Cal. MMJ Pioneer Is Destitute

A long effort to drive one of California’s medical marijuana pioneers into destitution has apparently worked.

Lynette Shaw, who opened the state’s first legal MMJ dispensary shortly after voters approved medical weed in 1996, says she’s broke, shut down three years ago by federal prosecutors and hounded by the IRS into insolvency. She’s millions of dollars in debt with no hope in sight – and that’s the thanks she’s gotten for essentially creating California’s dispensary system.

Voters passed Proposition 215 18 years ago, legalizing medical cannabis. The same year, Shaw opened the Marin Alliance for Medical Marijuana in Fairfax. It stayed in business for 15 years and set the model for legal pot shops across the state.

But in 2011, Melinda Haag, U.S. attorney for the Northern District of California, went on a tear through the Bay Area, especially Marin County. She shut down almost every dispensary in the county, including Shaw’s; Marin County now has no legally operating weed stores.

Haag closed the Marin Alliance by threatening Shaw’s landlord with seizure of his property. That has become perhaps the most popular tactic among federal prosecutors in California seeking to close dispensaries.

Haag and her office claimed they were going after shops that were too close to schools, parks and other places where children gather. But she shut down every dispensary in the county, regardless of those issues. Haag’s policy has been to go after almost any pot shop she can find.

This is in direct conflict with policy announced by the Justice Department in August. Deputy Attorney General James Cole said the Obama administration would no longer interfere with legal weed – or prosecute providers – as long as eight federal priorities are enforced, such as reducing gun violence in the marijuana trade.

Shaw found herself caught in the middle of Haag’s rogue operation. And if that wasn’t enough, the IRS came after her for $10 million – at a time when she had nothing.

The agency rejected every business deduction she filed. She appealed, and the IRS allowed her to claim the expense of the weed she sold to collective members. But that still left a bill of $3 million that she can’t pay.

“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.”

The IRS took her savings. Her car was repossessed. Her Social Security retirement benefits are gone. She couldn’t afford a legal defense, and she said she plans to file for bankruptcy soon.

“It’s very sad and very unfair,” said Fairfax City Council Member Larry Bragmann. “It’s not right when somebody has the courage to pioneer a project like this and ends up getting punished for their courage. 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.”