Oakland city council approves large-scale production of medical marijuana

James Anthony, of Harborside Health Center, addressed the council Tuesday night in a standing room only meeting.

James Anthony, of Harborside Health Center, addressed the council Tuesday night in a standing room only meeting.

In a lively, standing room only meeting, the Oakland city council voted Tuesday night to approve on first reading a city-wide plan for the cultivation of medical marijuana in four new large-scale factories.

After three hours of debate, which included 125 speakers during the public comment session, the council voted 5 to 2 in favor of the plan, with North Oakland’s councilmember, Council President Jane Brunner, abstaining. Councilmembers Jean Quan and Nancy Nadel voted against the plan. If the ordinance passes next week, requests for proposals would be submitted to the city this fall, with marijuana production permits being issued next January.

Under the plan, which was co-written by Councilmembers Rebecca Kaplan and Larry Reid, the city would issue cultivation, manufacturing and processing permits for large-scale facilities that grow cannabis for medical purposes. The ordinance, if passed next week, would make Oakland the first city in the country to authorize wholesale pot cultivation, ahead of other California cities currently debating similar measures, including neighbors Berkeley and Richmond.

“I support this. It’s a growing industry,” said councilmember and mayoral candidate Jean Quan, who later voted against the ordinance because specific eligibility criteria for the facilities was not included in a resolution to be voted on by the council. Referring to Proposition 19, which will appear on the November statewide ballot and if passed would legalize the recreational use of marijuana, Quan said, “If you’re going to have a growing use in the state, even if the state proposition doesn’t pass, the volume of medical marijuana and high-quality marijuana that is regulated is going to grow. Oakland has been a pioneer in this area.”

Facilities that apply for and receive the city’s cannabis permits would not be limited in square footage—meaning they could grow as much cannabis as their facility would hold. City staff estimate approximately 6,000 pounds of cannabis were produced in the city last year in approximately 45,000 square feet of cultivation space.

Jeff Wilcox, a local businessman, plans to open a 7.4 acre complex near the Oakland airport that could produce as many as 21,000 pounds of cannabis annually. He argued the large-scale factories would provide jobs and income for the city, but only if the city acted quickly.

“Do you want to be the Silicon Valley of cannabis?” Wilcox asked the council. “The issue is, you’re late. If Oakland wants to do this, you’ve got to do it. Berkeley is starting. Other cities are looking into it. If you don’t start this, other people are going to.”

People who spoke in support of the ordinance spoke to the city’s growing debt as a reason to vote to pass the measure, saying that taxes on the new businesses would raise city revenues. The cultivation, manufacturing and processing permits would cost $5,000 per year. In addition, each facility that received a permit would be charged a regulatory fee of $211,000 and be required to carry at least $2 million in liability insurance. Oakland currently receives 1.8 percent in sales tax from the sale of medical marijuana.

Oakland’s four permitted dispensaries generated $28 million in profits in 2009. The dispensaries paid local growers $18 million for the marijuana they then distributed throughout the state.

“This issue is about jobs and taxes,” said Dan Rush, a statewide director for the United Food and Commercial Workers Union Local #5. “The city has the opportunity to put 80 police officers back to work, to reopen libraries, to put city workers back to work, to do a real good job to put debt to bed. We should do everything to create those jobs.”

But residents who support small- and medium-sized cannabis farming spoke against the plan, saying the ordinance would put them out of business.

“I speak for the small and medium-sized growers who have faithfully provided medical marijuana even in the face of prosecution,” said Steve DeAngelo, the executive director of Harborside Health Center, the largest medical marijuana dispensary in the world. “They’ve done the best they could to grow marijuana in responsible ways. They are decent people with families to support. They need to pay their rent. They’ve been coming to me terrified, asking me to do something to stand up for their interests so that legislation is not passed that will take their livelihoods from them.”

Other small cannabis growers told the council they would be “excited” to participate in the permit process. “This absolutely needs to be regulated,” said Jesse Lyons, a residential farmer. Small cannabis growers, he said, are “excited to come out of the closet.”

Small cannabis farms would be eligible to apply for the permits if they formed collectives with other small farms; nevertheless, they can still remain in business, as long as their grow operation is no bigger than 96 square feet. But medium-sized cannabis farms, which are often for-profit entities, would have a harder time becoming eligible to apply. Another ordinance will be introduced to the Public Safety Committee this fall to address providing permits for medium-sized growers.

Stricter enforcement for cannabis farmers is also included in the ordinance. Much of Oakland’s cannabis is currently grown in private homes or large factories, oftentimes illegally. City officials estimate that a rise in electrical fires in Oakland, from 133 in 2006 to 276 in 2009, is directly related to indoor residential cannabis cultivation. Increased robberies, burglaries and homicides related to cannabis cultivation were also stated in the ordinance as concerns of city safety officials.

People who apply for the facility permits would be subjected to many of the same requirements as the marijuana dispensaries have been: background checks, tests of legal knowledge, a business plan review and a site and planning review. The applicants will be ranked by a point system; the city plans to issue four facility permits during the first year the ordinance is in effect and would reevaluate the program and potentially distribute more permits after the first year.

A major point of contention, both in public comment and during the council debate, concerned taxing the facilities. The city council will deliberate in a special session Thursday night whether to increase the business tax rate for cannabis businesses, which is currently $18 per $1,000, or 1.8 percent. An initiative will likely be put on the November ballot to raise the tax rate, which Oakland voters would have to approve. The new rate to be placed on the ballot will be debated by the council and determined Thursday night, but speakers on Tuesday warned the city council not to consider raising the tax too high.

“If you want to start the Silicon Valley of cannabis, don’t set tax rates so high that you kill the baby before its born,” said James Anthony, of Harborside Health Center. “You’ll need to maintain some level of regional tax parity or Oakland will lose business to surrounding cities.”

The criteria for determining who would receive a permit was also a source of debate in the meeting, with councilmembers Brunner, Quan and Nadel asking council staff to draft a resolution stating specific criteria for eligibility. Other councilmembers declined to do so, saying that getting too specific in a resolution would force the council to open the matter again in a council meeting if they needed to change anything at a later date. Quan and Nadel ended up voting against the plan, largely because of the absence of such criteria, while Brunner abstained from the final vote.

The council will hear the second reading next Tuesday morning, July 27, and officially vote on the plan before they recess for the summer.

California voters passed Proposition 215, the California Compassionate Use Act, in November 1996, which allowed patients and their primary caregivers to cultivate cannabis for their own medical use. In January 2004, state senate bill SB 240 allowed medical cannabis collectives or cooperatives to be established and provided the guidelines for how much cannabis a person can cultivate. The city of Oakland allowed four city-wide dispensaries to begin distributing cannabis to patients in February 2004. Three of those dispensaries are still selling medical marijuana.

In 2005, Oakland voters passed Measure Z by over 60 percent, which allows for the licensing, taxation and regulation of medical marijuana within the city. Oakland voters also passed Measure F in June 2009, which allows the city to tax its medical marijuana dispensaries.

This summer, Oakland became the first city in California to institute a pot tax.

Thursday’s  special session of the Oakland City Council will begin at 5:30 p.m. in the council chambers.

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6 Comments

  1. If it can brings a lot of positive value, then this is a good move.

  2. Concerned in America

    Oakland, and more importantly, Richard Lee deserve all the monopoly on cannabis cultivation that they can get. No single person, or very, very, very few, has put more $$, energy, hours, and people to work to further the acceptance of cannabis in America than Richard Lee.

    If you wish to have your own Medical Marijuana Factory, then go through what Mr. Lee went through to get your city to OK it for you. Don’t blame Oakland or Richard Lee for doing something YOU could’ve done yourself to begin with.

    I can’t believe anyone would not want to see Mr. Lee make more millions or even billions for that matter, he SHOVELS all his profits back into attempting to make cannabis more legitimate. With the right funding, he might be the ONLY leader smart and politically influential enough to force the federal government to reinvestigate the classification of cannabis federally, one day enabling our kid’s kids the ability to use this PREVENTITIVE medicine without fear.
    Futhermore ,Prop 19, if embraced properly will establish California as the new and IMPROVED Amsterdam, where over 1 million tourists visit just for the “legal” cannabis, according to National Geographic’s “Drugs Inc.-Marijuana” tv special. The influx of tourists will possibly be greater for CA, all Americans will save hundreds on airfare, and it’s sunny and beautiful in Cali., the revenues generated from hotels, restaraunts, delivery of product, gift shops and such cannot really be calculated. I think, hope, and believe if done right, ALL growers, big and small, will not be able to meet demand.

  3. Ranson Donnie

    Oh yeah Richard Lee has the patients best interest at hand….BS ***k Richard Lee….why is George Soros and George Zimmer the 2 biggest silent funders behind this whole Prop. 19…….Yeah they want to get their hands in the marijuana drug business…CA is not stupid VOTE NO on 19!!!!!

  4. Concerned in America

    Prop 19 does not effect current medical marijuana laws or medical patients. Every consumtion, in every form of cannabis is medicine. It should be available to all adults, and certain children in need. The only path to that reality in America right now is Prop 19. I don’t understand why so many growers would even think of voting “no”, it’s not like this law will be immeadiatly instituted. Of course, just like Arizona’s immigrant law, this one will be challenged, appealed, challanged again, and appealed again, only god knows when or if it will be instituted even if passed. 
           Without this first step, RIGHT NOW, it will be a set back that would only hurt ALL GROWERS when, not if, eventually(hopefully not soon) a new CONservative Federal administration begins an illegal crackdown like “Operation Green Merchant”  rounding up everyone and thier mother, charging, arresting, confiscating everything for “evidence”, even if they know they won’t win in court. 
        With Prop 19 at least you have the entire State backing you up, not just certain local government entities. 
         Think about it. Think of the possible future for all Californians when a new federally proposed “stimulus” package includes 500,000 new DEA jobs to eliminate the “illegal” marijuana industry in America, you know they will start in CA. 
        Well, it’s already decided in Oakland, they will have large facilities for cultivating MEDICAL marijuana. If you pass Prop 19, that medicine won’t be available to the general public, as far as I can tell. 
        Perhaps that’s the slant, the motivation and timing of this announcement, if all growers want customers, they are going to have to pass Prop 19 to increase demand, or if your collective is real and strong, it should stand on it’s own, unaffected by all other competition. 
          No matter what, a “No” vote, only darkens the future for all growers, consumers, patients, and Americans. 

  5. Spark

    Indeed. legalization is a process and has many steps. we have to accept change. that’s all it is. A new way of handling something. Patients are not at risk of losing any benefits and, eventually, any growers who are serious can get the right permits and join the ranks of legitimate businessmen. we pay taxes on many things as it is, and that is how so many things we take for granted get done. ie: roadwork, public safety, public services. we already pay for these things and a new taxable, in-demand, “product” is available on a larger scale, this is just the beginning. Oakland is going to see some serious improvements and it’s going to catch on. We have to let it go it’s course and accept the parts we are afraid of because this is what it looks like to make changes. a great thing is happening in our state and we should definitely help it continue.

  6. j

    fuck that shit

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