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  1. Terrapinzflyer
    OAKLAND, Calif. — For a brief, smoky moment last fall, this economically challenged city seemed poised to become the nation’s most aggressive when it comes to growing and taxing medical marijuana.

    Those hopes have been dimmed considerably in recent weeks, though, since an exchange of letters between the city attorney and federal law enforcement officials has made it exceedingly clear that Washington will not tolerate plans for the large-scale marijuana farms the City Council approved last July. City officials had hoped to use the massive indoor growing facilities to raise some $38 million annually in fees and taxes at a time when the city is struggling with a $31 million deficit and 17 percent unemployment.

    Polls last summer suggested that voters were likely to pass a November ballot initiative that would have legalized recreational marijuana use in California. They did not. But Oakland decided to proceed with its plans anyway.

    Hundreds of well-heeled investors and would-be farmers poured in from across the country to vie for four cultivation permits. Then, in December, just weeks before the city was set to issue the permits, the Council voted to stall the plan after the city’s attorney, John Russo, and a county district attorney warned the Council that the marijuana cultivation ordinance thwarted state law and that city officials could be held criminally liable.

    On Jan. 14, Mr. Russo wrote a letter to the United States Department of Justice seeking guidance on the city’s legal standing. In a response, Melinda Haag, United States attorney for the Northern District of California, warned that “individuals who elect to operate ‘industrial cannabis cultivation and manufacturing facilities’ will be doing so in violation of federal law.” The letter went on to say that the Justice Department was “carefully considering civil and criminal legal remedies regarding those who seek to set up industrial marijuana growing warehouses.”

    Mr. Russo has refused to provide further legal guidance to the city on the marijuana farm issue, forcing Oakland to hire a new legal team as they consider a revised version of the ordinance.

    Desley Brooks, the council member who wrote the revised ordinance, said the city had little choice but to move ahead with large marijuana farms. “There are unregulated grow operations in the city, and we’re having fires, home invasions and crime as a result,” she said.

    Ms. Brooks puts much of the blame for the legal hoopla over the ordinance on Mr. Russo. “Our city attorney went to the feds and invited scrutiny,” she said.

    State law restricts who can grow marijuana to medical marijuana patients and their “primary caregivers,” ruling out the type of stand-alone marijuana farms originally proposed by the city. Ms. Brooks’s revised ordinance couples the farms together with a storefront dispensary that acts as “primary caregiver.”

    “Oakland is the epicenter of medical marijuana in the United States,” said Allen St. Pierre, executive director for the National Organization for the Reform of Marijuana Laws. “The Department of Justice is paying closer attention in Oakland because they’re mindful of the fact that there is enough political and commercial chutzpah to actually get this done. The only thing stopping these entrepreneurs from breaking ground tomorrow is this letter from the feds.”

    When the city gave the green light to industrial-scale marijuana cultivation, an eclectic group of investors stepped forward.

    Among dozens of groups who spent months and hundreds of thousands of dollars on business plans, consultants and architects was Ben Bronfman, an heir to the Seagram liquor fortune and fiancé of the rapper M.I.A. Mr. Bronfman leased 11 acres of land by the airport where he and partners had hoped to install enormous greenhouses that would produce environmentally friendly marijuana using a massive, experimental carbon-capturing device. “Cannabis is a more constructive thing to have in our society than alcohol,” he said.

    Jeff Wilcox, a former commercial real estate developer turned medical marijuana advocate, was one of the first in line for a cultivation permit. He spent $120,000 and two years developing a $20 million plan to transform a 172,000-square-foot office park he owns into a high-tech facility capable of growing 23 pounds of medical marijuana a day, an annual crop worth up to $58 million. In accordance with city rules, much of that money would have been turned back into city coffers and into nonprofit organizations.

    Many of the investors who flocked to Oakland are now taking their money and their marijuana know-how elsewhere.

    “I applaud the city for pushing the envelope, but it’s frustrating for those of us who spent a lot of time and money on this process,” said Derek Peterson, a former Wall Street banker turned marijuana entrepreneur who spent $80,000 on his permit application.

    Mr. Peterson is not waiting around for the city to make a decision. Fourteen states and the District of Columbia now have medical marijuana laws on the books, providing ample opportunity to grow and distribute marijuana on a huge scale. Mr. Peterson is applying for a permit to do just that in Arizona.

    “Right now Oakland is far too visible for this kind of investment,” said Scott Hawkins, who worked as a consultant on a permit application on behalf of Richard Lee, the founder of Oaksterdam University, a medical marijuana trade school here. “Investors don’t want to risk their capital in this situation unless things can get worked out between the City Council and the Department of Justice and the city attorney’s office.”

    By MALIA WOLLAN
    Published: March 2, 2011

    http://www.nytimes.com/2011/03/03/us/03oakland.html?_r=1&src=twrhp

Comments

  1. Terrapinzflyer
    Marijuana Production in Oakland: Who´s in Charge Here?

    In 1996, California became the first state in the nation to legalize marijuana use for medical purposes. The medical marijuana industry germinated during the Clinton Administration and grew during President George Bush´s tenure, despite the Bush Administration´s opposition. When Obama took office, he voiced public support for medical marijuana and assured that the Department of Justice would not prosecute patients or dispensaries in states where medical marijuana was legal. Economies are responsive to political and legal change, and the relaxation in the threat of prosecution led the medical marijuana industry to flower.

    In July 2010, Oakland City Council passed a measure to grant licenses to four industrial-scale pot growers with the provision of hefty ($200,000+) licensing fees and a sales tax beginning at 1.8% and increasing to as much as 12%. The measure passed with the allure of a potential to raise $38 million for the city, annually. The Council also saw regulated, industrial-scale growing as a way of reducing small-scale production and the robberies and personal safety issues it sometimes attracts.

    In the months after the measure passed, the City Council considered the rules for regulating the first large-scale marijuana warehouses in the country. A major issue was to whom to award the four coveted permits, and criteria were created to reward entrepreneurs for best business model, security plan and, of course, being pesticide-free. In November, voters approved a measure that imposed a 5% business tax on all marijuana growers and dispensaries. The City Council planned to award the four permits by December 20, 2010.

    Then came a major buzzkill—the Obama Administration issued a blunt message that the Department of Justice would prosecute large-scale growers and distributors, and potentially penalize Oakland for getting a cut of the profits. Another, lesser problem was that the permit process failed to heed state law that was supposed to restrict medical marijuana growing to patient-caregiver collectives. The City Council went back to redraft the permitting process and bring it into compliance with state law by tying each farm to an individual marijuana dispensary.

    For a moment it appeared that a new protocol had been worked out and that the City Council might award five permits. Councilwoman Desley Brooks had come up with a plan allowing five dispensaries to operate their own industrial-size marijuana farms of up to 50,000 square feet (the Brooks Plan).

    Just as the City Council was getting fired up, the Obama DOJ local, US Attorney Melinda Haag blew the City Council´s high by issuing a warning that Oakland's cultivation ordinance as originally drafted would be illegal could result in federal and state prosecution. In a letter dated February 1, 2011, Haag wrote:

    "The department is concerned about the Oakland ordinance's creation of a licensing scheme that permits large-scale industrial marijuana cultivation and manufacturing as it authorizes conduct contrary to federal law. . . . Accordingly, the department is carefully considering civil and criminal legal remedies regarding those who seek to set up industrial marijuana growing warehouses in Oakland pursuant to licenses issued by the City of Oakland.

    Haag said federal authorities would enforce a crackdown on illegal manufacturing and distribution of marijuana, "even if such activities are permitted under state law" as they violate federal anti-drug laws. Operators of marijuana farms but also landlords, property owners, financiers and even the city's council members could face prosecution. Haag made sure to point out that the DOJ won't be focusing its limited resources on prosecuting patients, but distinguished that unlawful manufacturing and distribution was another story

    Alameda County District Attorney Nancy O'Malley issued a statement agreeing that Brooks Plan violated state law because it defined dispensaries as primary caregivers, which read too broadly the state law provision allowing primary caregivers to grow medical marijuana. In fact, district attorneys offices throughout the state have basically disregarded this provision of the law has basically since medical marijuana was legalized in 1996, hence the proliferation of garage-grow rooms and backwoods plantations.

    Within the week, City Attorney John Russo withdrew his legal advice and told the City Council to hire a separate, non-governmental attorney. Russo´s withdrawal doesn´t mean that the City Council has to flush its plan, rather, it´s more an illustration of how fractured his relationship with City Council is becoming. Just a week before, newly-elected mayor Jean Quan had expressed her desire to have her long-time lawyer friend Dan Siegel act as an unpaid legal adviser for the city, and the two had sparred over the legality of that. Furthermore, U.S. Attorney Haag issued her letter in response to City Attorney Russo´s request for guidance, but Mayor Jean Quan says the Council never asked Russo to seek advice.

    The fate of Oakland´s large-scale medical marijuana production is uncertain. The City Council´s Public Safety Committee will discuss Brooks' plan and Russo proposed amendments at their meeting on February 8. The full council will discuss the issue again at their meeting on February 15. The nation is watching--whatever happens in Oakland could have repercussions not only in California but also in other states that have legalized medical marijuana, like Arizona.

    SOURCES:

    http://www.mercurynews.com/breaking-news/ci_17322521

    http://www.baycitizen.org/marijuana/story/doj-oakland-industrial-pot-farms-illegal/

    http://www.ibtimes.com/articles/109...l-warned-by-feds-not-to-break-us-pot-law.htm#

    http://articles.sfgate.com/2011-02-03/bay-area/27098495_1_marijuana-farm-ordinance-dispensaries-pot

    About the Author

    San Mateo DUI Lawyer, Thomas Greenberg, is a native of California and a graduate of the University of California at Berkeley. He was formerly a highly respected deputy public defender and is now an experienced San Mateo criminal defense attorney who has provided effective legal services to literally thousands of clients



    March 04, 2011
    Tracy Rose

    http://www.americanchronicle.com/articles/view/222444
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