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Small growers fear the Walmart effect on California’s regulated marijuana market

July 20, 2010

OAKLAND, CA - JULY 22:  Different strains of m...
Image by Getty Images via @daylife


July 20, 2010 /By: LISA LEFF

OAKLAND: After weathering the fear of federal prosecution and competition from drug cartels, California‘s medical marijuana growers see a new threat to their existence: the ”Walmarting” of weed.

Oakland City Council will look today at licensing four production plants where marijuana would be grown, packaged and processed into items ranging from baked goods to body oil.

Successful applicants would have to pay $US211,000 ($243,000) in annual permit fees, carry $US2 million worth of liability insurance and be prepared to devote up to 8 per cent of gross sales to taxes.

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The move, and fledgling efforts in other Californian cities to sanction cannabis cultivation, has some marijuana advocates worried that regulations intended to bring order to the outlaw industry – and revenues to cash-strapped local governments – could drive small growers out of business.

They complain that industrial-scale gardens would harm the environment, reduce quality and leave consumers with fewer strains from which to choose.

”Nobody wants to see the McDonald’s-isation of cannabis,” Dan Scully, one of the 400 ”patient-growers” who supply the city’s largest retail medical marijuana dispensary, Harborside Health Centre, grumbled after a council committee gave the blueprint preliminary approval last week.

”I would compare it to how a small business feels about shutting down its business and going to work at Walmart. Who would be attracted to that?”

The council members Rebecca Kaplan and Larry Reid, who introduced the plan, have pitched it largely as a public safety measure.

The Oakland fire department blames a dramatic rise in the number of electrical fires between 2006 and last year in part to marijuana being grown indoors with improperly wired fans and lights. The police department says eight robberies, seven burglaries and two murders have been linked to marijuana growers in the past two years.

Mr Reid and Ms Kaplan are also open about their desire to have the city, which last week laid off 80 police officers, cash in on the medical marijuana industry it has allowed to thrive.

Oakland’s four retail marijuana stores did $US28 million in business last year, and if sales remain constant, the city would earn $US1.5 million this year from a dispensary business tax that voters adopted last summer.

”Allowing medical cannabis and medical cannabis products to be produced in a responsible, above board and legitimate way will be a benefit to the patients, to the workers and to the people of Oakland,” Ms Kaplan said.

Adding to the anxiety of growers – and the impetus Oakland officials have to get the grow tax in place – is a November state ballot measure to legalise marijuana possession for adult recreational use and authorise local governments to license and tax non-medical sales.

If it passes, the proposition is expected to feed the state’s hearty appetite for marijuana. Supporters of creating the four big indoor gardens say the plan is not dependent on legalisation, but would benefit from it.

”The reality is, this is an issue that is going to grow. I would like it to grow here. I would like it to be Oakland business and not the tobacco industry,” a councillor, Jean Quan, said.

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3 Comments leave one →
  1. July 20, 2010 12:14 am

    A friend of mine just emailed me one of your articles from a while back. I read that one a few more. Really enjoy your blog. Thanks


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