La consulta Mysql funciona en phpmyadmin pero no en php (debido a la fecha)

debe comparar fecha con fecha, no fecha con fecha y hora

AND  DATE(start_date) <= '2017-08-28' 
AND  DATE(end_date) >= '2017-08-28' 

entonces

SELECT id AS couponID, percentage_off, usage_count, used_count 
FROM coupons 
WHERE `code` = 'DANGER' 
AND active_status = '1' 
AND deleted = '0' 
AND  DATE(start_date) <= '2017-08-28' 
AND  DATE(end_date) >= '2017-08-28' 
AND category LIKE '%cLevel%'

en su caso, está usando var en php y debe convertir correctamente usando str_to_date, por ejemplo:

 str_to_date( '$now'),'%Y-%m-%d');

SELECT id AS couponID, percentage_off, usage_count, used_count 
FROM coupons 
WHERE `code` = 'DANGER' 
AND active_status = '1' 
AND deleted = '0' 
AND  DATE(start_date) <= str_to_date( '$now'),'%Y-%m-%d')
AND  DATE(end_date) >= str_to_date( '$now'),'%Y-%m-%d')
AND category LIKE '%cLevel%'

o como lo usa OP

   str_to_date( '$now'),'%Y-%m-%d %H:%i:%s');

  SELECT id AS couponID, percentage_off, usage_count, used_count 
  FROM coupons 
  WHERE `code` = 'DANGER' 
  AND active_status = '1' 
  AND deleted = '0' 
  AND  start_date <= DATE_FORMAT('$now','%Y-%m-%d %H:%i:%s')
  AND  end_date >= DATE_FORMAT('$now','%Y-%m-%d %H:%i:%s')
  AND category LIKE '%cLevel%'