Politics, Profits Dividing Medical Cannabis Providers in Oakland

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A popular dispensary owner has found himself at odds with his long-time peers, city officials and former business associates at a time when Oakland has made an historic move to allow the country's first large-scale commercial medical cannabis cultivation farms.

Oakland wants to license four football-field sized indoor grows by January, 2011, and supply up to one-fifth of the state's medicinal pot, taxing the product to net tens of millions of dollars per year. A final reading of the proposed ordinance is scheduled for Tuesday, July 27.

But the cultivation permitting regime has illuminated stark rifts in Oakland's medical cannabis community, which outsiders think to be cohesive. Leading dispensary Harborside Health Center and owner Stephen DeAngelo spoke against the cultivation ordinance, alongside fellow Oakland dispensary the Purple Heart Patient Center. On the other side: Oaksterdam owner Richard Lee whose businesses include the Coffeshop Blue Sky dispensary, as well as other growers, and local landowner Jeff Wilcox — a former business associate of DeAngelo and Harborside's neighbor.

DeAngelo spoke on behalf of perhaps 250 local growers who supply Harborside and feel threatened by the rules, which would initially push growers into two camps: those under 96 square-feet that will not require a permit, and large football field-sized facilities which will need a permit.

DeAngelo said the Bay Area medical cannabis community is united on a fundamental level, and these skirmishes are limited to the shape of business to come.

“I think that the medical cannabis community is united on all of our core issues. Now the question is no longer, 'Is cannabis going to be legal?' It's changed to, 'How is cannabis going to be legal?'”

The differences can be wide. As traditional market forces begin to exert themselves on the once-marginalized illicit drug, a spectrum of reformers has emerged, from pragmatic capitalists on one end, to idealistic, longtime radicals on another. This spread is evident in the once-close relationship between Wilcox and DeAngelo who are now estranged. The two worked together for months devising a plan for large commercial grows in Oakland, but had a falling out over control of the facility and have begun airing their differences in public.

Harborside Health Center has possibly the biggest pot club on the West Coast and wants to get into the cultivation side of the industry, but lacks the space on-site at its waterfront location. Wilcox has acres and acres of light industrial-zoned land near Harborside and wants to get into growing legal medical cannabis.

DeAngelo says he can't say for sure why the two parted ways late last year. Wilcox has said that DeAngelo wanted too much control over the enterprise, while he wants to allow multitudes to come in and work his space for a fee.

“I was like no, no, no this is a regional thing,” Wilcox says.

DeAngelo's push for control of cultivation at Wilcox's site came from two assumptions which are now to be issues of debate. The first one was that state law requires grows to be associated with specific patients in collectives or cooperatives.

Simply put, growers need to be able to produce a patient list to justify their grows under Prop 215 and SB 420. Some enforcement in California is so strict, growers put individual labels on each plant stating who the plant is being grown for. Harborside has such a patient list, but Wilcox might not need it after all.

Oakland has taken state law and interpreted it quite liberally over the years, DeAngelo says. Permitting big grows without the legal paperwork proving who the plants are for would be a cutting-edge interpretation of state law. Some experts, including Dale Gieringer at NORML, say Oakland would violate both federal and state law at that point, thereby inviting a DEA raid. Similar raids of permitted city grows in Mendocino have already occurred.

“It's absolutely critical we be in strict compliance with state law. Cultivation on this magnitude is a huge challenge to the DEA. They will be all over this, looking at it very closely and if they can justify a departure from Obama's policy they will go after Oakland,” DeAngelo says.

DeAngelo's second assumption: that the city would allow dispensaries to get large-scale cultivation permits. But that is now unclear. Currently, dispensaries have a permit to cultivate on-site, but none have the space to do so.

Councilmember Larry Reid, a principle architect of the cultivation ordinance, has adamantly stated no dispensaries shall get cultivation permits, claiming he wants to prevent a “monopoly” on the industry. Other councilmember have disagreed with Reid.

“I can't imagine what justification there could possibly be for prohibiting a non-profit organization of patients for getting a cultivation permit,” DeAngelo says.

Council consensus on dispensaries getting cultivating permits remains unclear; as well as exactly how or if the city will justify large-scale cultivation under state law. The city might choose to deal with both issues and many, many others through administrative regulations developed in the months ahead.

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