Oakland to regulate medical marijuana farms SFGate / Matthai Kuruvila / November 11, 2010 Even in the wake of state voters' rejection of a measure to allow the recreational use and taxation of marijuana, Oakland is pushing ahead with plans for taking the industry out of the black market. The City Council ratified an application process Tuesday night for large-scale marijuana farms that would be the first in the nation to be government-sanctioned. Council members also approved a separate measure doubling the number of allowable medical marijuana dispensaries in Oakland, to eight. Even though the sale of medical marijuana is authorized by state and local regulations, pot farming has largely operated in the shadows. Oakland wants to change that, and is planning to do so on a grand scale. "Oakland is a leader in this industry, and I'm hoping that this will continue to grow," Councilman Larry Reid said. The regulations approved by the council will require applicants for four city farming licenses to undergo extensive financial background checks, provide security and be well-backed financially. The council also is requiring that applicants pay the city back taxes for marijuana they have sold to dispensaries over the years, along with interest and penalties. Councilwoman Desley Brooks said that was only fair to newcomers to the business. The playing field "is not level if you allow people to thumb their noses at our law to have the same advantage as those who waited patiently," Brooks said. "There is an attitude in this city that you can do whatever you want to whenever you want to and that it's OK. "They owe us back taxes." No taxes so far Stephen DeAngelo, co-founder and executive director of the Harborside Health Center dispensary, said he knew of two marijuana farms in Oakland that had "tens of thousands of square feet" of growing space. He said those farms, as far as he knew, haven't paid taxes. Much of the marijuana now sold to dispensaries is grown by small-time operators using their homes for crop space. But that has caused problems in Oakland and beyond, such as electrical fires and break-ins. Cutting dangers By sanctioning large farms that have to obtain city permits and provide security, city officials believe they can avoid such problems. The federal government still looks upon medical-marijuana farming as a crime. Officials had no immediate reaction to Oakland's proposed city-sanctioned farms, in part because they exist only on paper so far. Ada Chan, a policy analyst for Councilwoman Rebecca Kaplan, said federal prosecutors had contacted Kaplan's office to talk about the proposed regulations. But Chan said they were not clear if there were concerns. The state's reaction is also unknown. Cannabis advocates fear the attitude may be negative if Republican Steve Cooley prevails in his too-close-to-call race for attorney general with Democrat Kamala Harris. "I'm just concerned that one of the people who would get those four large permits may end up being targets," DeAngelo said. Some at the council meeting had other concerns. Liana Held, a bookkeeper for dispensaries and growers, noted that the city regulations would restrict the amount of cash that medical marijuana outlets can have on hand. The problem, she said, is that the cannabis industry is largely a cash business. Making adjustments But Chan said such changes are part of becoming an above-board business. "If you want to come into the light, all of that is part of this," Chan said.