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Hundreds of small growers and collectives complained that the new ordinance could drive them out of business, despite having risked arrest to supply $28 million worth of medical marijuana sold at dispensaries last year. (ERIC RISBERG/ASSOCIATED PRESS FILE 2009 )

OAKLAND — Oakland is ready to cash in on the medical marijuana boom — and perhaps recreational pot use — now that the City Council agreed to license and tax four industrial-sized marijuana farms and promised to review policies that exclude small and medium-size farmers who grow the marijuana sold at the city's four dispensaries.

Hundreds of small growers and collectives complained that the new ordinance could drive them out of business, despite having risked arrest to supply $28 million worth of medical marijuana sold at dispensaries last year.

The city intends to crack down on growers who are not permitted or exceed the growing guidelines established for patients and caregivers, but agreed to delay enforcement until the large cultivation, manufacturing and processing permits are issued in January.

The delay gives city staff members time to develop a point system for evaluating the applications and return to the council with recommendations for ensuring the licensed growers will follow fair labor and local hiring policies as well as sound environmental practices.

It will also allow time for the public safety committee in the fall to figure out how or if independent small and medium-size growers should be regulated and taxed.

Oakland Councilmember Rebecca Kaplan, who co-authored the cultivation ordinance with Councilmember Larry Reid, assured the small farmers that the city would work on creating permits for medium-size facilities, and reassured medical-marijuana patients that licensing large farms does not prevent them from growing their own plants or selling to dispensaries as long as they are within the city's guidelines.

"We are at a time when medical cannabis is a growing and emerging industry," she said. "There is a growing demand to have permitted facilities, not just (to reduce) danger, but to provide good products, good paying jobs and to provide revenue for public safety."

Councilmember Nancy Nadel voted no and Councilmembers Jean Quan and Jane Brunner abstained. They supported the regulation but had questions about the criteria for selection, local hiring, environmental issues and the amount of tax revenue the cultivation operations would generate. Nadel wanted to delay a vote until the small and medium-size growers could be included.

The city will issue a request for proposals for four Cannabis Cultivation, Manufacturing and Processing Facility permits. Several people have expressed interest, among them Dhar Mann, a founder of iGrow, a hydroponic superstore in East Oakland, and Jeff Wilcox, a businessman who owns several acres of light industrial land along the Embarcadero.

Each applicant must pay a $5,000 fee to cover administrative costs for background checks and to review business and site plans.

Once selected, the four permitted cultivation businesses will be charged an annual $211,000 regulatory fee that will be used to hire staff members and develop and sustain a program to oversee the cultivators, similar to the team that oversees compliance and complaints about the city's liquor establishments.

The permitted facilities must be in industrially zoned areas of the city and meet all relevant building and fire codes, hire security guards and maintain security cameras, and carry sufficient liability insurance.

"(Passing this resolution) will actually decrease public safety," said Dan Grace, a small grower with five employees. "It will create an environment where small growers will have to go back underground, where they will not be able to get electrical permits. We actually do our best to be above board and follow safety regulations."

Steve DeAngelo, executive director of the Harborside Health Center dispensary, said he supports the licensing and regulation of the industry, but he wants to make sure that the more than 500 small and medium-sized growers who supply his business are included.

"They are not miscreants. "... These courageous growers have taken serious risks to provide medical marijuana to those who need it. Let's create a system that legitimizes all growers," he said.

Reid, co-author of the cultivation ordinance, said the new regulations would ensure that patients receive a high-quality product grown at a safe, regulated facility. He said the regulation is also needed to cut down on the numbers of fires, robberies and shooting crimes that are rampant among bootleg growers who take over homes in residential areas or in small warehouses.

He said there is nothing to prevent the small growers or collectives from banding together to apply for one of the four cultivation permits.

James Anthony, attorney for Harborside, said that's exactly what they intend to do. He said the permit application would include existing individual and small collective cultivators. Anthony also said he was hopeful that the council would take action to include the small cultivators in the fall.

Contact Cecily Burt at 510-208-6441. Check out her blog at www.ibabuzz.com/westside.

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