Giving Marijuana Away? The Taxman Wants a Cut

It's not every day that municipal regulations inspire local pride, yet some San Francisco medical marijuana advocates are boastful of the Medical Cannabis Act, the 2005 rules that govern the city's 26 medical cannabis dispensaries. Our rules are the best in the state, they claim, and a model copied by other cities in California. That doesn't mean they are perfect; city planning leaders have asked the Board of Supervisors to overhaul the medical marijuana laws, citing a "saturation" of dispensaries in the Mission and South of Market — never mind that the act's restrictive zoning requirements encouraged this.

But such pride isn't swelling in advocates' hearts for state marijuana laws, which have become an object lesson in the unintended consequences of charity. The Board of Equalization recently let some dispensaries know that they owe back taxes on medical marijuana given away to low-income patients, a tradition called "compassion" that advocates claim is necessary as neither MediCal nor Healthy San Francisco will pay for a gram of pot the way insurance covers, say, OxyContin. The BOE insists it is owed a cut on any marijuana grown or bought by the dispensaries with the intent to sell — whether it was sold or not. That means some dispensaries owe for years' worth of giveaways at $20 per donated $200 ounce, whether the pot was top-shelf or next-to-worthless cooking shake.

And 10 patients or more can't bond together and grow pot collectively, as they're supposed to be able to do under the 1996 Compassionate Use Act, without being considered a "dispensary" under San Francisco law. That means a dozen people growing one plant each in their living rooms must jump through the same hoops a 10,000-patient medical marijuana storefront must do by the Department of Public Health. As a result, the city's one medical marijuana charity group — the Mission Street–based Axis of Love — can no longer offer medicated brownies or donated cannabis at its community center (but members can acquire donated medicine and distribute it to nine people or fewer).

BOE spokeswoman Anita Gore says this is all fair and equitable. Marijuana dispensaries get the same treatment as all other retailers, which are charged a "use tax" for inventory bought from a wholesaler with the intention to be sold, only to be given away later. That's partly the problem, says Matthew Cohen, who runs Ukiah-based Northstone Organics, a farm-to-door medical pot delivery service. Medical cannabis laws, state and local, make no distinction between a commercial-size enterprise and a couple of people with a few plants for their back pain. "We need tax credits," says Shona Gochenaur, who heads up Axis of Love, "not penalties."

 
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NoReply

Cathy Smith from Hope.net gave Shona 5 grand a month for many many years and gave her pounds of compassion too! Got socked with a $220, 000.00 dollar IRS bill! So did other dispensaries that dealt with this DISHONEST person! Yet she is still getting donations! Plus Shona told the world who gave to her in world wide media interviews!

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NoReply

Cathy Smith from Hope.net gave Shona 5 grand a month for many many years and gave her pounds of compassion too! Got socked with a $220, 000.00 dollar IRS bill! So did other dispensaries that dealt with this DISHONEST person! Yet she is still getting donations! Plus Shona told the world who gave to her in world wide media interviews!

NoReply
NoReply

According to Cathy Smith who is ashamed of the whole thing--when all she was doing was trying to help out an AXIS --has stated that she is lying low--and HOPES to G-D that others see that she is NO longer giving the AXIS anything--and prays that others see this and follow suite! The Medical Cannabis Community is behind you --NEVER doubt that Cathy and Steve!

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NoReply

THIS ARTICLE IS ABOUT AXIS OF LOVE! At least they interviewed WHO they were talking about--HA HA!

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NoReply

Cathy Smith from Hope.net gave Shona 5 grand a month for many many years and gave her pounds of compassion too! Got socked with a $220, 000.00 dollar IRS bill! So did other dispensaries that dealt with this DISHONEST person! Yet she is still getting donations! Plus Shona told the world who gave to her in world wide media interviews!

NoReply
NoReply

Shona and her co-herts that work with her leading this group from Axis of Sh8 {love-- sic} are the most DISHONEST people on the planet! Happy to have left that shit group years ago!

grannygear
grannygear

Why does every one of your articles include Shona and/or Axis of love? Hmmm?

Johnny
Johnny

i had one question. is someone claiming they paid for medical marijuana that was donated? if axis is saying they "bought" the medicine, then taxes should be paid. possibly it could be that donated marijuana is being used to make tax write offs. if the medicine in this article was truly donated, the BOE would not be asking anyone for money. obviously someone is saying money changed hands. if thats the case, then the government needs its cut. it confuses me why this is becoming an us and them thing. it seems pretty straight forward. claim that money was involved, pay your taxes. claim that no money was involved and not have to pay taxes. why are we trying to reinvent the wheel? this is not an attack against clubs, medical marijuana or patients.

Elizabethfrantes
Elizabethfrantes

If you think Shona will give you a straight answer to that question, dream on. And didn't she OFFICIALLY STEP DOWN FROM THAT ORGANIZATION DUE TO CONFLICT OF INTEREST WITH THAT IDIOTIC COMMISSION?

efrantes
efrantes

Oh, and let's keep in mind that Shona was extorting pot from distributers and then handing it out to sycophants if they begged her enough.

elizabeth frantes
elizabeth frantes

Shona shut down the proposed "farmer's market" that would have allowed patients to buy directly from growers. And as I've been saying for years, our leaders only want money. Dozens of SF clubs shut down because they couldn't afford the hundreds of thousands of dollars demanded, the rules so convoluted no one really knows what's going on.

elfrantes
elfrantes

It's so ironic that Shona would whinge so much when she was instrumental in banning a "farmer's market" which would have allowed patients to buy directly from growers. She prefers to shake down dispensaries and then handing out the stuff she doesn't want to selected sycophants. I've been yapping for years now that our elected officials and others are interested only in ripping off the clubs, which is extortion and technically racketeering under Federal law. The City with its demand for hundreds of thousands per club and all those totally fucked up rules that are impossible to uphold are why the dispensaries can't help out like they used to. I WAS RIGHT ALL ALONG, so all you idiots who kept shushing me in the name of "solidarity" can kiss my gorgeous butt.

JEREMEtheEducator
JEREMEtheEducator

If you want compliance BOE....you will need to retract your current program. This is your chance to affect California economics in a responsible business friendly way. Unfortunately, you've chosen to be wanton in your attitude and policy, which makes for shaky deference.

RightBrain
RightBrain

The BOE has just furthered the division between compliance and non-compliance. They had a remarkable chance to work with dispensaries, but that has now changed. What dispensary will want to be honest now? A naive one.

efrantes
efrantes

They never wanted to work with the clubs, only wanted to extort money and then just say, well, gee, we're just enforcing the rules . ..which is why the rules keep changing and are all but impossible to follow. Technically, the City is racketeering, since they are profiting off of something illegal under Federal law.

JEREMEtheEducator
JEREMEtheEducator

The objective for dispensaries used to be a nonprofit model. You were to give away medication so you werent profiting. Now, the BOE, wants dispensaries to financially behave like drug dealers. This sends a message to all that the BOE or the powers that be really do want dispensaries to be drug dealers, the antithesis of the nonprofit model Californian marijuana dispensary. It is now logical to assume that BOE does not properly allocate the money they have taken from businesses. If they bleed nonprofits then they arent putting the money where its supposed to go. The message is clear: DO NOT TRUST YOUR GOVERNMENT and NEVER TELL THE TRUTH TO YOUR GOVERMENT. BOE has taught us, if you trust and tell the truth you will get screwed.

efrantes
efrantes

Nonprofits are worse than for profit. They just spend the money on themselves so there is no profit.

rsteeb
rsteeb

What part of "unconscionable" does BOE not understand?

 
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