Oakland City Council voted Tuesday to license up to four large-scale marijuana farms in industrial areas to supply the city"s four medical marijuana dispensaries, and promised to later review policies that could include smaller and medium-size farmers.
The city will not enforce the new ordinance until the cultivation permits are issued in January. The ordinance will get a second reading on Tuesday.
James Anthony, attorney for Harborside Health Center, said that the dispensary would apply for one of the permits and the applications would include existing individual and small collective cultivators. Anthony said he was hopeful that the council would take action to include the small cultivators in the fall.
The action came after critics, many of them small growers or patient collectives who said they risked arrest to supply much of the $28 million worth of product sold at the dispensaries last year, complained that the new cultivation ordinance will put them out of business in favor of big-box, big-money growers with deep pockets and political connections.
Critics, many of them small growers or patient collectives who said they risked arrest to supply much of the $28 million worth of product sold at dispensaries last year, complained that the new cultivation ordinance will put them out of business in favor of big-box, big-money growers with deep pockets and political connections.
They also fear that the new commercial growers will flood the market with inexpensive, fast-growing strains, thereby diminishing the quality and variety of medicine available for patients.
"Mega-growers will go for big, fast, cheap, so maybe it's not the best strain for people and their particular illness," said Terryn Buxton, 35, a small-scale patient-farmer who grows about 4-5 pounds of medicinal marijuana every couple of months. He provides that to Harborside Health Center dispensary at about $3,500 to $3,800 per pound. "There is a need for a wide variety of medicine out there."
Buxton invested about $9,000 to outfit his small grow room with lights, fans, temperature and humidity gauges and new wiring. His utility bill this month is $1,700, and he said he never gets a day off because his plants would die without constant attention and nurturing.
"People have a rosy idea out there that a bunch of growers are making a whole bunch of money, but that's not true," he said as he sprayed each leaf in his new crop with a natural soapy bug spray to kill mites.
Council member Larry Reid, co-author of the cultivation ordinance, said the new regulations would ensure that patients receive a high-quality product grown at a safe, regulated, facility. He said the regulation is also needed to cut down on the numbers of fires, robberies and shooting crimes that are rampant among bootleg growers who take over homes in residential areas or in small warehouses, without any regard for the safety of their neighbors.
He said there is nothing to prevent the small growers or collectives from banding together to apply for one of the four cultivation permits, but he thinks they would rather keep doing things the way they want, without regulations to cut into their profits.
"I disagree with these folks that say it will be like McDonald's," Reid said. "If I was a patient, I would want to make sure that the medicine I buy and consume was grown in a safe environment. These folks that are out there growing on their own, you don't know what you are getting. That's why we will have some sort of product testing."
Councilmember Nancy Nadel voted no and Council members Jean Quan and Jane Brunner abstained. They all supported the idea but wanted assurances that there would be environmental or fair labor policies.
Now that the ordinance has been approved, the city will put out a request for proposals for four Cannabis Cultivation, Manufacturing and Processing Facility permits. Several people have expressed interest, among them Dhar Mann, a founder of iGrow, a hydroponic superstore in East Oakland, and Jeff Wilcox, a businessman who owns several acres of light industrial land along the Embarcadero. Each applicant must pony up a $5,000 fee to cover administrative costs for background checks and to review business plans and site plans.
In addition to the application fee, newly permitted cultivation businesses must pay an annual $211,000 regulatory fee that will be used to hire staff and develop and sustain a program to oversee the cultivators, similar to the team that oversees compliance and complaints about the city"s liquor establishments.
The permitted facilities must be located in industrially zoned areas of the city and meet all relevant building and fire codes, hire security guards and maintain security cameras, and carry sufficient liability insurance.
The Public Safety Committee two weeks ago agreed to review the issue this fall, but many speakers urged the council to delay approval of the cultivation ordinance until the small growers can be included in the equation.
"(Passing this resolution) will actually decrease public safety," said Dan Grace, a small grower with five employees. "It will create an environment where small growers will have to go back underground, where they will not be able to get electrical permits. "... We actually do our best to be above board and follow safety regulations. "...
"Regardless of how the City Council votes on this issue (the dispensary owners and newly licensed large-scale cultivators) will be sitting pretty. It's us medium-sized growers who are going to be affected by this, and have to worry about how we are going to put food on the table."
But Amy Peterson, a supporter of the ordinance, said that she didn't see any corporate interests in the room.
"I don't see ConAgra here or Walmart here. This is a lot of individuals who have a lot of great ideas; entrepreneurs who want to create jobs," she said. "There are a lot of people here who have a lot of need and this will solve a lot of problems."
Oakland's four dispensaries sold about 6,000 pounds of medical marijuana and grossed about $28 million in sales last year, taxed by the city at the rate of $1.8 percent, a rate that the council plans to increase to 8, 10 or 12 percent. The new cultivation operations will also pay the tax.
Anthony said the new proposed tax rates are out of scale with the rates proposed by other cities such as Berkeley, Sacramento and Long Beach. He said the tax hikes proposed by Oakland will "destroy Oakland's cannabis industry."