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Large-scale licensing worries California marijuana growers

By Lisa Leff
Associated Press / July 19, 2010

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OAKLAND, Calif. — After weathering the fear of federal prosecution and competition from drug cartels, California’s medical marijuana growers see a new threat to their tenuous existence: the “Wal-Marting’’ of weed.

The City Council tomorrow will look at licensing four production plants where pot would be grown, packaged, and processed into items ranging from baked goods to body oil. Winning applicants would have to pay $211,000 in annual permit fees, carry $2 million worth of liability insurance and be prepared to devote up to 8 percent of gross sales to taxes.

The move, and fledgling efforts in other California cities to sanction cannabis cultivation for the first time, has some marijuana advocates worried that regulations intended to bring order to the outlaw industry and new revenues to cash-strapped local governments could drive “mom and pop’’ growers out of business.

These advocates complain that industrial-scale gardens would harm the environment, reduce quality and leave consumers with fewer strains from which to choose.

“Nobody wants to see the McDonald’s-ization of cannabis,’’ Dan Scully, one of the 400 “patient-growers’’ who supply Oakland’s largest retail medical marijuana dispensary, Harborside Health Center, grumbled after a City Council committee gave the blueprint preliminary approval last week. “I would compare it to how a small business feels about shutting down its business and going to work at Wal-Mart.’’

The proposal’s supporters, including entrepreneurs more disposed to neckties than tie-dye, counter that unregulated growers working in covert warehouses or houses are tax scofflaws more likely to wreak environmental havoc, be motivated purely by profit and produce inferior products.

“The large-scale grow facilities that are being proposed with this ordinance will create hundreds of jobs for the city,’’ said Ryan Indigo Warman, who teaches pot-growing techniques at iGrow, a hydroponics store whose owners plan to apply for one of the four permits. “The ordinance is good for Oakland, and anyone who says otherwise is only protecting their own interests.’’

Council members Rebecca Kaplan and Larry Reid, who introduced the plan, have pitched it largely as a public safety measure.

The Oakland Fire Department blames a dramatic rise in the number of electrical fires between 2006 and 2009 in part to marijuana being grown indoors with improperly wired fans and lights. The police department says eight robberies, seven burglaries and two murders have been linked to marijuana grows in the last two years.

Reid and Kaplan also are open about their desire to have the city, which last week laid off 80 police officers to save money, cash in on the medical marijuana industry it has allowed to thrive.

Oakland’s four retail marijuana stores did $28 million in business last year, and if sales remain constant, the city would get $1.5 million this year from a dispensary business tax that voters adopted last summer.

A similar tax on wholesale pot sales from the permitted grow sites to the dispensaries would bring in more than twice that amount, the city administrator’s office has estimated.

“Allowing medical cannabis and medical cannabis products to be produced in a responsible, aboveboard and legitimate way will be a benefit to the patients, to the workers and to the people of Oakland,’’ Kaplan said.