitate safe access for those in need, not put them at further risk. Dear Cannabis; is motivated to change this and we’re unifying our network to ensure sustainable access for people in need.
What resources are available to medical marijuana patients?
After the passing of Prop 64, access to cannabis resources for patients became limited. The costs associated with providing cannabis for free to at-risk communities caused programs to dry up around the state. Now, CA SB-34 allows licensed cannabis companies to contribute without incurring tax liabilities on their donations. However, because this amendment is nascent and lacks compliance protocols, we found that existing compassion programs were limited and the dispensaries that were offering assistance lacked adequate inventory.
Today, our network of licensed companies is working together to solve this problem by contributing to compassion projects that yield products specifically for donation. Since June 2020, our network has created and donated thousands of products that help sustain retail compassion programs throughout California.
If you are a patient or care-giver looking for support, we recommend asking your local dispensary if they offer a program and if there are any requirements beyond obtaining a medical recommendation to apply. Additionally, there are organizations such as Weed for Warriors Project, SweetLeaf Collective, BlkCannaJoy, and Veterans Cann Coalition, among many others that offer amazing resources and support to patients in need.
How can the industry continue to support patients and dispensaries that offer aid to the public?
Under CA SB-34, licensed cultivators, manufacturers, distributors, and retailers all may designate cannabis or cannabis products in their inventory for donation. However, those donations may only be distributed to patients by a licensed retailer. Therefore, we recommend partnering (if you’re not already licensed) with a retailer who understands the compliance and reporting requirements of SB-34 so your donations reach people who need them.
We believe that our industry needs to work together to provide the necessary support to patients throughout the state. We created our network so licensed companies can unite their resources to help patients without burdening their operations or bottom line.
How has cannabis impacted your lives? Why is cannabis so valuable to the quality of life of so many of those you partner and work with?
Personally, cannabis has been monumental in aiding our mental health and we both credit its usage to being able to lead productive, fulfilling lives. Beyond our individual struggles we both shared similar stories of loved ones suffering from cancer, addiction, and chronic pain who all found comfort through consumption. Despite the wide range of ailments, each case had the same solution: cannabis.
As advocates in this space, we hear stories every day of how cannabis is assisting people across the country in a myriad of ways. From helping chronic pain sufferers, to cancer patients dealing with side effects of chemo, to veterans living with PTSD, we’ve seen cannabis have positive, therapeutic benefits for patients receiving our donations.
Just like our licensed partners, we’re inspired and humbled by patients’ stories detailing their struggles and their gratitude for cannabis in providing relief. We hear from grandmothers who are now able run around with their grandchildren, veterans finally getting a full night of sleep, and cancer patients regaining their appetites. It is through these stories that we get to see the positive impacts cannabis products are having, and they continue to fuel our passion to create access for those in need.
“Cannabis prohibition ended to facilitate safe access for those in need, not put them at further risk. Dear Cannabis; is motivated to change this and we’re unifying our network to ensure sustainable access for people in need.”
—Kellie Carlton, Co-founder of Dear Cannabis
Today under CA SB-34, Dear Cannabis; is educating licensed companies on how to compliantly navigate the new legislation while empowering brands to do their part to help patients in need. If your licensed company is looking to donate inventory or would like to contribute services/resources to a future project, we are happy to help connect your products to patients in need.
How can cannabis brands and companies get involved in the compassion program?
Today, Dear Cannabis; is actively working to expand its network to strengthen the donation pipeline and sustain partner retail programs. We are working on cultivating strong partnerships throughout the supply chain to expedite compassion projects and increase impact. Below is a list of ways each license type can get involved:
Licensed Cultivators can donate extra cannabis flower, trim, or biomass. Dear Cannabis; will help you certify the donation and work with the network to get it packaged or processed into a compassion product for patients in need.
Licensed Manufacturers can donate bulk oil or their specialized services (processing and or packaging) to create a specific compassion product like FSO, tinctures, pre-rolls, and more. Dear Cannabis; can connect you with source material, compassion products to package, or other network manufacturers to co-produce a specialized product with your oil donation.
To remain compliant, all cannabis donations must be transported through the licensed supply chain in the same way as cannabis products for sale do. Licensed Distributors can contribute by providing transportation services on any project throughout the state.
Every batch of compassion products produced must pass CA regulatory compliance testing to be authorized for donation. Licensed Testing Facilities can partner with us today by providing required testing on our next project.
Additionally, since all cannabis donations must meet CA regulatory packaging and labeling standards, our projects are always looking for sponsors to cover those costs. Since there is no license required to purchase packaging/labeling supplies, we are able to partner with unlicensed and licensed businesses to fulfill this need.