OAKLAND PROCEEDING WITH CAUTION ON POT ORDINANCE

It seems that Oakland Mayor-elect Jean Quan and her virtual campaign
running mate, at-large Councilwoman Rebecca Kaplan, didn't want to
stand in front of the authorities on this one.

By a 7-1 vote, the Oakland City Council last week suspended its legal
marijuana farm ordinance because it's not as legal as it was billed to be.

The council, on the advice of legal counsel and a letter of caution
from the Alameda County district attorney's office, temporarily
withdrew a plan to allow large indoor pot farms in the city.

The issue became a hot potato for Oakland lawmakers when Proposition
19, a state initiative for recreational use by adults, was defeated
at the polls last month. And even though city officials said the new
ordinance wasn't contingent on the state ballot initiative, it turns
out they were dead wrong.

Oakland City Attorney John Russo issued a legal opinion saying the
plan violates the state's medical marijuana laws and could place
council members in legal jeopardy.

He advised the city to back off of the proposal because Prop. 215,
the state medical marijuana law, offers no legal protection from
prosecution by state or federal authorities.

"There's no authority in 215 to grow pot for profit," Russo told The
Chronicle last week.

Two weeks earlier, in an effort to illustrate the potential severity
of the problem, Alameda County District Attorney Nancy O'Malley used
the phrase "aid and abet or conspire" in a letter to Oakland officials.

Oakland policymakers' latest foray into the rapidly evolving world of
marijuana legislation was a disappointment only because it's one of
the few areas where the city has really shown leadership on a national scale.

In a state where medical marijuana dispensaries have cropped up in
cities faster than they can be identified or regulated, Oakland's
approach to the issue has been measured, restrained and smart.

The city has allowed only four permitted pot clubs to operate in the
city, and although that number will double next year, it's nowhere
near the unregulated growth seen in other large cities around the state.

The city has regulated the dispensaries and watched one of them,
Harborside Health Center, grow to become the largest facility of its
kind in the nation, and perhaps the world.

City officials are on the right track to zone and limit where such
operations can be established because, in Oakland - where the legal
pot clubs put up a combined $28 million in medical marijuana sales -
there are dozens of illegal pot farms operating that pose a potential
risk to neighbors.

In this case, Oakland city officials jumped the gun by approving pot
farms without limits on size or specific details about the legitimate
markets they intend to serve.

"No decisionmaker in Oakland should be surprised by the objections
raised in the D.A.'s letter," Russo said. "This has always been a
legally complex area, and you need to have a situation in which you
are at least abiding by state law. If you're just making up rules in
Oakland, it's not going to work."

He would not comment on his discussions with the council prior to the
July vote approving the new ordinance.

When you consider Russo's position as the only elected law
enforcement official in the state to endorse Prop. 19, his legal
analysis is not linked to a political position.

The message is clear: Oakland city officials need to proceed with
caution in the post-Prop. 19 era, which has prompted a response from
federal authorities.

In recent months, at least two Oakland medical marijuana dispensaries
have seen their bank accounts dropped by federally insured banks. One
of the institutions was Harborside, which reported $21 million in
revenue in 2009. Banks don't turn away those kinds of customers
without a real good reason.