OAKLAND PUSHES LEGAL ENVELOPE WITH POT FACTORIES

IN JULY of 2009, Oakland became the first city in the U.S. to tax the
sale of medical marijuana.

Now, exactly a year later, the City Council has taken another major
step on the road toward outright legalization.

The council has voted to license four new industrial-sized marijuana
farms in the city. These so-called Walmarts of pot will be authorized
to grow and process marijuana to sell to the four city-approved
medical cannabis dispensaries.

The ordinance must be read at a meeting a second time before it
becomes law, which is expected Tuesday.

For the privilege of obtaining a coveted "Cannabis Cultivation,
Manufacturing and Processing Facility" permit, applicants will pay a
$5,000 fee. The winners will each pay $211,000 per year to the city,
which will be used to hire staff and develop a program to oversee the
cultivators.

Meanwhile, the council is considering a proposal to institute a 2.5
percent tax on medical marijuana dispensaries and as much as 8 percent
on pot growers. Should California voters approve Proposition 19, which
would allow marijuana consumption for recreational use, the city would
levy up to a 10 percent tax on recreational pot sellers.

City Council members Rebecca Kaplan and Larry Reid co-authored the
cultivation ordinance. Both have cast it as a public-safety measure.
Reid said the new regulations would ensure that medical marijuana
patients receive a high-quality product grown at a safe facility. That
the regulations would cut down on the increasing number of fires,
robberies and shootings that have been occurring at homes and
warehouses operated by small growers.

Kaplan echoed Reid's assertions and said the ordinance would provide
good-paying jobs and bring in revenue for public safety. The
at-large-councilwoman also authored the new tax proposal which the
council is scheduled to take up tonight.

Yet what city officials aren't saying is that moving ahead to license
large-scale production plants, coupled with a proposal to levy new pot
taxes, puts Oakland on shaky legal ground.

The fact is, the sale or use of marijuana for any purpose is still
illegal under federal law - regardless of California law allowing the
sale and use of marijuana for medicinal purposes.

Last year, U.S. Attorney General Eric Holder ordered the Drug
Enforcement Agency to halt the Bush administration's policy of raiding
state-sanctioned medical marijuana dispensaries.

Yet that could easily change should the feds perceive that Oakland is
attempting to legalize recreational marijuana use through the back
door.

Nancy Nadel, who voted against the cultivation ordinance, was the only
council member to raise the critical issue that it is illegal under
federal law.

She urged her fellow council members to hold off until after November
- - after California voters have decided Prop. 19. We think she was
right to do so.

Instead, council members insisted that Oakland had to "seize the
opportunity" to become the epicenter of the emerging medical cannabis
growing industry.

Oakland is certainly in dire financial straits. Yet do residents
really want their city to become the pot capital of the country?