INVESTORS EYE SAN LEANDRO FOR LARGE MEDICAL MARIJUANA GROWING FACILITY

City weighs its position on the matter

SAN LEANDRO - Mayor Tony Santos said a group of investors has inquired
with him and Councilman Jim Prola about opening a large medical
marijuana growing facility in the city's industrial area.

"I don't want to give the impression that I'm promoting it, because
I'm not," Santos said Friday. "The group is looking for a location to
grow medical marijuana - no direct sales. They can only do it in
certain locations, and they need a lot of (electricity) to do it."

"There are some people that have made preliminary overtures about
warehouse space," Prola said. "We told them to talk to the city
manager, the city attorney and the police chief."

Santos and Prola did not say who they spoke with, but described a
group of investors looking to expand a small-scale medical marijuana
growing operation in Oakland, and that the group included an attorney
and a real estate agent. The group is eyeing San Leandro for a
growing, warehousing and distribution facility, they said.

"I gather it would take $10 million to set up a facility," Santos
said. "They obviously need a lot of security and that kind of stuff.
They are talking about growing $100 million a year. They would be
willing to give us 5 percent of gross receipts."

Santos said attitudes toward marijuana are changing, pointing to
Berkeley and how medical marijuana brings tax revenue to that city and
to Proposition 19 on November's ballot, which would legalize marijuana
in California and allow local governments to regulate and tax it.

City Manager Stephen Hollister said he will be meeting with city staff
and the city attorney about whether an application for such an
operation can be entertained. Several years ago, the city passed a
six-month emergency moratorium on medical marijuana dispensaries that
has expired.

"The city's position is that dispensaries are not permitted in any
zoning district within the city," he said. "There are also issues with
conflict with federal law."

He added that the city as yet has no position on growing, warehousing
and distribution. He said he has not been contacted by medical
marijuana growers.

Jeff Starkovich, managing partner for the commercial real estate firm
Cassidy Turley, said his company has warehouse space for lease in
industrial San Leandro. He said he has received inquiries by many
types of businesses into his firm's properties, including from medical
marijuana growers.

"There's been interest in the past, but no proposals," he said. "Until
it happens, it's still rumor."

"It's like any other commercial thing. They have to go through the
proper channels," Prola said. "I flat out told them that there would
be absolutely no dispensing. There will be no, I repeat, no
dispensaries anywhere in my district, anyway."

"There are so many codes and so many hoops that they have to jump
through, the chances of it happening right now I'd say are very
small," Prola added. "They are looking into the possibilities and the
legalities. Nothing has been negotiated. It's all speculation right
now."