Pass out or pass around small stationery items (8)
I believe the answer is:
dispense
'pass out' is the definition.
(thesaurus)
'pass around small stationery items' is the wordplay.
'pass' becomes 'die' (as in passing away).
'around' indicates putting letters inside.
'small' becomes 's' (abbreviation - e.g. clothes size).
'stationery items' becomes 'pens'.
's'+'pens'='spens'
'die' placed around 'spens' is 'DISPENSE'.
'or' acts as a link.
(Other definitions for dispense that I've seen before include "Prepare and distribute medicine" , "let off?" , "Prepare and give out, as chemist does medicines" , "Do without - give to others" , "Issue (e.g. medicine); do (with)out" .)