California city gives final approval to pot factories

Jul 28, 2010, 1:37 GMT

San Francisco - The city of Oakland, just east of San Francisco, gave final approval Tuesday to the establishment of four massive pot cultivation facilities.

The move makes Oakland the first city in the US to approve gigantic industrial-sized marijuana factories and comes just months ahead of a statewide vote in November to legalize the popular drug for recreational use throughout California.

The controversial plan was passed Tuesday by the city council, which also plans to ask residents to approve a 5-per-cent sales tax on medical marijuana to help the cash-strapped city balance its books.

Under the terms of the new regulation, the four factories would each have to pay an annual fee of 211,000 dollars to support a team of city supervisors. They would also have to post at least 2 million dollars in liability insurance and pay a tax on all their sales. The factories would need to meet guidelines for reducing energy use, greenhouse gas emissions and pesticide use in order to obtain the permits.

Investors from across the country are expected to flood Oakland with applications for the four permits, which even with the taxes and levies are still likely to make millions of dollars in profit every year.

Agramed, a firm that pushed for the measure, plans to set up a growing operation the size of two football fields in empty industrial buildings using artificial lights. It estimates that it would hire almost 400 workers and pay at least 1.5 million dollars a year in taxes as it produces every day more than 26 kilograms of high-grade pot - valued at more than 100,000 dollars per day at current dispensary prices.

Current California law allows individuals to grow and use medical marijuana, for which they need a doctor's prescription. But all use of marijuana remains illegal under federal law, and agents of the US Drug Enforcement Agency could raid the high-tech new weed factories approved by Oakland, arresting the owners and workers and confiscating the produce.

'We want to see what the federal reception is,' said Derek Peterson, a co-founder of iGrow. 'Wholesale cultivation has been a don't-ask, don't-tell business.'

Polls show that the electorate is split over the November ballot initiative to legalize marijuana in California - and it is unclear what stance federal authorities would take if the measure were to be approved.

Paradoxically, it is the small growers who have been supplying the market for years who are among the staunchest opponents to the Oakland plan and to the November legalization initiative. They fear it would drive down prices and force them out of business.

'These growers are not anonymous miscreants burning down houses and bringing crime to neighbourhoods,' said Steve DeAngelo, whose Harborside dispensary is the largest in the nation, buying marijuana from more than 400 growers. 'They are real people, decent people with families to support.'

But proponents of the new measure said it was smart public policy that would generate revenue for the cash-strapped city government, ensure that fire and building codes are enforced, keep neighborhoods safe and reinforce Oakland's place as the centre of the California's cannabis economy.

'It's really important for Oakland to be a vital part of that growth and development for licensed facilities,' said Councilwoman Rebecca Kaplan, who drafted the proposal.