Business - California Oakland to license, tax indoor marijuana growers

OAKLAND, Calif. (AP) -- Local governments in California and other Western states have tried to clamp down on medical marijuana, but Oakland has taken a different approach.

If you can't beat 'em, tax 'em.

After becoming the first U.S. city to impose a special tax on medical marijuana dispensaries, Oakland soon could become the first to sanction and tax commercial pot growing operations. Selling and growing marijuana remain illegal under federal law.

Two City Council members are preparing legislation, expected to be introduced next month, that would allow at least three industrial-scale growing operations.

One of the authors, Councilman Larry Reid, said the proposal is more of an effort to bring in money than an endorsement of legalizing marijuana use -- although the council has unanimously supported that, too.

The city is facing a $42 million budget shortfall. The tax voters approved last summer on the four medical marijuana clubs allowed under Oakland law is expected to contribute $1 million to its coffers in the first year, Reid said. A tax on growers' sales to the clubs could bring in substantially more, he said.

How much money is at stake isn't clear because the tax rate and the number of facilities the law would allow haven't been decided. A report prepared for AgraMed Inc., one of the companies planning to seek a grower's license, said its proposed 100,000-square-foot-project near the Oakland Coliseum would produce more than $2 million in city taxes each year.

Given their likely locations in empty warehouses in industrial neighborhoods, the marijuana nurseries under consideration would have more in common with factories than rural pot farms.

The discussion in Oakland comes amid a statewide campaign to make California the first state to legalize the recreational use of marijuana and to authorize cities to sell and tax sales to adults.

Other supporters say licensed growers would create hundreds of well-paying jobs. The local branch of the United Food and Commercial Workers union already has signed up about 100 medical marijuana workers, and the growers are expected to have union shops as well, said Dan Rush, special operations director of UFCW Local 5.

"I think Oakland's intention is to make Oakland the leader and the trendsetter in how this industry can be effective in all of California," Rush said.

Published: Tue, Jun 1, 2010

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