OAKLAND, SEEKING FINANCIAL LIFT, APPROVES GIANT MARIJUANA FARMS

OAKLAND, Calif. -- This city, which has been at the vanguard of
medical marijuana legalization on everything from taxation to trade
schools to the unionization of marijuana workers, voted Tuesday to
permit industrial-size marijuana farms.

After hours of public testimony, the City Council voted 5 to 2 to
permit large-scale indoor marijuana plantations. The struggling city,
which faces a $31 million deficit and has a 17 percent unemployment
rate, estimates that the marijuana factories could bring in as much as
$38 million annually in fees and taxes.

"As the industry continues to emerge and grow, we know that other
cities are looking at this," said Councilwoman Rebecca Kaplan, who is
running for mayor. "It's important for Oakland to be a vital part of
the growth and development of licensed facilities."

While the city has been one of the most welcoming in the state to
medical marijuana purveyors, how the drug is grown has been largely
unregulated. Oakland's new law, which requires a final vote from the
City Council next week, would bring large-scale marijuana cultivators
above ground, mandating that they pay a $211,000 annual fee, provide
security, conduct criminal background checks on employees, install
camera surveillance and fire-safe electrical systems, and buy insurance.

If the plan receives final approval, the city would begin issuing
large-scale production permits in January.

Last year, the city's four licensed medical marijuana dispensaries
sold some 6,000 pounds of marijuana worth $28 million and requiring
approximately 45,000 square feet of space to grow. City officials
estimate that farmers in the new facilities could produce 70,000
pounds a year.

If California voters approve a statewide ballot measure in November
legalizing recreational marijuana use for adults, the city would be
well positioned to capitalize on the new market.

During the raucous Tuesday meeting -- marked by hissing, booing and
applause -- the council heard testimony from marijuana farmers,
including small-scale cultivators who grow their crops in closets and
those intending to create marijuana farms larger than football fields.

Nearly all the speakers urged the council to act quickly and to expand
the permitting process to include medium-size farmers.

"You want to be the Silicon Valley of cannabis?" asked Jeff Wilcox,
who is seeking a permit for a business park for medical marijuana
cultivation. "You've got to start now."