OAKLAND SUSPENDS LARGE-SCALE POT-GROWING PLAN

The Oakland, Calif., city council voted to suspend a plan to allow
the creation of four large-scale marijuana-growing facilities, in the
latest setback for California's burgeoning marijuana movement.

Tuesday night's vote follows warnings from the Obama administration
and a local district attorney that the facilities, which would be
built and operated as private ventures, could violate federal and state laws.

California law allows marijuana to be used for medicinal purposes.
Federal law prohibits any use of pot, though the Obama administration
has indicated it will largely allow states to enforce their own
medical-marijuana laws.

City council members will ask city lawyers to recommend changes to
the plan and will discuss potential amendments on Feb. 1, said the
office of Oakland councilwoman Rebecca Kaplan.

"We want to make sure that the city and our medical cannabis
facilities are in as strong of a position as possible," Ms. Kaplan
said in a statement.

The Oakland vote follows the defeat in November of California's
Proposition 19, which would have legalized marijuana in the nation's
most-populous state.

It is also a turnabout for Oakland, which has become known for its
marijuana-friendly attitudes. The city has licensed pot dispensaries,
and its voters have approved marijuana-specific taxes.It is also home
to Oaksterdam University, a private venture that trains people to be
cannabis entrepreneurs. But the city's marijuana laws have come under
more scrutiny from law-enforcement officials.

During the fall, federal officials from Washington and the San
Francisco Bay area met with Oakland City Attorney John Russo and
"expressed concerns that the path Oakland was taking was in violation
with the law," said Alex Katz, a spokesman for the city attorney. Mr.
Katz said he couldn't elaborate on the discussions.

Earlier this month, Alameda County District Attorney Nancy O'Malley
wrote Oakland Mayor-elect Jean Quan-the city is in Alameda County-
warning that the planned growing facilities could violate state law.
which requires marijuana-cultivating facilities to be not-for-profit.
The letter said marijuana growers relying on the wording of the
Oakland proposal could violate that part of the state law.

Ms. O'Malley also suggested that city-council members and other city
workers could face criminal charges for moving ahead with the facilities.

The city council in July approved the ordinance to allow
industrial-scale growing operations in the city of 400,000. One
person planning to apply for a permit to build such an operation was
Derek Peterson, a former Morgan Stanley investment banker and a
founder of the marijuana company Gropech.

He said he hoped to obtain a permit so Gropech could build a
50,000-square-foot facility with 40,000 plants, which could generate
as much a $40 million a year.Mr. Peterson said he fears that the city
council will severely limit the size of the growing facilities.
Still, he plans to apply for a permit after the city council revises
the plan, even if it means his facility won't be as large as he
originally wanted it to be. "In this environment, it's a like an
emerging market, so you've got to stay fluid," Mr. Peterson said.

The delay in implementing the marijuana-cultivating ordinance could
also hurt Oakland's bottom line. Last month, voters approved a 5% tax
on marijuana sales.