Sat, May 29, 2010 - Page 7 News List

Oakland to license, levy taxes on indoor marijuana growers

REVENUEWith a budget shortfall of US$42 million, voters approved a tax on medical marijuana clubs, which could bring US$1 million into the city’s coffers

AP , OAKLAND, CALIFORNIA

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 US 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 US$42 million budget shortfall. The tax voters approved last summer on the four medical marijuana clubs allowed under Oakland law is expected to contribute US$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.

“Looking at the economic analysis, we will generate a considerable amount of additional revenues, and that will certainly help us weather the hard economic times that all urban areas are having to deal with,” Reid 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 9,290m² project near the Oakland Coliseum would produce more than US$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.

Dhar Mann, the founder of an Oakland hydroponics equipment store called iGrow, and Derek Peterson, a former stock broker who now sells luxury trailers outfitted for growing pot as a co-founder of GrowOp Enterprises, have hired an architect to draft plans for two warehouses where marijuana would be grown and processed year-round.

Their vision includes using lights, trays and other equipment manufactured by iGrow and creating an online system that would allow medical marijuana dispensaries to see what pot strains are in stock, place orders and track deliveries.

“We are emulating the wine industry, but instead of ‘from grape to bottle,’ it’s ‘from plant to pipe,’” Mann said.

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