SCOTTSDALE PHILANTHROPIST TRYING TO UNITE MEDICAL-MARIJUANA USERS AND GROWERS

When the state began approving applications for medical-marijuana
users last month, officials offered no guidance about where to find pot.

Since dispensaries are not yet licensed, more than two-thirds of the
roughly 3,300 Arizonans who have permission to use marijuana also
have indicated they plan to grow it.

But the rest are on their own, and Scottsdale philanthropist Gerald
Gaines says terminally ill patients and others are having trouble
tracking down marijuana. So Gaines is launching an effort to put
users and growers together.

Gaines, who hopes eventually to oversee a dozen or so dispensaries,
is looking for 150 volunteers willing to be listed as "designated
caregivers" for medical-marijuana users.

"We're looking at almost a year before people who are legally allowed
to have medication can actually get it," Gaines said. "There's no
natural connection between somebody who might be a patient and
somebody who might be a grower."

Proposition 203, approved by voters in November, legalized
medical-marijuana use for people with certain debilitating conditions
and allowed them to designate someone as a "caregiver" to grow or
otherwise obtain marijuana for them.

Caregivers are authorized to grow 12 plants per patient if the
patients live more than 25 miles from a dispensary. Since dispensary
licenses won't be issued until August, and it will be several more
months until they pass state inspection and open for business,
qualified caregivers currently are allowed to grow pot for their patients.

Gaines is offering free growing lessons to anyone interested in
becoming a temporary caregiver until dispensaries open, and he hopes
to connect patients and caregivers through his website
(www.compassionfirstaz.com). The online caregiver network is free.
Growers can recoup their costs from patients who pay for the pot.

Dispensary business

Gaines hopes to be in the medical-marijuana business for the long
haul and donate millions of dollars to local charities.

A founding director of Sprint PCS, Gaines came to Arizona four years
ago from Colorado, where two of his sons were involved in the
medical-pot industry.

His plan is to provide start-up capital and services to get up to 15
dispensaries licensed through two for-profit companies, Compassion
First AZ and Maricopa Medical Marijuana LLC.

He's advertising for managers to run dispensaries with salaries up to
$160,000 a year, plus benefits. The managers and dispensary boards
would donate 40 percent of the revenues, and Gaines' for-profit
companies would take a percentage for providing outside services,
including accounting, legal and personnel.

Gaines estimates that an average Phoenix-area dispensary, with 800
patients buying an ounce of marijuana a month, could generate $5
million in revenues each year. Roughly $2 million of that would go to
charity under his model.

"I believe strongly in medical marijuana as a product for ill
patients," he said. "A big part of the power of our model is giving
the right to give to charity to people who haven't had that opportunity."

State rules

Arizona Department of Health Services rules will allow about 125
dispensaries statewide. They must be run as non-profits. State rules
offer some guidance, but provide plenty of wiggle room.

Dispensaries must have bylaws that include "provisions for the
disposition or revenues" and provide receipts and a business plan
showing the facility is operating as a not-for-profit. There are no
limits on compensation for dispensary personnel other than that it be
"reasonable."

Gaines plans to set up a fund with the Arizona Community Foundation
to distribute the dispensary revenues. Dispensary board members would
decide where the money should go.

The foundation vets the charities, requires that all money go to
501(c)(3) organizations and prohibits funding to political groups.

Megan Brownell, chief communications officer for the foundation, said
the agreement with Gaines is pending state approval of the
dispensaries and review by the foundation's gift-acceptance
committee. That committee oversees new, unusual or complicated gifts.

"In this case, it's new for us. It would be just an extra layer of
scrutiny to ensure that everybody involved is in compliance with the
law," she said. "Our staff did do research to ensure that these
dispensaries are legal in the state of Arizona. . . . We're not going
to do anything that would be in violation of federal law."

Some out-of-state dispensaries have struggled to give money away. A
food bank in Oakland last year declined proceeds from a
dispensary-sponsored food drive for fear that it would jeopardize its
federal funding, according to a New York Times article. But
dispensary donations have helped an AIDS hospice in San Francisco
offset state funding cuts.

Though medical marijuana is now legal in 16 states, it remains a
federal crime. Opponents of the state law say anyone involved with
the industry could face federal prosecution.

Joe Yuhas, of the Arizona Medical Marijuana Association, an industry
trade group, said he doesn't expect the federal government to target
non-profits that accept dispensary contributions because the federal
government already collects about 30 percent of revenues in income
taxes. Dispensaries aren't recognized as businesses under federal
law, so they can't take business-tax deductions.

"The largest beneficiary of a medical-marijuana dispensary is the
federal government," Yuhas said. "There should not be a fear based on
Big Brother cracking down on a community-based organization. But
ultimately it's a business decision and perhaps a personal judgment."

Yuhas said he believes most dispensaries will satisfy their
non-profit status by running efficient operations and offering free
or reduced pot and other services to low-income customers.