HAYWARD — Cannabis businesses that are allowed to set up shop here are required to donate a portion of their proceeds to nonprofits, and now the city is figuring out who will get the money.
A foundation is being set up to distribute those funds.
The Hayward Community Foundation will be affiliated with the East Bay Community Foundation, which funds organizations that support early education, the arts and other causes.
The City Council voted unanimously to approve the foundation on March 19.
The Hayward foundation will have its own distribution committee, likely made up of local residents and business and nonprofit leaders, who will decide who will receive the funds.
City Manager Kelly McAdoo called the foundation “an outlet for the cannabis community benefit money.”
While foundations are traditionally funded through grants, donations and bequests, the Hayward foundation will be initially funded from money generated by cannabis businesses. It could receive funds from other sources after it becomes established.
All would-be owners of a marijuana club or dispensary in Hayward are required to show how their businesses will benefit the community as part of applying for a city permit.
Most have pledged to make cash donations to nonprofits, according to John Stefanski, a management analyst with the city.
Jiva Life, for instance, which secured a permit to open at 1223 A St., plans to launch the Tri-City Association for Cannabis Education to provide public outreach on the dangers of abusing the substance to Hayward, Fremont and Union City residents.
It also said 4 percent of Jiva Life’s proceeds will be given to community organizations.
Despite California’s legalization of cannabis in 2016, traditional financial institutions will not handle transactions generated at cannabis clubs and dispensaries because marijuana remains illegal under federal law, prompting the owners to deal in cash.
“Leaving the distribution of donations to the discretion of individual cannabis operators may not be in the best interests of the community, as they may direct funds to nonprofit organizations that may not address the most pressing needs of the community,” Stefanski said.
The foundation would offer a way to channel contributions from businesses such as Java Life.
The council offered minimal comment before approving the foundation.
The East Bay Community Foundation will hold, manage and invest the funds generated in Hayward, while the local distribution committee will make recommendations.
Jeri Boomgaarden, a senior development officer with the East Bay foundation, told the council that the Hayward foundation eventually could become independent.
But that will hinge on it developing enough resources to hire people with specialized knowledge on grant-making and financial regulations and reporting requirements.
The Richmond Community Foundation, the Berkeley Community Fund and the Rodeo-Crockett Community Foundation are also affiliated with the East Bay Community Foundation.