CA: Lawmakers Seek To Ease Taxes On Groups That Give Free Medical Cannabis

Photo Credit: Jonathan Wiggs

For 20 years, Joe Airone rode a bicycle through San Francisco’s Tenderloin, Castro and Mission neighborhoods, delivering free cannabis to low-income patients with terminal cancer and AIDS.

He made his last stop in December, then shut down his group, Sweetleaf Collective, to avoid paying thousands of dollars in annual taxes under state Proposition 64.

He’s among a handful of charities that have stopped handing out pot to severely ill people because they can’t afford the taxes their suppliers pass down to them in a new era of legalization.

“We gave away more than 100 pounds of cannabis flower to terminally ill patients last year, and we could be taxed on all of that,” said Airone, who goes by the name Sweetleaf Joe. He said he routinely wakes up at night in a panic, thinking about all the people whose pain he can no longer help relieve.

On Thursday, state Sen. Scott Wiener will introduce a bill to ease tax burdens for groups like Sweetleaf Collective. Wiener sees these charities as unintended casualties of Prop 64, which sought to regulate medical and recreational cannabis throughout the supply chain.

“Applying taxes to compassionate care will shut down collectives, and I can’t imagine that was the intent of voters,” Wiener said.

His bill, SB 829 — co-authored by Assemblyman Jim Wood, D-Santa Rosa — would establish a new medical license designation for groups that donate cannabis to people with severe ailments. It would exempt these groups from paying a 15 percent state excise tax on cannabis that they are giving away. And it would allow commercial pot farms to donate their surplus crops to these charities without having to pay a cultivation tax.

The way it is now, farmers and other suppliers pass those taxes on to the nonprofits, rather than eating the cost.

The authors of SB 829 hope to tie California’s newly regulated cannabis industry back to the state’s Compassionate Use Act of 1996, which legalized medical marijuana and allowed patients with severe ailments — including AIDS, cancer and glaucoma — to get the drug free of charge.

Sweetleaf was among the many compassionate care programs that emerged after voters approved the 1996 law. Others include the Caladrius Network in Nevada County, which serves parents of catastrophically ill children, and Weed for Warriors, a Bay Area-wide organization that provides cannabis to veterans coping with injuries and Post Traumatic Stress Disorder.

And then there are more informal versions of compassionate care, like the house parties that cannabis activist David Goldman and his husband, Michael Koehn, hosted in their Castro district apartment.

Every two months, the couple invited 25 critically ill people — mostly gay men living with HIV — into their two-bedroom home for free pizza and soft drinks. They would send everyone home with goody bags full of cannabis products: edibles, flowers, concentrates and topical oils for skin.

“We never asked for anything in return,” said Goldman, who uses medical cannabis to manage his glaucoma. “Now we can’t do it any more — we would have to pay thousands of dollars in taxes, and we can’t afford that.”

Ryan Miller, a former U.S. Marine and co-founder of an Oakland group called Operation Educating Veterans About Cannabis (EVAC), said he has continued giving away medical pot for free, in spite of the new law. He was vague about the details.

“We will pursue our mission by any means necessary,” he said.

Miller was among the proponents of Prop 64, even though he knew it would threaten his group’s donation model. He said it was worth making a sacrifice “for the greater good” of legalizing commercial marijuana.

Airone has mixed feelings about the new law. He’s grateful that marijuana consumers are no longer deemed criminals. But he says the new tax structure takes pain medication away from people who need it most.

“So prohibition has ended for skater dudes, but it began again for all these terminally ill people who we were trying to help in 1996,” he said.

As a result, collectives that serve these patients have either shut their doors or gone underground. The new term for this practice is “black market philanthropy,” Airone said.

“Now we have to break the law to save people’s lives,” he lamented.

Sitting on the sidelines are patients like Christopher Sullivan, who suffers from complications related to HIV and chronic pain from a past broken neck.

Sullivan lives in San Francisco’s Silver Terrace neighborhood, and he relied Sweetleaf to deliver free cannabis for the last four years. Those deliveries stopped last fall.

“I’m very low-income, and when I go to the (commercial) dispensaries, the least expensive thing I can find costs $25,” he said.

Surviving on a fixed income of $1,100 a month from workers compensation, Sullivan says there is no way he could regularly afford a $25 purchase — plus tax.

Airone and others hope that SB 829 will rectify that situation. If it doesn’t hit too much opposition, the bill could land on Gov. Jerry Brown’s desk by August. Because of an urgency clause it could take effect as early as September if the governor signs it.

At that point, Wiener hopes to get Sweetleaf Collective and other nonprofits back up and running. Airone worries that some of his patients won’t live to see the change.

“I don’t check the Sweetleaf voicemail any more, because I just can’t listen to any more people asking when we’re going to figure this out,” he said.