Pubdate: Fri, 31 Jan 2014
Source: Marin Independent Journal (CA)
Copyright: 2014 Marin Independent Journal
Author: Richard Halstead


Although the legalization of marijuana use, both for recreational and
medical purposes, is sweeping the country, the woman who founded the
nation's first locally sanctioned medical marijuana dispensary in
Fairfax some 18 years ago is struggling to avoid homelessness.

When Lynnette Shaw opened the Marin Alliance for Medical Marijuana in
1996, it was the first medical marijuana dispensary in the state to
operate under the auspices of Proposition 215, California's
Compassionate Use Act. But in 2011, a crackdown launched by Melinda
Haag, the San Francisco-based U.S. attorney for the Northern District
of California, shut down the Marin Alliance.

Haag threatened Shaw's landlord, Farshid Ezazi of Orinda, with
confiscation of his School Street building if he continued to allow
the dispensary to operate there. The Fairfax dispensary was among
dozens statewide that federal prosecutors said they targeted due to
their proximity to parks, schools and other facilities used by children.

At about the same time, Shaw said she was notified by the Internal
Revenue Service that she owed more than $10 million in back taxes; the
IRS was disallowing all of the Marin Alliance's business deductions.

Shaw, who says she is broke, returned to Marin this week from Los
Angeles, where she was living with friends. She came back to auction
off memorabilia from the Marin Alliance in an attempt to generate
money to help cover the mortgage on her Fairfax house, which she has
rented out.

"I've had two years of hell, and it's not fair," Shaw said. "I'm
basically still being persecuted for inventing the licensed dispensary
system, which started a revolution."

Shaw said she initially appealed the IRS order, and the agency has
decided to allow her deductions for buying the cannabis she sold to
members of the collective. The IRS is, however, continuing to try to
collect the remaining $3 million from her.

"I was handling a lot of cash, but I had bills to pay," Shaw said. "We
got audited twice a year for the first five years. We proved time
after time that we were honest and broke."

To get her license to operate in Fairfax, Shaw had to comply with 84
conditions set by the town's Planning Commission.

Shaw said she has no money to mount a legal defense. She said the IRS
confiscated the $10,000 in savings that she had. Her car has been
repossessed. And she was recently notified that her future Social
Security retirement benefits have been zeroed out.

"I'm going to be declaring bankruptcy shortly," Shaw

Fairfax Councilman Larry Bragmann said, "It's very sad and very
unfair. It's not right when somebody has the courage to pioneer a
project like this and ends up getting punished for their courage."

Bragmann said, "Here you had a legal, regulated dispensary, which was
really the model for what could be done for the patients, and right
now in progressive Marin there is not one legal dispensary for patients."

Steve DeAngelo, director of the Harborside Health Center in Oakland,
one of the largest dispensaries in the nation, said, "Our case is
quite similar to Lynnette's, except since we are a corporation instead
of a sole proprietorship. I will hopefully not find myself in the same
situation as Lynnette.

"It is a really, really horrible way for somebody who gave of herself
so generously as Lynnette did to be paid back by the community,"
DeAngelo said.

DeAngelo said the IRS has notified Harborside it owes $2.4 million in
back taxes for its first two years of operation, and he expects the
agency to increase that amount, since it is in the process of auditing
subsequent years of operation.

Harborside is challenging the IRS on those assessments and is also
battling an attempt by Haag to seize the building in which it
operates. DeAngelo said the city of Oakland has so far blocked
confiscation of the building on the basis that it would harm public
health and safety.

DeAngelo remains hopeful that federal prosecutors will have a change
of heart. He noted that earlier this month Attorney General Eric
Holder said the Obama administration would soon roll out new
regulations making it easier for banks to do business with legal
marijuana sellers.

Recreational marijuana use is now legal in two states, Washington and
Colorado, and another 18 states have legalized cannabis for medical
purposes. An initiative to legalize marijuana in California may appear
on the November 2014 ballot. A Field Poll released in December
reported that 55 percent of Californians support legalization.

DeAngelo is also optimistic about Harborside's chances of prevailing
in its fight to keep the U.S. attorney for the Northern District of
California from seizing the buildings it occupies.

Matt Pappas, a Long Beach lawyer, said he successfully represented
five clients last year whose property the U.S. Attorney's Office for
the Central District of California was attempting to seize because
medical marijuana dispensaries were operating there.

"The government dismissed the cases with prejudice," Pappas said, "and
in several of the cases, the collectives that were on the property
remained in operation."

Pappas asserted that Haag, the U.S. attorney for the Northern District
of California, is failing to follow Department of Justice policy.

"She is fully out of compliance with her boss, who is Deputy Attorney
General James Cole," Pappas said. "She is off the reservation."

Lillian Arauz Haase, a spokeswoman for Haag, did not respond to a
request for comment.



A Marin Allliance for Medical Marijuana memorabilia silent
auction/sale begins this weekend.

Items include posters, flyers and gun safes where cannabis was stored
to keep it dry. Three lockers full of material at Ignacio Mini
Storage, 394 Bel Marin Keys Blvd. in Novato. Lockers will be open for
inspection noon to five on Friday, Saturday and Sunday. 
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MAP posted-by: Jo-D