Report: Berkeley Patients Group earned $15m in 2009

As Berkeley Patients Group prepared to shut its doors on May 1, it advertised a delivery service behind the front desk. Photo: Frances Dinkelspiel

Berkeley Patients Group took in $15 million and paid its top executives $911,000 in 2009, while only donating $18,083 to charities, according to a story released Wednesday by California Watch.

Etienne Fontan earned $357,529, Tim Schick earned $290,765, and Debby Goldsberry earned $263,299 in 2009, part of $3.3 million spent on labor costs, according to story. The medical cannabis dispensary, which operated at 2747 San Pablo Avenue until May, when the federal government forced it to close, spent $151,789 on security in 2009 and distributed $253,433 to marijuana advocacy organizations, according to California Watch. It made about a 40% profit on its products.

BPG officials had told the Oakland Tribune in 2009 that it donated about $300,000 a year to charities.

The California Watch story is the most revealing disclosure ever of the finances of what has long been regarded as Berkeley’s most established dispensary. Since BPG is a private, not-for-profit company, it is not required to reveal its finances, although it must pay taxes to both the state and Berkeley.

The city levies a 2.5% tax on sales of cannabis, which means BPG would have had to pay $375,000 in taxes to Berkeley in 2009  if Measure T had been in place. Voters adopted the tax on cannabis sales in 2010 and the city has estimated it will get about $150,000 a year from the city’s three dispensaries.

In 2010, a lawsuit filed by Berkeley Patients Group against one of its former employees, Rebecca DeKeuster, also revealed details about the profits of medical cannabis dispensaries. BPG had sent DeKeuster to Maine to apply for the license to open four dispensaries, but DeKeuster soon quit and went out on her own.

Papers filed with the lawsuit revealed that the Northeast Patients Group, which would have been affiliated with Berkeley Patients Group, expected to gross more than $2 million serving 691 patients at its four dispensaries in the first year, selling medical cannabis for $340 an ounce. It projected gross revenues of almost $7.4 million in its second year of operation, serving 1,159 patients. That worked out to revenues of $5,500 to $7,500 per patient, depending on the location.

Berkeley Patients Group was the largest medical cannabis dispensary in Berkeley and one of the largest in the East Bay with 13,000 members. In addition to providing a wide array of medical cannabis and plants, it provided free massages, yoga classes, and other types of services to its members. The dispensary shut down after its landlord David Mayeri received a letter from the federal government threatening to seize the property since it was located within 1,000 feet of a school. Since it shut its physical plant, Berkeley Patients Group has been running a delivery service.

Officials from BPG say they are close to finding a new location for the operation.

In February 2011, the state Board of Equalization slapped Berkeley Patients Group with a bill for $6.2 million in back taxes and penalties. The dispensary has been paying off its debt slowly.

Officials from BPG declined to talk to reporters from California Watch.

However, a Los Angeles lawyer quoted in the California Watch article said the finances of Berkeley Patients Group did not seem out of line.

Read the California Watch story.

Related:
Berkeley’s largest cannabis dispensary to close May 1
[3.15.12]
Berkeley cannabis lawsuit reveals bitter infighting [7.18.11]
Berkeley Patients Group owes $6.4 million in back taxes [2.24.11]

To get breaking Berkeley news from Berkeleyside follow us on Twitter and on Facebook.

Print Friendly
Tagged , , , , , , ,
  • Anon

     Not all non-profit groups are charities.

  • http://www.caviarcommunism.us/ West Bezerkeley

    Those limits are only in place for cannabis. There isn’t a limit on the amount a person can buy per day of edibles made from cannabis.

    ***added after my original post — the edible factor is the loophole.

  • http://www.caviarcommunism.us/ West Bezerkeley

    I’m thinking we would all benefit from a Berkeleyside implementation & enforcement of NPR Discussion Rules – http://www.npr.org/help/discussionrules.html

    Here’s an executive summary of NPR discussion rules:
    1. If you can’t be polite, don’t say it.
    2. Don’t use obscenities
    3. Anything you post should be your own work.
    4. Please stay on topic.
    5. Rambling is the kiss of death.
    6. Please respect people’s privacy.
    7. This is not a place for advertising, promotion, recruiting, campaigning, lobbying, soliciting or proselytizing.
    8. Do not “feed” the trolls — http://www.npr.org/blogs/inside/2008/12/i_had_a_long_conversation.html

  • berkeleykev

     It’s not a lie if you count the 253k given to pro-marijuana groups.  253k + 18k equals pretty clost to “around 300k” given to charities, which is what they claimed.

    Or was there some requirement to give to specific charities?  Do you simply choose to ignore the 250k they gave away?

  • PragmaticProgressive

    A lobbying group is not a charity.

  • Anon

     “a medical marijuana advocacy organization is not a charitable organization”

    What do mean by that?  Most people use that term to denote a 501(c)(3) to which donations are tax-deductible.  If the donations are being used for lobbying, then they are not charitable and are not tax deductible.  Most of the medical marijuana advocacy groups I know of ARE charitable organizations as that term is commonly understood.  Some, like many non-profits, have separately incorporated lobbying organizations but donations to them are not tax deductible and not considered charitable organizations.

  • Guest

    Seems to me like a lot of people here are saying BPG gave to charities that they don’t agree with, so they don’t count as charities. 

  • Guest

     no, donations to organizations that lobby are not considered charitable by IRS and are not tax-deductible.  not the same thing

  • Guest

     I see … they’re only ‘charities’ if Berkeleyside agrees with their mission/thinks they are sufficiently local?

  • Guest

     it is if it is incorporated as a 501(c)(3) – not sure why this is so hard for people to understand.  as far as I can tell from their website, donations to ASA are tax-deductible – that means they are a “charity”.

  • Anon

     under what theory is an organization/entity that helps terminally ill patients not allowed to make money?

  • PragmaticProgressive

    A 501c3 can’t be an action Organization attempting to influence legislation. ASA’s charter suggests that it does jut that. It may not be over the line, but it’s certainly toeing it.

  • PragmaticProgressive

    Not when they are lobbying, as they say they do.

  • PragmaticProgressive

    When it’s a non-profit.

  • Bruce Love

    A 501c3 can’t be an action Organization attempting to influence legislation. ASA’s charter suggests that it does jut that. It may not be over the line, but it’s certainly toeing it.

    A 501(c)3 can engage in limited kinds and amounts of lobbying.    It is not even unusual.   There is no reason to believe that ASA is “toeing” any line.

  • Anon

    It is different because they are donating to advocacy groups for their industry, which is not charitable but is in their own self-interest.

  • Anon

    Seems to me that you haven’t read the comments thread or are illiterate.

  • Bruce Love

     

    It is different because they are donating to advocacy groups for their
    industry, which is not charitable but is in their own self-interest.

    If what Frances said in the comments is true, they gave to ASA and to NORML.   ASA is a 501(c)3 and NORML includes a  501(c)3 (the “NORML Foundation”) — charities in every sense of the word.

    There is self interest in this way: These organizations help to empower patients and providers and help to protect their rights.

    About ASA, for example:

    ASA provides legal assistance to many thousands of individual patients and caregivers each year.  It has been involved in (and led) a number of important lawsuits regarding patients rights.   It conducts legal training.  It runs media campaigns.  It provides training for activists.  It acts as an information clearing house.  Yes, it sometimes works with legislators but it does much, much more besides that as befits its status.

    In short, if this is the kind of organization to which BPG was donating lots of money then they were indeed giving charity in support of people in need.   To criticize them for giving charity to organizations that look out for the interests of the people they serve is remarkable.

  • Anon

     http://www.drugfree.org/join-together/alcohol/medical-marijuana-lobbying