Pubdate: Sun, 6 Jun 2010
Source: New York Times (NY)
Page: A27A
Copyright: 2010 The New York Times Company
Contact:  http://www.nytimes.com/
Details: http://www.mapinc.org/media/298
Author: Kate McLean
Bookmark: http://www.mapinc.org/find?115 (Cannabis - California)
Bookmark: http://www.mapinc.org/find?253 (Cannabis - Medicinal - U.S.)

THE LEGAL BUT LARGELY UNREGULATED WORLD OF POT MERCHANTS THRIVES

In his nondescript San Francisco flat, Kevin Reed operates a sleek, 
efficient marijuana delivery service.

Five drivers deliver the product -- glistening green buds in white 
paper bags -- to neighborhoods throughout the city. Two operators 
work the phones. Flat-screen TVs display security feeds of the 
surrounding neighborhood.

Mr. Reed, who had a clean-shaven head and wore a pinstriped shirt, 
calls his business the Green Cross. It is the only pot delivery 
service in San Francisco with a city permit, for which Mr. Reed paid $15,000.

Getting the permit was a laborious, three-month process, and this is 
why Mr. Reed is watching the proliferation of rival pot delivery 
services -- none licensed -- with dismay.

"I have to compete with the guy who has 2,000 plants in a field 
behind his house," Mr. Reed said in a lilting Alabama accent as he 
smoked a joint. "And is selling his pot for $200 an ounce in the 
newspaper, delivery fee included. And not paying Uncle Sam a dime."

In the new marijuana economy, the guy with the pot field behind his 
house is increasingly at odds with a growing class of Bay Area 
cannabis merchants.

A patchwork of local, state and federal laws -- some in direct 
contradiction to one another -- has led to a freewheeling marketplace 
for Bay Area pot, some of the world's finest. With a state ballot 
measure to legalize the drug set for November, the economic activity 
has reached a fever pitch, drawing in local politicians, trade 
unionists, doctors and a variety of entrepreneurs.

Some of the activity is still blatantly illegal. In Oakland, a house 
where growers surreptitiously used eight car batteries to cultivate 
300 pot plants recently burst into flames. And, in a practice that 
growers now say is widespread, pesticides not meant for consumable 
crops are being sold in hydroponic "grow" shops throughout the 
region, often in unlabeled vials.

Other activities occupy a more informal gray area. Posts on Web sites 
like budtrader.com propose to exchange marijuana for Nintendo systems 
and offer warnings about "rippers" who cheat or steal from suppliers.

With so much cash flying around, these transactions also attract 
crime. Last week, a San Francisco State student who ran an unlicensed 
delivery service out of his apartment took an order over the 
Internet. When he went to deliver a pound of marijuana to Richmond 
after midnight, the student was robbed of the pot and $1,000.

Still other activities are perfectly legal. The 29 licensed medical 
marijuana stores, or dispensaries, in San Francisco, Oakland and 
Berkeley are prohibited from turning a profit, but many are thriving. 
Harborside Health Center in Oakland is the largest medical marijuana 
store in the world -- it shares 52,000 registered members with a 
sister location in San Jose. Harborside puts these earnings into free 
programs -- like yoga classes and cannabis for low-income members -- 
and makes charitable contributions.

"Some people think that our movement is being hijacked into big 
business," said Jeff Jones, a proponent of the legalization 
initiative and a longtime medical marijuana activist. "I think we are 
just maturing."

It has been 13 years since voters passed Proposition 215, which laid 
out narrow rules for patients with a doctor's prescription to grow 
and consume marijuana. More state rules followed, and local 
governments have added their own regulations.

Municipal governments decide how many dispensaries can operate within 
the city limits -- Oakland allows four, Berkeley three, while San 
Francisco sets no cap. Some city and county governments limited how 
much medical marijuana can be legally grown by individuals and dispensaries.

Marijuana remains a controlled substance -- and illegal -- under 
federal law. But most local authorities take a laissez-faire approach 
to marijuana businesses that would appear to be only loosely 
connected to medical treatment.

But legal ambiguities aside, pot is rapidly evolving into a 
legitimate business in the Bay Area.

Last week, Rebecca Kaplan, a member of the Oakland City Council, 
appeared at a news conference of union leaders to announce that pot 
industry workers -- including bud tenders-- would become members of 
the United Food and Commercial Workers Local 5. It was a move that 
dispensary operators and legalization proponents applauded as 
bringing new legitimacy to their industry.

"This is a good day for Oakland," Ms. Kaplan told reporters. "Having 
the workers in a union adds another check and balance as this movement grows."

Ms. Kaplan is also working on a proposal with Councilman Larry Reid 
to regulate marijuana production by licensing about four indoor pot 
farms in the industrial areas of Oakland. The city already limits 
indoor residential medical marijuana growing to 72 plants for 
individuals and 6 mature plants plus 12 immature ones per patient for 
dispensaries.

The Council will consider the new plan in July, and if it passes, the 
AgraMed company will be poised to apply. The company proposes to 
build a 100,000-square-foot medical marijuana megafarm beside 
Interstate 880 near Oakland International Airport that, according to 
projections, could generate 58 pounds of pot a day and $59 million a 
year in revenue.

"I think the City of Oakland has shown a lot of courage in managing 
cannabis from a common sense standpoint," said Jeff Wilcox, president 
of AgraMed and a member of the steering committee of the initiative 
to legalize marijuana. "They have rationally looked at it and found a 
way to develop it into a real industry that serves individuals, that 
serves the community."

Mr. Wilcox is hoping to bring a degree of corporate structure to the 
medical marijuana industry. In March, he approached the city with an 
economic study that proposed a 3 percent "production tax" on AgraMed, 
which he said could generate $1.8 million a year for the city. 
AgraMed would also create 371 jobs, many of them unionized, according 
to the study.

Mr. Wilcox estimated that AgraMed would cost $20 million to develop 
- -- a risk he said he was willing to take even though the company 
would be technically illegal under federal law, and facility 
operators would be subject to prosecution.

Mr. Wilcox's vision can be seen at his 7.4 acre complex of low 
buildings. Although he said construction would not begin until the 
Council signed off and his permit was granted, Pacific Gas and 
Electric recently increased the power supply to one of his buildings 
by about 2,000 amps. Martin Kaufman, Mr. Wilcox's associate, 
estimates that the facility will require 600,000 kilowatt hours of 
electricity a month to power the grow lights needed for 30,000 
plants, which can be harvested six times a year.

Because marijuana is illegal, many growers are reluctant to open 
their operations to scrutiny. Currently, there are no local, state or 
federal agencies to provide that oversight. In this regulatory 
vacuum, private businesses -- essentially self-deputized regulators 
- -- have emerged to do things like certify that marijuana is organic 
and test the product for contaminants.

The issue of testing is particularly sensitive because growers are 
turning to an array of growth-enhancement products and illegal 
pesticides to protect their lucrative crops.

"Medical cannabis has had to be produced and procured in a 
not-quite-above-board way," Councilwoman Kaplan said. "I think we're 
really at a turning point that we can handle this in a regulated and 
permitted way."

Many Bay Area dispensaries participate in civic projects and 
organizations like the Chamber of Commerce. And as the November 
balloting get nearer, advocates of legalization are gathering new and 
powerful allies.

Some medical marijuana activists worry that there is now a divide 
between the well-connected dispensaries and smaller, more informal 
groups of growers and consumers who for years have been part of the 
medical marijuana scene.

"To me, it's a money movement now," said Chris Smith, who is part of 
40 Acres Medical Marijuana Collective, an underground medical 
marijuana group in Berkeley. "Most of them probably got a little 
political pull or a little political networking; they got lawyers; 
they got money for lawyers; they jump right in to position."

40 Acres Collective consists of about 100 growers and users who 
gather to share pot, money and plants.

Mr. Smith said the collective would like to be able to get a city 
permit and become a licensed dispensary. But the city has capped the 
number of pot clubs at three, and all the spots are taken. Mr. Smith 
said he worried that 40 Acres Collective might ultimately be shut out.

As he showed off several rooms filled with marijuana plants beginning 
to flower, the collective's members gathered in another room to 
celebrate the 76th birthday of Mr. Smith's father, Scott Smith Jr., a 
former Black Panther who taught his son to garden.

The celebration was to be followed by an event called "the weed 
Olympics," in which the participants try to out-smoke one another.

"Medical marijuana is not really a business, you know?" said the 
younger Mr. Smith, as people around him laid out pot cookies, tiny 
pot-laced pineapple upside-down cakes and decorative pot plants for 
the party. "It's a community-based organization. There is revenues 
being exchanged, transactions happening, but that's not really what 
it's about." 
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MAP posted-by: Richard Lake