OAKLAND POISED TO CASH IN ON MEDICAL MARIJUANA BOOM

OAKLAND - Oakland is ready to cash in on the medical marijuana boom -
and perhaps recreational pot use - now that the City Council agreed to
license and tax four industrial-sized marijuana farms and promised to
review policies that exclude small and medium-size farmers who grow
the marijuana sold at the city's four dispensaries.

Hundreds of small growers and collectives complained that the new
ordinance could drive them out of business, despite having risked
arrest to supply $28 million worth of medical marijuana sold at
dispensaries last year.

The city intends to crack down on growers who are not permitted or
exceed the growing guidelines established for patients and caregivers,
but agreed to delay enforcement until the large cultivation,
manufacturing and processing permits are issued in January.

The delay gives city staff members time to develop a point system for
evaluating the applications and return to the council with
recommendations for ensuring the licensed growers will follow fair
labor and local hiring policies as well as sound environmental practices.

It will also allow time for the public safety committee in the fall to
figure out how or if independent small and medium-size growers should
be regulated and taxed.

Oakland Councilmember Rebecca Kaplan, who co-authored the cultivation
ordinance with Councilmember Larry Reid, assured the small farmers
that the city would work on creating permits for medium-size
facilities, and reassured medical-marijuana patients that licensing
large farms does not prevent them from growing their own plants or
selling to dispensaries as long as they are within the city's guidelines.

"We are at a time when medical cannabis is a growing and emerging
industry," she said. "There is a growing demand to have permitted
facilities, not just (to reduce) danger, but to provide good products,
good paying jobs and to provide revenue for public safety."

Councilmember Nancy Nadel voted no and Councilmembers Jean Quan and
Jane Brunner abstained. They supported the regulation but had
questions about the criteria for selection, local hiring,
environmental issues and the amount of tax revenue the cultivation
operations would generate. Nadel wanted to delay a vote until the
small and medium-size growers could be included.

The city will issue a request for proposals for four Cannabis
Cultivation, Manufacturing and Processing Facility permits. Several
people have expressed interest, among them Dhar Mann, a founder of
iGrow, a hydroponic superstore in East Oakland, and Jeff Wilcox, a
businessman who owns several acres of light industrial land along the
Embarcadero.

Each applicant must pay a $5,000 fee to cover administrative costs for
background checks and to review business and site plans.

Once selected, the four permitted cultivation businesses will be
charged an annual $211,000 regulatory fee that will be used to hire
staff members and develop and sustain a program to oversee the
cultivators, similar to the team that oversees compliance and
complaints about the city's liquor establishments.

The permitted facilities must be in industrially zoned areas of the
city and meet all relevant building and fire codes, hire security
guards and maintain security cameras, and carry sufficient liability
insurance.

"(Passing this resolution) will actually decrease public safety," said
Dan Grace, a small grower with five employees. "It will create an
environment where small growers will have to go back underground,
where they will not be able to get electrical permits. We actually do
our best to be above board and follow safety regulations."

Steve DeAngelo, executive director of the Harborside Health Center
dispensary, said he supports the licensing and regulation of the
industry, but he wants to make sure that the more than 500 small and
medium-sized growers who supply his business are included.

"They are not miscreants. "... These courageous growers have taken
serious risks to provide medical marijuana to those who need it. Let's
create a system that legitimizes all growers," he said.

Reid, co-author of the cultivation ordinance, said the new regulations
would ensure that patients receive a high-quality product grown at a
safe, regulated facility. He said the regulation is also needed to cut
down on the numbers of fires, robberies and shooting crimes that are
rampant among bootleg growers who take over homes in residential areas
or in small warehouses.

He said there is nothing to prevent the small growers or collectives
from banding together to apply for one of the four cultivation permits.

James Anthony, attorney for Harborside, said that's exactly what they
intend to do. He said the permit application would include existing
individual and small collective cultivators. Anthony also said he was
hopeful that the council would take action to include the small
cultivators in the fall.