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July 21, 2010

"Oakland council OKs plan to set up pot factories"

The title of this post is the headline of this notable report from the Los Angeles Times.  Here are the details:

Oakland's City Council on Tuesday approved an ordinance that could make it the first city in the state to permit industrial marijuana production, a path-breaking decision that could spur the commercialization of a crop largely grown in hidden gardens.

The plan would authorize four potentially enormous pot factories, but makes no provision for the hundreds of growers who now supply Oakland's four dispensaries, which sold $28 million in marijuana last year. The council, however, promised it would develop a plan for these growers before permits are awarded next year for the four large-scale marijuana operations.

"This is a monumental step forward," said Dale Gieringer, an Oakland resident and the longtime head of California NORML, which backs the legalization of marijuana. "It really means moving into the era of industrial-scale operations and Oakland means to do it big."

The 5-2 vote came after two hours of testy debate between pot growers who argued the proposal could destroy their livelihoods and businessmen who said it could turn Oakland into the Silicon Valley of pot, create jobs and generate new tax revenues. The audience booed, hissed and talked back, causing City Council President Jane Brunner to repeatedly admonish the crowd....

Jeff Wilcox, a businessman who has presented the most detailed plan for a marijuana factory, warned the council that if it did not act quickly, it would lose the momentum to other cities, such as Berkeley, which plans to ask voters to approve six large-scale commercial operations. "You've got an issue here," he said. "You're late."...

Bringing what has been a secretive and lucrative cash business into the open would also allow Oakland to tax it, potentially adding millions of dollars to its ailing budget. The city, which has led the state in its innovative approach to marijuana, was the first to adopt a pot tax, which is 1.8%, but is considering asking voters to approve a substantial increase.

Oakland keeps a list of people who have expressed interest in the permits. On Tuesday afternoon, Arturo Sanchez, who oversees the city's marijuana regulations, said it had 192 names. But much of the attention has focused on just a few successful businessmen who have been vocal about their plans and their intent to win permits. They have money, buildings, proposals and ready access to the council members, but only recently became interested in medical marijuana.

Wilcox, a retired construction firm owner, wants to convert a complex of aging industrial buildings he owns along Interstate 880 into what could be the world's largest pot factory, raising about 58 pounds of marijuana a day, more than enough to handle Oakland's consumption.

Two other entrepreneurs, Dhar Mann and Derek Peterson, partners in a hydroponics store called iGrow, have a team already working on designs for a multi-level operation in a 57,000-square-foot warehouse that they have an option to lease. Peterson said he had no doubt their proposal would win a permit.

I am getting a contact high from just reading about the notable impact of combining the laboratories of democracy and the engines of the free market in the medical marijuana business.  Especially if — should I say when? — more politicians and voters see a tangible economic benefit from allowing pot production and sales, I suspect it will be only a matter of time before market forces help to bring at least a partial repeal to modern pot prohibitions.

July 21, 2010 at 10:43 AM | Permalink


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A case of Baptists and Stoners :) http://joshblackman.com/blog/?p=4895

Posted by: Josh Blackman | Jul 21, 2010 11:10:43 AM

I love this! A great use for factories standing empty. Feeds into the local "produce" trend. Creates a new small business that will employ local people at several levels: menial up to management. People are actually happy to pay taxes on the product. Just not seeing the downside here.

Posted by: Ala JD | Jul 21, 2010 11:27:37 AM

Walking down South Broadway in Denver last weekend, I was privileged to see a miraculous thing: A medical marijuana dispensary immediately adjacent to a police station.

Nothing says legitimate like that kind of location.

One of the really stunning things about the onslaught of medical marijuana dispensaries (far more than even completely legalized marijuana could ever support; considerably more than coffee shops in many neighborhoods), is how deeply more pot dealers really yearn to be legal and legitimate.

What other industry has a lobbyist in the state capitol and city hall asking that her clients be taxed (and subjected to more government regulation), even when the law on the books provides a clear sales tax exemption for prescribed drugs?

Perhaps it goes hand in hand with the fact that marijuana dealers are mostly selling locally grown products (indeed, it is very hard to make a go of it in the legal business without growing it yourself), which frees them from the economic need to be affiliated with large scale criminal enterprises. Marijuana dealing, probably more so even than prostitution, is the least "organized" of the vice crimes.

Posted by: ohwilleke | Jul 21, 2010 5:41:45 PM

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