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ADR 0001 — Tax classification: 501©(6) Business League

Status: Proposed Date: 2026-05-04 Decision-makers: Pre-formation working group; pending Board ratification

Context

The Guild is forming as a national professional membership organization for cannabis professionals. It needs a tax classification that fits a member-driven, dues-based, certification-and-education organization that may also engage in profession-related advocacy.

Options considered

  1. 501©(3) public charity — Charitable deductibility, foundation grants, but lobbying limits, prohibition on political activity, and material risk of denial for a cannabis-adjacent organization.
  2. 501©(4) social welfare — Unlimited lobbying, but no charitable deductibility, limited foundation access, and weaker fit for a credentialing/dues model.
  3. 501©(6) business league — Recognized vehicle for trade associations, certifications, and sponsor-funded programming. Member dues deductible as business expense (less lobbying portion). Unlimited lobbying germane to exempt purpose. Best fit for the Guild's structure and revenue model.

Decision

The Guild will form as a 501©(6) business league.

Consequences

  • File IRS Form 1024 ($600 user fee) within 27 months of formation for retroactive recognition.
  • Adopt member-notice approach for the lobbying portion of dues (rather than proxy tax).
  • Sponsor recognition structured as qualified sponsorship payments under §513(i).
  • Foundation grants will be limited; the Guild's revenue must come primarily from members, sponsors, and program fees.
  • File Form 990 annually.

References