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New ordinance in Oakland would legalize big industrial pot farms

Flickr photo by Neeta Lind

The city of Oakland could become home to some of the world’s largest government-licensed marijuana-growing operations, with permits to distribute products around the state, according to a draft ordinance released yesterday.

The city’s public safety committee meets tonight to consider the plan to permit four industrial-scale, “medical cannabis” cultivation facilities.

The ordinance does not limit the size of the indoor operations, but says the council has received proposals ranging from 20,000 to 100,000 square feet. 

“The cultivation of medical cannabis in Oakland has not been regulated and occurs entirely in small-scale home operations or larger-scale illicit warehouses,” reads a report submitted to the committee by city council members Rebecca Kaplan and Larry Reid. “These unregulated operations have led to public safety hazards, including fires, burglaries and home invasions, health risks to patients, and related response costs to the city.”

But the plan doesn’t restrict operations to Oakland. “Responsible transfer permits” would allow registered dispensaries anywhere in the state to purchase medical marijuana from the city’s pot farms. “Sales would be subject to the recently approved sales tax on medical cannabis providing additional revenue for the city through sales taxes,” reads the report.

In addition to improving public safety, the report suggests the plan could help revive the city’s anemic finances, raising anywhere from $3 million to $38 million in permit fees and sales taxes. 

Experts say licensed marijuana-growing operations of this size and purpose do not exist anywhere in the world. Even the pot-friendly Netherlands only legally permits small-scale marijuana cultivation for distribution to consumers.

“I am not aware of any indoor-growing facility of that size or one whose product is meant to be consumed,”  said Jonathan Caulkins, a Carnegie Mellon professor who co-authored a recent RAND Corporation study on marijuana in California.

Dale Gieringer, who heads the California branch of the National Organization for the Reform of Marijuana Laws, said he could think of only a few government-sanctioned, outdoor pot farms that were larger than the indoor facilities being considered for Oakland.

“This is a very big deal,” he said.

The plan is raising a few eyebrows, even among legalization advocates like Gieringer. He said the ordinance envisions a “monopoly” for marijuana growers while also maintaining a virtual stranglehold on distribution (the plan would increase the number of legal dispensaries in Oakland from four to six).

“There are certainly more than four brands of wine and beer in Oakland and there are certainly more than four brands of cannabis,” Gieringer said.

But the supporters predict the plan would lead to lower prices and help wipe out illegal growing operations.

“Permitting larger-scale cultivation will allow for lower production costs per pound by creating economies of scale,” reads the committee report. “Lower production costs will allow regulated cultivation facilities to undercut wholesale prices of cannabis grown in unregulated operations.” Still, the report estimates dispensaries will continue to purchase at least 20 percent of their product from boutique growers who cultivate within a 96-square-foot legal limit.

Berkeley’s City Council is also considering industrial-scale marijuana cultivation and Mendocino recently passed regulations allowing outdoor pot farms to expand capacity to 99 plants per land parcel.

It’s leading some observers to wonder whether the battle for the statewide medical marijuana market – and accompanying tax dollars – is intensifying among local governments, well in advance of the vote this fall to legalize marijuana use in California.

Of course, much depends on the actions (or inactions) of the federal government. The feds still classify pot as a schedule one narcotic and DEA agents continue to raid some farms that claim to be operating within the state’s medical marijuana laws.

KQED's Forum program devoted an hour today to the Oakland ordinance.

Filed under: Public Safety, Daily Report

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