Oakland Tries Smaller, Closed-Loop Pot Farm Permits


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Oakland's pot farm permitting process is back again.

Today at 5:30 p.m. at Oakland City Hall, the Oakland City Council's Public Safety Committee plans to conduct a public hearing and vote on a proposal that would double the number of dispensaries from four to eight, as well as amend Oakland's embattled cultivation ordinance to make it compliant with state law.

Under the cultivation amendments, each permitted farm must be in a “closed loop,” growing medical cannabis for a specific dispensary. Farms must not exceed 25,000 square-feet per location, and grow no more than six mature plants per patient in the collective.

A medical marijuana bud flowers in an indoor grow room.
  • David Downs
  • A medical marijuana bud flowers in an indoor grow room.

The amendments are based on advice from attorneys at law firm Meyers Nave. Council brought in the firm this year to offer advice after Oakland's City Attorney John Russo refused to help the council — citing the illegality of their original plan.

That 2010 plan — which included 100,000 square-foot, independent farms with no grow caps — drew rebuke from U.S. Attorney Melinda Haag, and Alameda County District Attorney Nancy O'Malley.

The rebukes indicated Oakland's original plan was not legal under state law, let alone federal law, and the Oakland City Council could be arrested, jailed, prosecuted and imprisoned. Their homes could be seized by the D.E.A.

Even if the new amendment aligns the city plans with state law, they'll be taking a risk, as are all medical marijuana users, growers, and collectives. On June 29, U.S. Department of Justice Deputy Attorney General James M. Cole sent out a memo [.PDF] to federal prosecutors clarifying that state law will not shield those “facilitating ... multiple, large-scale, privately-operated industrial marijuana cultivation centers ... [with] revenue projections of millions of dollars”.

Smoking pot, as well as selling, trafficking or growing it remains a federal crime under the Controlled Substances Act. Oakland city staff states in their report, “Medical marijuana collectives proceed at their own risk.”

By permitting industrial cultivation, the city hopes to ameliorate some of the nuisances caused by rampant indoor cultivation, staff states. Some indoor weed gardens have ruined housing, and they attract would-be robbers. The Oakland Fire Department responds to about one fire with a pot farm on site per month.

Separately, staff states that increasing the number of dispensaries to eight prevents market domination and adds dispensary diversity. Oakland has about 390,000 people in it and three operating storefront collectives. By contrast, San Francisco, has population of about 800,000 and 29 dispensaries. Oakland's dispensaries — which must operate as not for profit collectives or cooperatives — brought in $28 million in sales in 2010. Sales increased 40 percent from 2008 to 2009.

Collectives of three or less people needn't apply for a dispensary or cultivation permit, under the ordinance.

Each dispensary may have eight ounces of dried cured cannabis per patient as well as six mature plants and 12 immature plants per patients.

License fees run $5,000 per application, $60,000 for a dispensary permit, and $211,000 for a cultivation permit.

If the Public Safety Committee passes the amendments, they usually go to the full City Council. Staff estimates about 200 groups might apply for the dispensary and growing permits.
Here is the full agenda [.PDF], and the staff report [.PDF].