A medical marijuana collective is not required to be organized as a non-profit organization, but many choose to become nonprofit corporations.
Regardless of the actual business structure, a medical marijuana collective should operate in a manner that is “not-for-profit”. By operating in this way they are telling their patients that they are not in operation to generate profits for the owners, but to ensure that their MMJ patients have safe access to the medication they need.
A medical marijuana collective should operate in a manner that is “not-for-profit”
In order to legally operate as a not-for-profit corporation, the collective will reinvest any revenue made into services for members, patient advocacy, or other nonprofit activity. The terms not-for-profit and nonprofit are often confused, and a not-for-profit medical marijuana collective is not the same as a nonprofit. This difference is especially noticeable when looking at taxes. Nonprofits including churches, schools, certain hospitals, social clubs and service groups are exempt from paying both federal and state taxes because of the nature of the work they do in the educational, religious and charitable sectors. A medical marijuana collective can not currently be recognized as a tax exempt entity by the IRS, and they must pay taxes in the way a traditionally formed C-Corporation would.
For more information on the non-profit flow of medical marijuana medication, please click here.
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