California city approves pot factories

Jul 21, 2010, 16:51 GMT

San Francisco - The California city of Oakland, just east of San Francisco, has approved the establishment of four massive marijuana cultivation facilities ahead of a statewide vote in November on whether to legalize the popular drug.

The controversial plan, which makes Oakland the first in the nation to license wholesale marijuana cultivation, was passed by the city council late Tuesday night on a 5-2 vote.

Under the terms of the law, which still awaits final approval in a second vote, the four factories would 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 3 million dollars in liability insurance and pay tax on all their sales.

Agramed, a firm which pushed for the measure, plans to set up an 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 over 26 kilogrammes of high grade pot every day.

Current California law allows individuals the right 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 Drug Enforcement Authority could raid the high-tech new pot 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, a cultivation store that plans to apply for a license. '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, ensure that fire and building codes are enforced, keep neighborhoods safe from robberies, and enhance Oakland's position as the center of the state'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.