OAKLAND DISPENSARY A MAJOR FORCE IN MEDICAL POT

Cementing its position as a cannabis capital, Oakland has moved
rapidly in recent weeks toward a world of legalized pot, developing
permits for what would be some of the largest sanctioned marijuana
farms in the world and writing ballot measures that would create a
bevy of cannabis taxes.

But at every step, notable opposition came from one group: Harborside
Health Center, believed to be the world's largest medical marijuana dispensary.

Harborside says it was fighting for the product's integrity,
preserving the vision of state voters when they legalized pot as
medicine in 1996. But some saw it as simply a business move for a
dispensary that's become a colossus in an industry that hasn't
totally moved out of the black market.

"Really, they're just wanting to protect their market share," said
Indigo Moonstar, 28, who said he operates a small marijuana grow
facility in Oakland and has criticized Harborside at City Council
meetings. "They've had a corner on the market."

Marijuana might be mainstream, and its recreational use might become
legal in California if voters pass Proposition 19 in the November
election. But the profound changes also raise complex issues that
industries of the purely legal kind have long wrestled with and
complained about: the burdens of taxation, regulation and competition.

If recent Oakland City Council meetings about marijuana were any
indication, not everyone is ready for the government to move in.

Harborside unsuccessfully lobbied against the council's November
ballot measure to increase the city's existing 1.8 percent tax on pot
dispensaries' gross sales to 5 percent. They said the higher
operating cost would drive patients to neighboring cities with lower
or no taxes.

Harborside also lost its fight against industrial farms, in which it
said inevitable corporate ownership and profit-seeking would
deteriorate the quality of the medicine.

Harborside's activism is applied to a hodgepodge of pot laws. While
federal law bans all marijuana use, state law allows dispensaries to
sell to patients who have doctors' recommendations. Large-scale
growing is largely illicit, a gap the Oakland City Council last month
sought to close by developing regulations and licensing.

At the center of it all is Harborside's leader, Stephen DeAngelo, who
wants full legalization but is wary of government overreaching. He
said the recent political battles are about more than just Oakland.

"What we've seen is that Oakland is the leader in cannabis
regulation," said DeAngelo. "Once Oakland takes a step, typically
it's followed by other cities across the state."

$21 Million in Sales

Harborside might be the world's biggest dispensary, but its central
Oakland building has no storefront sign. It doesn't need one.

The 4-year-old dispensary has 54,000 members, 800 of whom come every
day. It took in $21 million in sales last year - triple what
Oakland's three other dispensaries generated combined. It buys from
roughly 500 marijuana growers - rejecting 4,500 other farmers annually.

Its network of growers and patients depends on it, giving Harborside
unique clout, from seed to sale.

DeAngelo says his dispensary has thrived because of quality. He
prides himself on the knowledge of his staff, cleanliness, strict
security and natural light in every room. Concerned that patients
couldn't know for sure the purity or potency of their pot, Harborside
says it was the first in the state to give patients independent lab
tests on their products.

DeAngelo says Harborside operates like a nonprofit. Employees get at
least $14 an hour plus health benefits, a 401k plan and a free gram
of pot per shift.

Roughly 5 percent of Harborside's revenues are "given back" to the
community through services it provides for free, DeAngelo said. That
includes things like naturopathy, Reiki and acupuncture. Those who
are poor, or perform marijuana activism, can get free pot.

Success and Skepticism

Critics don't dispute Harborside's good work or the quality standards
it has set. They just question its control of the market.

When Harborside claimed that Oakland's proposed cannabis taxes would
hamstring the local pot industry, council members asked for
Harborside executives' salaries. They refused, though actual
nonprofits are required to disclose.

In the past, Harborside fought increasing the number of dispensaries
in Oakland, which has just four. More recently, the dispensary said
industrial farms would squeeze out small growers - it enlisted its
small army of growers to lobby the council.

Some saw hypocrisy in a dispensary giant that fought to expand
competition now saying it is the voice of small farmers against big ones.

"They're totally two-faced on this," said Richard Lee, founder of
Oaksterdam University and the key backer of Proposition 19, which
would legalize recreational use of marijuana in California.

"For the last four years, it's just fine to have the world's biggest
dispensary," said Lee, who owns a dispensary, Coffeeshop Blue Sky.
"Now, when (large-scale farming) comes up, all the arguments against
it apply to them."

A True Believer

DeAngelo said his dispensary fought industrial farms because small
growers were "the heart" of Harborside, which now plans to apply for
an industrial permit by pairing with those small growers. Some
accusations, he said, are born of jealousy.

"You always hear from people who haven't been able to replicate your
success," he said.

DeAngelo is a true believer in medical marijuana - viewing it as
entirely distinct from recreational use. He estimates that only 10 to
15 percent of the population might be into the drug for fun.

"Everybody gets sick at some point in time," DeAngelo said,
explaining why he believes in full legalization. "It's destined to be
a household remedy."

He says the fights at the council were critical for the emergent industry.

"Society has a chance to get it right this time," he said. "We didn't
get it right with tobacco. We didn't get it right with alcohol. We
put those potentially dangerous substances in the hands of
corporations who had no interest other than making as much money as possible.

"Do we want those kinds of companies getting their hands on cannabis?"