Oakland’s Push for Industrial Pot

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Go ahead and have a chuckle that the first city poised to permit industrial marijuana production is in the Bay Area–home to Haight-Ashbury, Berkeley moonbats and bongs aplenty. But Oakland’s unprecedented plan is a creative proposal driven by economic and social need, not reefer-addled pols. It could help close the city’s yawning budget gap, corporatize marijuana production and bring a booming industry out of the shadows.

On Tuesday, Oakland’s City Council approved an ordinance would let companies compete for four licenses to operate large-scale grow operations, which would supply pot to medical marijuana dispensaries. (Medical marijuana has been legal in California since 1996, when voters passed Proposition 215. Last year Oakland’s dispensaries had $28 million in sales.) The initiative, which the city council passed by a 5-2 margin, aims to stem the surge of illegal grow operations and curtail pot-related crime. Others say it will position Oakland to capitalize if California voters approve Proposition 19, which would legalize recreational pot use, in November. “You want to be the Silicon Valley of cannabis?” one businessman who will vie for a license told The Bay Citizen. “If Oakland wants to do this, you’ve got to start, because other people are going to.”

The ordinance, which is up for a final vote on Tuesday, could net millions of dollars in taxes and hundreds of new jobs for Oakland, which is grappling with a $30 million budget shortfall. The licenses won’t come cheap. For the right to operate massive plots—one proposed farm envisioned a 100,000 sq. ft. facility—businesses would have to fork $211,000 for the annual permit and a $5,000 administration fee to cover expenses like background checks.

Not surprisingly, stalwarts among the city’s medical-marijuana community are opposed to the change. Smaller dispensaries would be supplanted by the equivalent of big-box retailers, and variety and quality could suffer. “It would be the difference between a fine wine from a Napa vineyard and a bottle of Mad Dog 20/20,” Steve DeAngelo, who runs the city’s largest dispensary, told a local news channel. A small-scale grower told the Mercury News: “Mega-growers will go for big, fast, cheap, so maybe it’s not the best strain for people and their particular illness.” It’s also unclear how the controversial proposal would square with state law.

Pot is big business, and economists like Harvard’s Jeffrey Miron have long touted the economic benefits of legalizing weed. Last year Oakland, home to a “university” that offers classes in cultivation, began charging a 1.8% tax on medical marijuana. Industrial grow operations would pay a tax that could climb as high as 12%. With local and state governments struggling mightily with sagging property values, anemic consumer spending and other economic woes, there’s no question that finding new revenue streams is important. This path may not be for everybody, but Oakland may be ready to pin its hopes to pot.