City Council to decide fate of marijuana farm permits tonight

Now that the ash has settled on California’s latest marijuana ballot initiatives, Oakland’s industrial cannabis policy—the nation’s first—can move forward, beginning with the city council’s meeting tonight.

By the time the Council convenes at 6 o’clock this evening, the members’ Public Safety Committee hopes to have finished the complicated process of deciding who will receive the limited number of large-scale medical marijuana cultivation permits in Oakland.

But if the council members decide the proposal still needs a few tweaks, they will send it back to the Public Safety Committee to be retooled. This would delay the process until perhaps as late as January 2011.

“God help us if we go through this until January,” said Nancy Marcus, an assistant in the City Administrator’s Office. “We’re all hoping it goes through on November 9 so that the process can be moved forward by the 22nd.”

According to the plan approved by the council in July, the city will allocate a total of four permits for large-scale medical marijuana growers. In the meantime, more than 300 people have asked the City Administrator’s office to put their names on a list of those interested in obtaining one of the new permits.  The list includes people from nine states, as well as a lone Canadian. It is comprised of lawyers, at least one medical doctor, and someone from Oakland with the name David Wedding Dress.

The cultivation permits, which allow for unlimited growing, will cost more than $200,000 each. Just to apply for one, applicants will have to fork over a non-refundable $5,000 fee, which, according to Arturo Sanchez, assistant to the City Administrator, is money that contributes to the city’s monitoring costs.

Observing that every cultivator would be constrained at least in part by the physical space of the facility, Sanchez said he prefers not to characterize the cultivators’ growth allowances as “unlimited.” “Just ‘not capped,’” Sanchez said. “We’re hoping that they’ll be judicious. There just won’t be a ceiling.”

Simply figuring out the selection process—a system for choosing the four industrial-scale growers that levels the playing field, benefits the local economy, and appears corruption-resistant—is proving to be a laborious task. At the last Public Safety Committee meeting, the four council members who make up the committee opted for an arrangement that allows the nearly $211,000 cultivation permit fee to be divided into quarterly payments.

The committee also clarified the point system the city will use to encourage marijuana businesses to hire local workers. This issue—how much of the ownership and work force at each facility should be from Oakland—has been a notable point of contention among the Safety Committee’s members. It is now set at 40 percent, down from the previous figure of 70 percent.

Councilmember Jean Quan, who as of Tuesday morning was leading Oakland’s undecided mayoral race, argued for lowering the number, saying that would encourage creative and innovative technology from the Peninsula and other places outside Oakland. Councilmember Nancy Nadel, on the other hand, argued that at least 60 percent of the owners and workers should be Oakland residents, reasoning that this would circulate more money through the city.

The point-based ranking system that will largely identify who will receive one of the permits seems to have been ironed out, too. In all, a total of 2,260 points will be available to the ten applicants who make it to the second phase of the evaluation. From there, an exam will be administered to test the final group of permit hopefuls on their knowledge of state and local cannabis laws.

But to even get that far into the process, applicants will first have to prove they are compliant and proficient in six key categories: their business plan; the construction of their building; a proper security plan; a fire protection and environmental plan; and evidence as to the overall financial backing to follow through on it all. A predetermined total of points will be awarded for each of these classifications, so that an application can be moved to the second round of the process.

Sanchez explained that a board of reviewers, comprised of six city staff members, will read a piece of every application. Each application will receive a reference number, to ensure a blind review, and will then be then scored on a scale of zero to 1,500. Sanchez will then act as the general reviewer once these six staff members have provided their impartial judgments.

Oakland’s large-scale cannabis cultivation plan is the latest step in a long process of official acceptance of medical marijuana cultivation and distribution in California. Fourteen years ago, the voter-passed California Compassionate Use Act of 1996 (Proposition 215) first declared that patients and their primary caregivers in this state would not be subject to criminal prosecution for the personal cultivation and possession of marijuana. But that law did not decriminalize distribution or sale to others.

In 2004, the State Senate amended the Compassionate Use law with Senate Bill 420, aimed at patient cooperatives or collectives that are not-for-profit—a technical term, different from federally-granted nonprofit status. Under SB 420, these cooperatives or collectives may grow, distribute and/or sell medical marijuana to their members. The amended law also allows duly designated primary caregivers, who consistently attend to patients’ needs, to charge for their labor and services in providing marijuana.

But the Oakland City Council’s decision last summer, to invite four marijuana-growing enterprises to set up urban businesses here, marks the first time a California city has officially welcomed large-scale urban cannabis cultivation. After months of carving out draft permit proposals, tonight the city hopes to make a final decision. If the council members approve the new permit application policy, the hundreds who have asked for it will receive notice of what they must do next to apply. Applications may be ready to send out to them as early as November 22.

During this same meeting, separate from its decision on the cultivator application process, but directly related to it, the council will also determine if four additional cannabis dispensary permits should be made available, for a total of eight. Finally, city councilmembers will decide whether the fee to possess one of the dispensary permits should be doubled, from $30,000 to $60,000 annually.

At present, although it’s common knowledge that there are many places to buy marijuana in Oaksterdam and other parts of Oakland, only four dispensaries are legally recognized in the city, with one operation, the Oakland Patient ID Center, currently facing permit revocation. The other three legal dispensaries open for business are: Harborside Health Care, Purple Heart Center and Coffeeshop Blue Sky, the official Oaksterdam café. When the city hears of a dispensary illegally operating, the City Administrator’s office sends them notices to shut down.

Like the efforts to come up with an agreeable cultivation-permit plan, the decision over doubling the number of dispensary permits has taken the council a long time. “Has it been timely?” repeated Carl Anderson, executive director of the American Medical Cannabis Dispensary, Inc. (AMCD), when he was asked about the process. “No. I don’t understand why it’s taken them so long.”

Anderson, 72, said his company is eager to receive a dispensary permit and begin paying taxes. “Lord knows the city needs help,” he said. “It’s been a very drawn out and a sometimes disheartening process.”

Anderson came to California from Florida in the early 90s, before medical marijuana was legalized. He eventually became a patient after the use of cannabis reduced his chronic back pain, he said, and shortly thereafter led him to be an advocate for promoting the medical marijuana industry and its healing effects. He said that if he eventually receives a dispensing permit, his operation wouldbe the first entirely unionized cannabis facility (United Food and Commercial Workers Union, Local 5) in the world.

Like everything else about the next phase of medical marijuana cultivation and dispensing in Oakland, the potential for new tax revenues is both uncertain and appealing to city officials. According to Arturo Sanchez, Measure V, approved by voters last week, will tax medical marijuana dispensaries and cultivators 8 percent for every sale—from cultivator to dispensary and from dispensary to patient. Previously, the tax was set at 1.8 percent, or $18 for every $1,000 spent.

Officials speculate that this will produce large tax revenues for a cash-strapped city, perhaps as much as several million dollars annually. “Because we’re talking about the theoretical, the numbers aren’t definite,” said Sanchez. “So it’s always an estimate.”

Image: This list shows the more than 300 parties interested in growing and selling cannabis in Oakland. They will receive instruction on how to apply for a cultivation permit once the process is finalized. Photo by Kevin Fixler.