Funding from the Marijuana Industry

UC is implementing a pilot program that would permit individual campuses to evaluate proposed funding from the marijuana industry. Under the pilot program, campuses are expected to engage in due diligence if they are aware of or reasonably suspect that potential funding may be related to the marijuana industry through a gift, grant, or other mechanism.

Tier 1: Non-governmental entities or individuals that appear to directly derive all or most of their funding from conducting marijuana-related activities that are illegal under federal law (such as sale, distribution, or cultivation of marijuana, other than pursuant to federal authorization or industrial hemp cultivation by an entity whose activities are authorized under the federal Farm Bill)

• Accepting funding from an industry that engages in activities, such as the sale, distribution, or cultivation of marijuana, that are criminally prohibited under federal law raises serious concerns. Possible risks of accepting funding from such an industry include charges of money laundering, charges of aiding and abetting violations of the Controlled Substances Act, risk that the funding could be subject to Federal forfeiture under laws that give the government authority to seize assets derived from the illegal manufacture, import, sale or distribution of a controlled substance, and reputational risks of working with/for an illegal industry. To ensure consistency across UC, campuses may not accept donations, grants or other funding from entities or individuals known to directly derive most or all of their funding from conducting marijuana-related activities that are illegal under federal law.

Tier 2: Non-governmental entities or individuals that appear to derive their funding from separately identifiable revenue streams, where one such revenue stream is directly from conducting marijuana-related activities that are illegal under federal law (such as from the sale, distribution, or cultivation of marijuana)

• As described above, there are potential risks of accepting funding from an industry that directly derives its funding from conducting illegal activities. However, those risks can be mitigated if the campus obtains assurance that the funds flowing to the University are not derived from an illegal source. Prior to accepting funding from any entity or individual that that has access to funding that is from legal activities as well as from illegal marijuana-related activities, the campus must conduct due diligence and obtain written assurance that the funds provided to UC are not derived from activities that are illegal under federal law, including that the funds are not derived from the sale, distribution, or cultivation of marijuana or marijuana products. Campuses should also consider the potential optics of each funding opportunity.

Tier 3: Non-governmental entities or individuals indirectly tied to the marijuana industry, such as a company that derives its profit from providing services to entities conducting illegal activities under federal law

• In these situations an entity may be providing legally permissible products and services to the marijuana industry (e.g., manufacture and sale of grow lights or equipment used to measure the safety and toxicity of marijuana), but the funds they receive from their customers are likely to have been generated through the federally illegal activities of the marijuana industry. While there are potential concerns about accepting funding from an entity or individual that has only indirect ties to the cannabis industry, the legal risk of enforcement for charges of money laundering or charges of aiding and abetting violations of the Controlled Substances Act are lower than they are for accepting funds from a company that is directly engaged in illegal sales/cultivation/distribution. Campuses may make local decisions about whether to accept such funds. Campuses may consider conducting due diligence and obtaining written assurance that the funds provided to UC are not derived from activities that are illegal under federal law, including that the funds are not derived from the sale, distribution, or cultivation of marijuana or marijuana products. Campuses are also advised to evaluate the potential optics of each funding opportunity.

Please see UC Research Policy Analysis & Coordination (RPAC) Guidance Memo 19-02 for more information.