This year, California is supposed to see the final enactment of the Adult Use of Marijuana Act (AUMA), approved by California voters in 2016’s Proposition 64. But authorities have thus far failed to address a glaring omission in the law: any provision for the regulation of “compassionate care” providers.
On New Year’s Day, the long-awaited Medicinal and Adult-Use Cannabis Regulatory Safety Act (MAUCRSA) was implemented, but final regulations to oversee cannabis enterprises were put off, leaving the businesses operating under temporary licenses. Finally, new draft regulations were released July 13. After a 45-day public commentary period, they will assume the force of law. And they have left some bitterly disappointed.
Regulations Favor For-Profit Sector
One of those disappointed cannabis activists is Joe Airone, founder and director of the Bay Area-based not-for-profit Sweetleaf Collective, which he boasts is the oldest continuously running medical marijuana provider in the state. The Sweetleaf Collective started in 1996, the same year such operations were legalized in California by Proposition 215. It started doing bike deliveries around San Francisco and has recently expanded to the Los Angeles area.
But California’s new legal cannabis system has only paralyzed their compassionate care program.
“Before, all we needed was patient paperwork for each of our collective members. We could cultivate, transport and distribute. We could manufacture cannabis products and dispense them to patients,” Airone said. “This year, that would require four different licenses — for cultivation, distribution, manufacture and dispensary or delivery — to do what we were doing last year completely legally for 150 patients. And each of those permits costs tens of thousands of dollars.”
In short, Airone says, “Costs are now prohibitive for us. The whole industry is now geared for commercial activity. There’s no space now for non-commercial activity — providing cannabis for free to those who need it most.”
Sweetleaf is a not-for-profit mutual benefit corporation under the California tax code, which is what all cannabis businesses were required to be prior to Prop 64.
“Now cannabis businesses can be regular commercial corporations and make lots money,” Airone says. “That’s what regs and laws are geared toward now.”
Kicking Compassion Down the Road
The text of Prop 64 called for a “feasibility study” for licensing “non-profit entities” in the cannabis industry — to have been completed by January 2018. It was never carried out. A November 2017 rider bill signed by Gov. Jerry Brown pushed the deadline for the study back by two years — to January 2020.
Airone was hoping the newly released regulations might nonetheless provide some legal space for his collective to operate in.
“We have been working directly with the Bureau of Cannabis Control,” he says. “We have been trying to craft a non-commercial license.”
In a Bureau of Cannabis Control Advisory Committee meeting in Los Angeles on March 15, the advisory board voted unanimously to create a non-commercial license category. The sub-committee on public health found that that gap in the law constituted a “public health emergency,” and needed to be addressed as soon as possible.
“We were going on that recommendation and thought that we would have a license type before the final regulations dropped,” Airone says. “Nothing has happened. We had high hopes, and I don’t really know how to explain what’s going on right now.”
Airone says he has patients, including patients suffering from AIDS, asking him when they will be able to receive medicine again.
“I have patients asking me, ‘When can I get my stuff? I’m losing weight, when am I going to be able to get my medicine?’ With AIDS wasting syndrome, you can lose from 30 to 50 pounds in a month, and cannabis is the only thing that can help some patients…. A lot of my people aren’t going to be here in 2020.”
State House Moves to Relieve Tax Burden
Another burden for compassionate providers is that under the current regulations, non-commercial activity is taxed as if it were commercial.
“Last year we gave away over 100 pounds of cannabis for free,” Airone says. “We were told by our consultants that if we did that this year, we would be liable for $200,000 in taxes. We cannot handle a six-figure tax bill. We’re a small not-for-profit.”
On top of local taxes, Prop. 64 imposed a 15 percent excise tax on retailers, while cultivators must pay $9.25 for each ounce they produce. According to the San Francisco Chronicle, California is hoping to bring in a yearly $1 billion in taxes from cannabis sales, with the revenues going to addiction prevention and law enforcement efforts to suppress the black market, among other things.
In late May, state Senator Scott Wiener — a San Francisco Democrat and longtime medical marijuana supporter — introduced a bill to exempt compassionate care programs from taxes when providing free cannabis to financially disadvantaged people living with serious health conditions.
“Compassionate care programs aid people who are seriously ill and suffering, and we should be helping them thrive, not squeezing them with business taxes that are forcing many of them to close,” said Wiener in a press release. “Let’s correct this oversight in Prop 64, and help people living with serious conditions like HIV and cancer get the medical cannabis they need.”
The measure has the support of the Drug Policy Alliance and California NORML and has made it through two committee hearings with bipartisan support. But as a tax bill, it needs a super-majority of 67 percent of those voting in both the Senate and Assembly in order to pass. The Assembly vote is slated for next month.
‘Black Market Philanthropy’
While compassionate care might have inspired California’s medical marijuana laws, it appears that adult-use cannabis legalization could paradoxically mean the death of compassionate care in California.
“Victory was built on the backs of human suffering,” Valerie Corral, a co-founder of Santa-Cruz-based Wo/Men’s Alliance for Medical Marijuana, told the Sacramento Bee in March. “Unfortunately, compassion is not financially appealing in this market.”
Airone says Sweetleaf has found some creative ways to continue to get medicine to its patients.
“I don’t have a permit, so I can’t touch the medicine. But we did the legwork to organize donations to our patients without touching the stuff.”
Recently, the firm True Humboldt brought product from permitted cultivators in Emerald Triangle to a giveaway at Magnolia Wellness dispensary in Oakland and the Green Earth Collective in Los Angeles. The company Flow Kana also did a big give-away to Sweetleaf patients. Airone credits these companies as “big players in the industry that do care about compassion.”
“But now it’s a lot more complicated,” he says. “By this time, last year we had distributed 60 pounds. So far this year, we’ve distributed 15 pounds. That’s 75 to 80 percent less. And we’re one of the most established compassionate programs in the state, and we’ve been doing this without a hitch for 20 years.”
He estimates there are 30 or 50 other collectives in similar straits across the state.
Airone also notes the unlikely phenomenon of “black-market philanthropy” — compassionate providers operating outside the framework of the AUMA. “They are true activists who will not let their patients suffer. They are willing to break the law so they can get medicine to their patients, and I highly commend them.”
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