Wednesday, May 26, 2010
Huge, Legal Cannabis Farm Study Surprises Industry, Officials
Regulation & Legislation / Growing & Eradication David Downs — Wed, May 26, 2010 at 11:47 AM
The groundbreaking study showing how the City of Oakland could make $2 million per year licensing a medical cannabis growing warehouse caught many locals by surprise this week. Even though city officials and the cannabis industry are looking toward licensing large-scale grows allowed under state law SB 420, the hard numbers appear to be the first of their kind. Economist Joanne Brion of Brion and Associates, who did the six-month, $16,000 report said she was surprised at how potent an economic force cannabis is.
“My gut instinct said that this would be a great revenue and job generator for the city,” she said. "But after running the numbers, “I went, ‘Wow, that’s really a job generator.'"
Brion’s report found that licensing a seven-acre cannabis growing facility near I-880 at the Embarcadero would create up to 371 union jobs, paying an average salary of $53,700 a year. The site could produce an average of 58 pounds of cannabis per day, and generate gross revenues of around $59 million per year. The site would grow an estimated quarter of one percent of the estimated 8.6 million pounds of cannabis cultivated annually in California.
Jeff Wilcox, founder of AgraMed — a non-profit mutual benefit company set up in Oakland specifically to cultivate medical cannabis — commissioned the study. Wilcox, a retired construction company owner, wants to redevelop a seven-acre parcel he owns near I-880 and the Embarcadero. His four-building parcel abuts the Harborside Health Center, which is the West Coast’s most prestigious medical cannabis dispensary.
With largely vacant commercial real estate and a large power capacity, the entrepreneur in him looked at the growing medical cannabis industry and, after consulting with Harborside founder Stephen DeAngelo, concluded a large-scale indoor cannabis farm was an opportunity.
- David Downs
- California grows an estimated 8.6 million pounds of cannabis a year. None of it is taxed.
But Wilcox has three teenaged children in Lafayette, CA. Morally, he said he was concerned about getting into medical cannabis, but after talking to his kids — who can get pot easier than alcohol due to its lack of regulation — and activists like retired Orange County Judge James Gray, Wilcox said taxing and regulating the widely used drug poses less risk to his kids than the current de facto legalization Californians enjoy.
“My kids came home from the mall one day. They were upset. They said that in the first five minutes they were there, someone asked them if they wanted to buy pot,” says the middle-aged singe dad, who also grew up with pot more readily available than alcohol. “Legally, we have to do something. I think Oakland and the state needs to tax the shit out of this and legitimize it.”
Wilcox — who is also now on the TaxCannabis 2010 steering committee — went to the City of Oakland last year and asked if they were interested in licensing large-scale grows. When they said yes, he sought economists willing to run the numbers on what would be among the first large-scale, licensed medical cannabis farms in the country, then publish the findings. It wasn’t easy. Three turned down the work before he found Brion and Associates, a fifteen year-veteran of urban economics.
“Funny, some of my friends didn’t want to do the work,” Brion said. “I guess it’s still controversial. My interest is public policy. And you can only make good public policy if you have good information.”
Brion set upon the task of quantifying the construction and operation costs, as well as the margins of a large-scale growing operation — taking into account special factors like security, the price of cannabis, and potential yields.
“We had to do a lot of research,” she said. “These aren’t like standard studies. It is the first analysis on large-scale medical cannabis growing.”
Nailing down yield rates for plants became a challenge, but after talking with growers, she concluded the best way to measure yields is “quantity per light.” Once she had a good quantity-per-light metric and knew the amount of lights the facility could support, she determined the site could produce an average of 58 pounds per day.
The biggest caveats in the study are now the wholesale price of medical cannabis and how much the city might tax it. “The price, of course, will vary,” she says. “The other big caveat is the potential production tax the city might charge.”
Brion estimates the average wholesale price per pound of medical grade cannabis at $2,800. The city could tax it anywhere from the current retail tax rate of 1.8 percent to up to five percent in her analysis, generating anywhere from $1.1 million to $2.9 million in taxes off gross annual revenues. It would be among the most labor-intensive work in the Bay Area, she said.
An existing wholesale warehouse might have one employee per 500, 600, or even 1,200 square feet. But AgraMed’s site, if permitted, would need one employee for every 270 square-feet of working space.
Oakland city official Arturo Sanchez said the city council is looking at issuing a moratorium on medical cannabis cultivation as a prelude to a Public Safety Committee meeting that will examine what large-scale growing license regulations would look like. “Sometime over the summer the council will make up its mind whether to regulate it, allow it, or not,” Sanchez said.
Licensing large-scale grows would be a win-win-win, Wilcox said. Such grows would increase public safety, increase medicine quality, and raise funds and create jobs for the city.
Growers often steal power from the electrical grid with dangerous wiring schemes that have burned down residences. Robbers routinely target the lightly guarded plants and money of indoor pot farms. Both issues could be mitigated by a regularly inspected facility with up to thirty security personnel, cameras, and gates. In addition, multiple similar facilities could drive down local pot’s cost, increase its quality, and put dangerous, local home growers out of business. Long-term, a fully licensed supply of cannabis in California could curb the environmental destruction from cartels growing in national forests, and render home-growing a quaint hobby, on par with growing seasonal vegetables.
Furthermore, dispensaries currently buy their product from complete strangers, regulars or their own growers. Unlike federally regulated drugs and foods, pot’s largely an open-loop system subject to pesticide and pathogenic mold contamination. AgraMed’s supply chain would be closed and controlled like few others, sending pristine product to local dispensaries like Harborside.
The medical cannabis cultivation moratorium is scheduled to appear before the Oakland City Council June 1, and the Public Safety Committee meeting on growing regulation is scheduled for June 8.
Comments (17)
Showing 1-17 of 17
EBONGE OLYMPIA please contact me at brainpicker1310@gmail.com regarding a team to cultivate on your land.
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I am the chief of a village in the South west region of the Republic of Cameroon.It has been proven that our soil is very good for the cultivation of canabis.I am inviting any gruop capable of cultivating the plant to come and operate a farm in my village.Pictures are avilable to show the former canabis farm in my village Bai foe.I look forward to reading from interested persons.Its all true.Abundant fertile land avialable in the surbubs of Cameroon reserved for the cultivation of canabis.
I BOUGHT KONA PROPERTY IN 96 , IT STILL SITS EMPTY , NOT MAKING THE 1 MILLION A YEAR ~ IT IS SO SAD , MAYBE BY 2020~JUAN
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I"ve been pro-medical pot for a long time but the Oakland decision has changed my mind. If an international corporation based in Georgia is going to come in here and take comand of what should be a local industry then I'll be voting against medical pot in the future. If I were in Oakland I'd be voting against the city council too. Greed is ruining the whole process. How predictable. There is nothing non-profit about these pot clubs. The majority of "patients" are not ill. The whole thing is a sham. What a pitty. The only viable alternative now is wholesale legalization...and a bunch of pollen in those warehouses.
wholesale price per pound of medical grade cannabis at $2,800 that's a lot of money for wholesale better to get a permit and just plant one in you garden.
so if wholesale is $2800 =$ 175 an OZ wholesale. more than $300 an OZ to the end smokers that way to expensive.
Mr. Wilcox needs to take a look at the recent Appeals case of Williams v Butte County. In this landmark ruling, Judge Raye establishes the legality of David Williams collective grow, as well as making it crystal clear that "Each member of the collective agreed to contribute comparable amounts of money, property, and/or labor to the collective cultivation of medical marijuana, and each would receive an approximately equal share of the marijuana produced" and therefore it was that equality that made the collective legal under the auspices of SB420.
Frankly, AgraMed doesn't look a damn thing like that kind of legal patient collective to me. In fact, it makes me sick. From what I've read here, the patients picked up by Mr. Wilcox (presumably from Harborside) can't "contribute comparable amounts of money, property, and/or labor" because Mr. Wilcox already owns the property and intends to hire workers rather than use labor from the collective members. Then AgraMed intends to sell the medicine for $3000 a pound, wholesale, to a dispensary. (That's better than what small grows ever get for high-quality medicine now, whatever happened to supply and demand?) At 58 pounds A DAY, this is far, far more than the overhead. The patients, then, would probably pay $360 or more an ounce for it; this then leaves a neat $2760/pound gain for the dispensary.
It is certain that the patients that AgraMed would grow for wouldn't "receive an approximately equal share of the marijuana produced"; the value of each patient's cannabis is being split between Mr. Wilcox; the AgraMed management team, their security services and their workforce; the cost of the land, unlike home gardens; the dispensary distributing the cannabis; and finally the patient who SHOULD receive any medicine left after all this "overhead"; but would instead have to buy it from a dispensary at the same price as anyone else, and therefore will be unequally served by the nature of the patients' individual economic situations.
The buck stops here.
It is the right and responsibility of every medical patient, cannabis advocate, environmentalist, or supporter of grassroots capitalism to stand up to AgraMed, groups like them, and the City of Oakland; we must demand our right to be self-sufficient in the face of Big Business. Tell them that we will not be sold to an illegal, immoral, unequal, unsustainable, corporate trainwreck out to make easy millions by undermining the grassroots medical cannabis movement. Only by the movement standing together and shutting down this attempt (and every other attempt by some upstart robber baron) to overthrow the people's will, can we defend our FREE medicine from a true non-profit collective made up of our local community members.
This serves as a warning to Oakland's Public Safety Committee in particular and to the City Council in general: What AgraMed suggests is both illegal and unconscionable. Anyone involved with the City who supports stripping the patients of their right to grow, so soon after you decided each patient could need up to 72 plants to be relieved, would be a damnable hypocrite and an enemy of the entire medical cannabis community. Furthermore, anyone who then wants to allow a massive disaster like AgraMed creep in while the patients suffer, certainly has a short career ahead of them. Because you're not just dealing with the patients themselves, you're dealing with their parents, children, siblings, grandchildren, cousins, nieces, nephews, friends, in-laws and on and on and on. Anti-cannabis voters rarely make cannabis law a primary factor in the actual polling booth, but pro-cannabis advocates WILL, and bring a dozen more. This November's Tax and Regulate initiative means that the vast majority of cannabis users will be out voting, and looking to protect their rights from Big Business as much as Big Brother. Don’t forget.
What's getting lost here is the issue of sustainability.
a 5000 light operation, at 1000 wats per light, is 5 million watts per hour x 12 hours per day (the shortest amount of hours the plants are exposed to light) =60,000,000 watts or 6 MW. A MW (megawatt) powers about 500 California homes per year. One day of electricity use by this factory farm could power at least 3,000 homes for a year, that not including fans, filters, dehumidifiers & etc.
This is not sustainable. Where are they going to get this energy? From drilling for gas in the gulf? From mountaintop removal for 'clean' coal?
It is a weed, and will grow with solar power, no need for special equipment. Just plant them in the sun. The City of Oakland, which has expressed its desire to be a leader in efforts to achieve oil independence, needs to rethink it's enthusiasm for indoor growing. It's one thing to think about the jobs and money that come with cannabis, it's another to let those bright lights blind them to environmental reality.
How about we bring back the large-scale cultivation of industrial hemp. That's where the real benefit to society is. The products that can be made would include paper, cloth and bio-fuel as well as nutritional seed oil. As a world society on whole, we were dependent on all of these uses for centuries and we would greatly benefit from going back to using hemp. It takes less resources to produce, does not deplete soil and is far more renewable than current alternatives. This is where the real "revolution" needs to be.
Weed is called weed because it IS a weed. All it takes is four square feet of soil, water and sunshine and you can have your own for free. The quality of the seed indicates the quality of the plant--regardless of the growers skill. Anyone who wants it will grow their own in their yard and will not pay a premium at the State-run store. I could easily produce far more than I can smoke right now and then give the rest away to friends. There will be neighborhood grows everywhere and the State will not benefit one dime in the long run.
Dope is a pipe dream. It will not generate the tax revenue spoke of in this article for very long. It is cheap to produce and illegal growers do not have the overhead, regulations and taxes to account for so they will easily be able to undersell the legal market which would consist of the "convenience" smokers--those who do not want to take the minimal time and effort it would take to produce their own--this article speaks of. Should we impose even more draconian laws to regulate the legal market than we already have to try and stem the illegal market? Where is the benefit to that?
Only by pushing industrial hemp production and usage can we, as a society, see any real benefit here. Unfortunately, the power behind legal industrial hemp is minimal and the power against it--paper-pulping, cotton, corn and soy production--is frighteningly strong and deeply politically invested (id est: they OWN Congressmen and Senators as well as the Presidency). The real tragedy is--and for the last 90 or so years has been--that we're not wearing it; writing on it; using it to power our engines and eating it--not that we can't smoke it.
I would add my comment that Cannabis is much safer than alcohol and most controlled prescription drugs in terms of potential for overdose, creation of a dependency or organ damage. Just recently such popular drugs as Tylenol Motrin and Benadryl were “recalled” due to potential serious, even fatal, side effects. And yet, there is an active disinformation campaign going on with respect to “medical Cannabis”.
Also, I would comment that Cannabis use has been shown to suppress violent behavior (Substance Abuse: A Comprehensive Textbook, 4-th Edition, page 267), and this is extremely important from the point of view of the individual, as well as public, safety.
Since Cannabis use suppresses violence by inducing a calm, relaxed state and also improves the “negative affective state” that many people occasionally have, its use may also prove to be a “barrier”, rather than “gateway” to alcohol and hard drug use.
I would also comment that Anti-Cannabis laws on this country seem to encourage young people to experiment with alcohol and/or hard drugs for the simple reason that Cannabis, which is much less dangerous, can be detected in drug testing for much longer than, say, heroin, other opiates, cocaine, or methamphetamines, which are infinitely more dangerous than Cannabis.
This is why many people may tend to try those hard drugs with very high “addiction liability” and then get addicted.
Removing marijuana from the same group with heroin and cocaine will finally send the right message to young people as to the dangers of the latter, or otherwise some people may assume that cocaine, heroin, other opiates or methamphetamines are JUST AS dangerous (or non-dangerous) as Cannabis, while they are infinitely more dangerous.
I believe we can show the public BENEFIT from legalizing Cannabis, not just the absence of harm. I further believe that stressing Cannabis potential to suppress violence and, hopefully, curb the hard drug abuse and addiction is a PUBLIC SAFETY issue, and we are on the right side of it!
Lettuce grows in almost as many California backyards as does Cannabis.
What's being widely overlooked is the effect on the marijuana trade of reintroducing "industrial" hemp. Pollen from hemp will render pot valueless on the black market, but will give the home gardener both nutriceutical food and herbal medicine from the same plants.
Think about it...this is a huge consideration that is completely unaccounted for.
Ahhh, gamer76..... what a lovely point you've made with the lettuce-to-cannabis comparison. I couldn't agree with you more.
What a great article! I'm going to share it. The more rational conversations we have with those opposed to cannabis RE-legalization, the more we can educate them. I do not fault prohibitionists for their mode of thinking. They are simply responding to the Pavlovian conditioning we ALL have received growing up. "Just say no. Don't do drugs. Enjoy our national past times (sponsored in part by Budweiser) and take your medicine like the doctor tells you, but do NOT use marijuana. It will ruin your life."
Those of us who know the truth (and there are tens of millions of us) about cannabis must be patient and ease the naysayers out of their cocoons. Trust me, when they realize they actually HAVE been lied to all this time, they'll be pissed, just like WE were.
Don't worry, the prices won't drop or rise very rapidly due to large grows becoming licensed. Think about beer and liquor. What keeps them honest and their prices reasonable is the fact that if prices go too high, people will start making their own beer and liquor at home. At the same time, people are willing to pay for the convenience that large scale brewing and stilling create. I'm sure you've heard this before, it's cheaper to grow lettuce in your backyard, yet hardly anyone does. That's how it will be with cannabis, just like it is with beer and lettuce.
i'm not sure which clubs you go to. all the clubs i've been at have very low priced bags, comp bags for poor patients and free weed delivery for hospice patients. although its true that i only participate in the collective clubs.
this legislation will not drive the price up in any way, as it will allow more people to grow their own personal medicine. while it does bring the risk of capitalism into the cannabis culture, we don't have to allow that to become the predominant mode of operation.
Yeah baby, we NEED $3000 dollar pounds here in California. I kind of thought this medical marijuana thing would result in lower prices than Amferny on the corner with his $25 dime bags could offer sick people. Not so much huh. Now it looks like legalizing it will only increase the prices. How does that work? The "risk" premium of illegal pot would be gone. Already got people fixing the price and everything. You know they'll still have to pass laws to penalize self growers or this whole tax house of cards will collapse.
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