Defining Cooperatives and Collectives

It seems there is some gray area, in California at least, for the definition of "Collectives" or "Cooperatives" in regards to operation of Medical Cannabis dispensary operations. While Cooperatives must file articles of incorporation with the State to conduct business in California, the California Attorney General, in the Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use, declares that the law does not define collectives; the Attorney General uses the "dictionary definition" of a collective in its guidelines. So what does this mean for cultivators, dispensaries and caregivers and how should they structure their organizations to best protect their members and their continued success?

Collectives, as it is understood, are not privately owned, but rather the "collective" output of members; nothing is bought or sold and nothing is owned. Fees, costs and production are borne by the collective, with the collective output going to benefit the group and its continued operation. The apparent lack of a definitive concept of a collective may lead to ongoing legislative and operational difficulties associated with collective operations.

In contrast to Collectives, Cooperatives engage in a "buy/sell" arrangement with Cooperative members. Each member of the Cooperative owns his or her own land and products and sells them to the Cooperative, which then distributes the products for costs designed to cover operational expenses and the costs of production. While this system is more familiar and comfortable, by Western free-market standards, the pressures from the black market on price might not benefit patients and caregivers involved in cooperatives as much as the less "price-influenced" Collective scenario.

Regardless of whether a group opts to establish or maintain a Collective or Cooperative, certain steps are required by state legislators to establish legitimacy. These steps, along with others required by County or City officials and perhaps landlords of leased properties, require dispensary operations to maintain similar, if not more stringent, standards as other types of businesses. Business Insurance is often one such requirement, and Statewide Insurance Services, MMD Specialty Division has been working with dispensaries, cultivators and A-rated insurance companies to continually provide business insurance coverage specifically catered to meet the operational needs of Collectives, Cooperatives and growers in California, Colorado, New Mexico, Nevada and other states permitting the use of Medical Cannabis. Statewide continues to work with organizations in other states preparing to permit the consumption of cannabis for medicinal purposes, in order to provide exceptional coverage options to operations once they have state and local approval to proceed with their operations.

Statewide Insurance Services, MMD Specialty division remains at the forefront of the Medical Cannabis Industry and provides an added level of much-needed legitimacy to the business efforts of the community.

Read the Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use, published in August 2008 by the California Attorney General, for more information regarding Collectives, Cooperatives and Dispensary Operations.