Thursday, July 14, 2011

New Clubs On Horizon in Oakland, Pot Farms Shelved

By David Downs
Thu, Jul 14, 2011 at 12:03 PM

Medical cannabis patients in Oakland will likely have double, possibly triple, the number of dispensaries to choose from in the years to come, as the city backs away from its embattled cultivation plans and turns toward boosting club diversity.

On Tuesday evening, the Oakland City Council's Public Safety Committee voted unanimously to increase the number of permitted dispensaries from four to eight. The increase goes before the full council for another vote next week. During the Public Safety Committee meeting, councilman Larry Reid also expressed interest in increasing the number of Oakland dispensaries to twelve.

Lab-tested Grape OG at Harborside Health Center
  • Craig Merrill for East Bay Express
  • Lab-tested Grape OG at Harborside Health Center

The council also decided to punt the issue of permitting industrial cultivation into the fall. Legalization Nation considers Oakland's cultivation plans stalled indefinitely, especially after the June 29 “Cole Memo”, in which U.S. Department of Justice Deputy Attorney General James M. Cole specifically singled out as an enforcement priority those “facilitating ... multiple, large-scale, privately-operated industrial marijuana cultivation centers ... [with] revenue projections of millions of dollars”.

Dispensaries, on the other hand, appear to be less contentious, and have become a significant revenue source for Oakland — city staff considers them a success and model for the nation. In 2010, the three operating dispensaries — one ran into legal trouble and closed — took in $28 million in sales. The clubs aren't allowed make a profit, so they discharge their gains in the form of generous wages and health benefits, community services like therapy and hospice packages, and taxes. The city of Oakland took in $420,000 in business taxes and an estimated $320,000 in sales taxes in 2010, according to city officials.

Doubling or tripling dispensary permits might not double or triple tax revenue, though. New dispensaries will likely siphon off existing clubs' sales. Harborside Health Center, thought to be the largest club on the West Coast, has about 80,000 patients, according to company figures.

During public comment, none opposed increasing the dispensary count, though some questioned the city's opaque permitting process and its fee structure. "You can't make the city administrator's office a king," said lawyer Lisa Gygax.

Oaksterdam operator Richard Lee again advocated for more, smaller stores, while asking the council to go easy on the taxation.

Oakland has about 390,000 people in it and three operating storefront collectives. By contrast, San Francisco, has a population of about 800,000 and 29 dispensaries. The increase goes before the full council for another vote Tuesday, July 19 at 5:30 p.m. at Oakland City Hall.

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