Pubdate: Sun, 18 Jul 2010
Source: New York Times (NY)
Page: A23A
Copyright: 2010 The New York Times Company
Contact:  http://www.nytimes.com/
Details: http://www.mapinc.org/media/298
Author: Kate McLean
Referenced: The draft ordinance 
http://clerkwebsvr1.oaklandnet.com/attachments/25511.pdf
Cited: Proposition 19 http://www.taxcannabis.org/
Bookmark: http://www.mapinc.org/find?115 (Cannabis - California)
Bookmark: http://www.mapinc.org/topic/Proposition+19

PROPOSAL FOR MARIJUANA FACTORIES PROMPTS A BATTLE FOR CONTROL

A proposal to create four large-scale marijuana factories in Oakland 
has touched off a turf war in the lucrative market for medicinal 
marijuana. Established local merchants are trying to hold their 
ground against entrepreneurs who are seeking to gain a foothold in 
the rapidly evolving industry.

Under the proposal, which will be debated by the City Council on 
Tuesday, Oakland would issue four permits to operate the factories, 
which are currently not limited in size or scale. One would-be 
applicant is planning a 7.4-acre complex that could produce over 
21,000 pounds of marijuana a year.

Based on current prices, such a factory would generate about $60 
million in annual revenue, more than twice the gross receipts for 
Oakland's four medical marijuana dispensaries last year.

Taxes on cannabis cultivation and sales could generate millions of 
dollars for Oakland, once the program is up and running, and create 
hundreds of jobs, according to supporters. The ordinance -- written 
by Councilwoman Rebecca Kaplan, who is also a mayoral candidate, and 
Councilman Larry Reid -- would also require the factories to pay a 
$211,000 "regulatory fee."

"I think it's a total win-win for everyone," Ms. Kaplan said last 
week, after the Public Safety Committee voted 3 to 1 on Tuesday to 
send the cultivation ordinance to the full City Council.

The proposal is creating discord between businesses seeking to 
preserve the status quo and others who are trying to carve out new 
businesses in advance of Proposition 19, a November ballot measure 
that would legalize marijuana for adult recreational use in California.

"It's big business; you're talking about manufacturing gold," said 
Jeff Jones, a longtime marijuana activist working with the 
legalization effort. "There's going to be stakeholders, different 
opinions and different approaches, which lead to bickering like in 
any other marketplace."

One of the most vocal critics of the cultivation proposal is Stephen 
DeAngelo, executive director of Harborside Health Center, the largest 
medical marijuana dispensary in the world. With outlets in Oakland 
and San Jose, Harborside has 58,000 members, or patients, who can buy 
dozens of strains of marijuana packaged in vacuum-sealed bags or in 
edible forms ranging from cookies to gelato.

The dispensary receives its marijuana from about 400 member/suppliers 
who deliver one or two pounds of cannabis at a time. Allowing 
large-scale production in Oakland would crowd out those small 
growers, according to Harborside officials and the dispensary's lawyer.

"Why does this whole new system have to be created?" Mr. DeAngelo 
asked in an interview. "Let's bring these citizen farmers out of the 
shadows and into the light and give them a role in this new industry."

Jeff Wilcox, a Bay Area businessman, is an outspoken proponent of the 
industrial pot permits as well as a leading advocate for the 
Proposition 19 initiative. Mr. Wilcox is hoping to obtain one of the 
four permits to build AgraMed, a marijuana production complex on 7.4 
acres beside Interstate 880 near Oakland International Airport.

AgraMed would include a bakery to create edible forms of marijuana, a 
lab to test for potency and contaminants and 100,000 square feet of 
cultivation space. If he obtains a permit, Mr. Wilcox said, he will 
offer to lease space to smaller growers.

James Anthony, a lawyer for Harborside, said Mr. Wilcox was a 
"Johnny-come-lately" motivated by profit, not by the desire to help 
patients who use marijuana for medical reasons.

Mr. Wilcox responded that Harborside and its supporters had been 
"sitting in the back just waiting."

"They started this campaign of lies to kill the cultivation permits," he said.

Mr. DeAngelo said he was not opposed to the Oakland plan, but wanted 
to see a permit process that would benefit smaller growers, an 
opinion that was echoed by many Tuesday at the meeting of the Public 
Safety Committee.

Oakland is known as a marijuana-friendly city, but friendliness was 
sometimes in short supply last week as Council members heard hours of 
contentious public comment on the proposed ordinance.

The Council chambers were filled with members of the Bay Area 
cannabis industry: dispensary owners, lawyers specializing in 
medical-marijuana law, would-be permit applicants, subcontractors who 
see the proposed factories as a means to expand their businesses and 
growers of all stripes. The Bay Citizen

A nonprofit, nonpartisan news organization providing local coverage 
of the San Francisco Bay Area for The New York Times. To join the 
conversation about this article, go to baycitizen.org.

Some expressed concern that allowing industrial marijuana factories 
would drive down prices and squeeze out local cultivators.

"I think this ordinance is nothing more than a municipally sanctioned 
monopoly on medical cannabis," one grower told the committee.

In a compromise effort, Vice Mayor Jean Quan and Councilwoman 
Patricia Kernighan suggested that Ms. Kaplan and Mr. Reid devise a 
similar permit process for medium-sized facilities. Those new rules 
will be up for discussion in September, but in the meantime, some 
growers worry that they are being run out of business.

"It's politics," said Dan Grace, who runs a 3,000-square-foot nursery 
for young pot plants called clones. "All you can count on is what we 
have now, and what we have now is not a process that allows for 
medium-sized growers."

Councilwoman Nancy Nadel drew some applause from the audience when 
she raised concerns that the cultivation ordinance was not legal 
under state or federal law. "I don't see any rush to do this until we 
know what happens in November," Ms. Nadel said, referring to the 
ballot initiative.

Ms. Quan warned, however, that if Oakland did not act quickly, other 
cities could seize the opportunity to become a hub for the expanding 
medical-marijuana industry. "I want Oakland to be in place, so I want 
to move this out," she said.

The debate was heated in part because the proposed ordinance has gone 
through several revisions, and rumors have swirled about the 
regulations. City Council members said they received a flood of calls 
amid concerns that all dispensaries would be required to buy 
marijuana from the industrial facilities. But that is not a requirement.

Until recently, cultivation of medical marijuana has not been closely 
regulated in any California cities.

"Our real goal is to eliminate a lot of the public problems stemming 
from illegal and unregulated cultivation," said Dhar Mann, an Oakland 
businessman who plans to apply for one of the permits if the proposal passes.

A report attached to the proposal said residential electrical fires 
in Oakland rose from 133 in 2006 to 290 in 2009, a spike, it said, 
"likely attributable to cannabis cultivation." There were also eight 
robberies, seven burglaries and two homicides linked to marijuana 
growing, the report said.

Mr. Mann, 26, owns a 15,000-square-foot hydroponic supply store 
called iGrow, which will soon open franchises in eight states. He 
recently scouted another large-scale warehouse with an architect and 
security contractor in the hope of growing marijuana there.

If he receives a permit, Mr. Mann said, he will outfit the building 
with solar panels, a grass roof and a state-of-the-art security system. 
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MAP posted-by: Richard Lake