OAKLAND TO REGULATE MEDICAL MARIJUANA FARMS

Even in the wake of state voters' rejection of a measure to allow the
recreational use and taxation of marijuana, Oakland is pushing ahead
with plans for taking the industry out of the black market.

The City Council ratified an application process Tuesday night for
large-scale marijuana farms that would be the first in the nation to
be government-sanctioned. Council members also approved a separate
measure doubling the number of allowable medical marijuana
dispensaries in Oakland, to eight.

Even though the sale of medical marijuana is authorized by state and
local regulations, pot farming has largely operated in the shadows.
Oakland wants to change that, and is planning to do so on a grand scale.

"Oakland is a leader in this industry, and I'm hoping that this will
continue to grow," Councilman Larry Reid said.

The regulations approved by the council will require applicants for
four city farming licenses to undergo extensive financial background
checks, provide security and be well-backed financially.

The council also is requiring that applicants pay the city back taxes
for marijuana they have sold to dispensaries over the years, along
with interest and penalties.

Councilwoman Desley Brooks said that was only fair to newcomers to
the business.

The playing field "is not level if you allow people to thumb their
noses at our law to have the same advantage as those who waited
patiently," Brooks said. "There is an attitude in this city that you
can do whatever you want to whenever you want to and that it's OK.

"They owe us back taxes."

No Taxes So Far

Stephen DeAngelo, co-founder and executive director of the Harborside
Health Center dispensary, said he knew of two marijuana farms in
Oakland that had "tens of thousands of square feet" of growing space.
He said those farms, as far as he knew, haven't paid taxes.

Much of the marijuana now sold to dispensaries is grown by small-time
operators using their homes for crop space. But that has caused
problems in Oakland and beyond, such as electrical fires and break-ins.

Cutting Dangers

By sanctioning large farms that have to obtain city permits and
provide security, city officials believe they can avoid such problems.

The federal government still looks upon medical-marijuana farming as
a crime. Officials had no immediate reaction to Oakland's proposed
city-sanctioned farms, in part because they exist only on paper so far.

Ada Chan, a policy analyst for Councilwoman Rebecca Kaplan, said
federal prosecutors had contacted Kaplan's office to talk about the
proposed regulations. But Chan said they were not clear if there were concerns.

The state's reaction is also unknown. Cannabis advocates fear the
attitude may be negative if Republican Steve Cooley prevails in his
too-close-to-call race for attorney general with Democrat Kamala Harris.

"I'm just concerned that one of the people who would get those four
large permits may end up being targets," DeAngelo said.

Some at the council meeting had other concerns.

Liana Held, a bookkeeper for dispensaries and growers, noted that the
city regulations would restrict the amount of cash that medical
marijuana outlets can have on hand. The problem, she said, is that
the cannabis industry is largely a cash business.

Making Adjustments

But Chan said such changes are part of becoming an above-board business.

"If you want to come into the light, all of that is part of this," Chan said.