OAKLAND PUTS PLAN FOR POT FARMS ON HOLD

Council Suspends Its Proposal for Four Large Operations After D.A.'S
Warning on Liability.

California's most cannabis-friendly city has temporarily suspended a
plan to permit and tax four large marijuana-growing facilities
because of ongoing legal concerns.

The Oakland City Council voted 7 to 1 this week to send the measure
back to legal staff for reworking after the city received a letter
from the Alameda County district attorney. The letter suggested not
only that the city's plan may violate the law, but also that elected
officials could be legally liable.

"It remains an open question whether public officers or public
employees who aid and abet or conspire to violate state or federal
laws in furtherance of a city ordinance, are exempt from criminal
liability," Dist. Atty. Nancy O'Malley wrote in a letter earlier this
month to Oakland's mayor-elect, Jean Quan.

Federal law prohibits any use of pot, though the Obama administration
has indicated it will largely allow states to enforce their own
medical marijuana measures. California's pot laws call for a closed
loop between cultivators and patients, but federal officials met with
Oakland City Atty. John Russo this fall to warn that the large-scale
pot farms were probably out of those bounds.

Russo also provided his own memo to the council before approving its
plan advising that it may run afoul of state law. The failure of
Proposition 19, the marijuana legalization measure on last month's
state ballot, has also muddied the waters.

"If Prop. 19 had passed, the legality of this would have been a lot
clearer," said Dale Gieringer, longtime head of California NORML,
which backs legalization. "There was a lot of enthusiasm: 'Let's get
Oakland ahead of the curve on this because if Prop. 19 passes we are
right there ready to go.' "

Under the Oakland law, operators would pay an annual fee of $211,000
to help fund a city enforcement staff. That cost effectively ensured
massive-scale operations likely to provide enough marijuana to
sustain the entire Bay Area medicinal industry, Gieringer said.
Oakland alone has $28 million in sales a year. One prospective
applicant proposed a 10,000-square-foot kitchen and two football
fields' worth of grow space that would produce about 58 pounds of
marijuana every day, many times the amount now sold in Oakland.

Under state law, Gieringer said, collective or cooperative growing
organizations providing marijuana to members are legal, but these
growers would be supplying multiple dispensaries. A Berkeley
ordinance passed by 82% of voters last month, in contrast, authorizes
and taxes cultivators on a much smaller scale so the link to users
could be maintained.

O'Malley focused in her letter on the narrow legal definition of
"primary caregivers," who she notes are allowed to cultivate for
patients under California law if they have "consistently assumed
responsibility for the housing, health or safety of that person." But
Gieringer said growers providing marijuana to a larger number of
individuals do not tend to rely on that defense, turning instead to
the provisions on collective cultivation.

O'Malley, who stressed that she was not making a determination on the
measure's legality, was pointed in her warning.

"Notwithstanding pronouncements by city officials or the enactment of
the ordinance, the prosecuting agency in Alameda County is not
providing any assurances that activities authorized by the ordinance,
but not authorized under state or federal law, are permissible," she wrote.

Oakland has led the state in efforts to regulate and tax cannabis
operations in the medical marijuana era. Unlike Los Angeles and San
Diego counties' district attorneys, who take a narrow view of the
law, both Russo and O'Malley have been supportive. O'Malley, a cancer
survivor, said in her letter that her office has always "taken a very
reasonable approach to enforcement of the marijuana laws" in light of
the state laws governing medicinal cannabis.

But the plan to endorse four gigantic grow operations had sparked
broad controversy by freezing out hundreds of small-scale growers who
have been providing gourmet bud to city dispensaries. Many lobbied
against the measure.

Councilwoman Rebecca Kaplan, the measure's main proponent, said in a
statement that she was optimistic that a workable compromise could be
reached. The council will discuss proposed amendments to the law on
Feb. 1. The council could have shelved the ordinance permanently but
instead voted on a motion by Kaplan and another councilwoman to amend it.

"We're poised to come back early next year with an amended system of
responsible regulation," Kaplan said.