California, Oakland

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<span class=postbold>See Also</span>: <a class=postlink href=http://municipalcodes.lexisnexis.com/codes/oakland/_DATA/TITLE05/Chapter_5_80_MEDICAL_CANNABIS_.html>Oakland Municiple Code - Title 5.80</a> - Medical Cannabis Dispensary Permits.

Court declines to rehear pot king case

The Press Enterprise
The Associated Press

SAN FRANCISCO

A federal appeals court declined Wednesday to review its decision overturning pot guru Ed Rosenthal's conviction for growing marijuana.

Rosenthal, who has written books on how to grow marijuana and how to avoid getting caught, was convicted three years ago for cultivating hundreds of marijuana plants for a city of Oakland medical marijuana program.

He was sentenced to one day in prison after U.S. District Judge Charles Breyer said it was reasonable the Oakland man thought he was immune from prosecution because a 1996 state law allowed medical marijuana use.

Both sides had appealed, with prosecutors seeking a stiffer sentence and the defendant seeking to clear his record.

The 9th U.S. Circuit Court of Appeals reversed the jury verdict in April because of misconduct by a juror who consulted an attorney on how to decide the case. It affirmed that decision Wednesday.

Prosecutors declined to say whether they'll take the case to U.S. Supreme Court or seek a new trial.

The case is United States v. Rosenthal, 03-10307.

Published: Wednesday, July 19, 2006 16:21 PDT

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Feds Raid Pot-Laced-Candy Factory

<span class=postbigbold>Federal Agents Shut Down Calif. Factory They Say Produced Dope-Infused Snacks</span>

ABC News
by Paul Elias, Associated Press
September 28th, 2007


Federal agents said Thursday they shut down a factory that made marijuana-laced barbecue sauce, chocolate-covered pretzels and other "enhanced" snacks intended for medical users of the drug.

The Drug Enforcement Administration said it arrested three people Wednesday and was looking for a fourth who operated Oakland-based Tainted Inc.

Agents also seized 460 marijuana plants and other laced products including candy bars, cookies, marshmallow pies, ice cream, peanut butter, jelly, energy drinks and "Rice Krispy treats."

Tainted Inc. was launched by Michael Martin, 33, of El Sobrante as a small operation that made laced chocolate truffles. When it was raided Wednesday, the company was shipping products to medical marijuana dispensaries throughout California and in Seattle; Vancouver, British Columbia; and Amsterdam.

Authorities said the operation also had ties to Los Angeles pot clubs and believe it has ordered four tons of chocolate over the past two years to make marijuana-laced candy.

Those arrested were Jessica Sanders, Michael Anderson and Diallo McLinn. Martin is a fugitive, authorities said.

The raids of the factory and four Bay Area houses came after a two-year investigation and growing police concern that the legalization of medicinal marijuana in several states has caused a proliferation of large-scale marijuana-lacing operations.

Laced snacks are often more potent and longer lasting than smoked marijuana. Federal authorities contend that marijuana is an illegal drug, no matter how it used or who uses it, and they don't honor the state laws.

"This appears to be represent, once again, the federal government taking umbrage with the fact that California has legalized medical marijuana for medical patients," Sanders' attorney, Randolph Daar, told the San Francisco Chronicle. Lawyers for McLinn and Anderson had no comment.

A call to the company Friday was not returned.

Several people who ran a marijuana-lacing operation called Beyond Bomb that produced such products as Stoney Rancher, Rasta Reese's and Keef Kat pleaded guilty this year in Oakland federal court to marijuana charges. Beyond Bomb's founder Kenneth Affolter was sentenced to nearly six years in prison.

"These items could have harmful effects on a user, especially the unsuspecting ones," DEA agent Javier Pena said. "We will continue to shut down these production lines, one marijuana-candy factory at a time."

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Pot Candy Maker Out On $300,000 Bail

KTVU TV2
October 4th, 2007

Jim Vargas Reports on Pot Laced Candy Bust

Watch Raw Video of Oakland Pot Candy Bust


SAN FRANCISCO -- The founder of an Oakland food factory that laces everything from cookies to barbecue sauce with marijuana surrendered Thursday to face a federal drug charge.

Michael Martin, 33, was freed on $300,000 bond.

Federal drug agents last week raided Tainted Inc. in Oakland and arrested three of Martin's employees on drug charges for allegedly producing such marijuana-laced products as honey, soda and other snacks.

Martin's employees were arrested during the raids, but federal officials couldn't find Martin and considered him a fugitive. Martin said he was on vacation and arranged to turn himself in once he heard of the raids, according to his supporters.

Authorities said they seized several laced products during the raids.

Martin's attorney Sara Zalkin didn't return a telephone call.

Martin's supporters with the nonprofit Safe Access Now organization said he was making the products for medical marijuana clubs in California.

State law has legalized marijuana use to treat medical conditions, but federal law bans the plant's use for all purposes. The U.S. Supreme Court has ruled that federal law trumps state law when it comes to medical marijuana.

According to the search warrants, Tainted Inc.'s products first came to the attention of investigators in April 2004 when an internal Drug Enforcement Administration publication reported that agents had recently seized marijuana-laced candy bars called Buddafingas and Stoners that were wrapped in packages mimicking the popular brands Butterfingers and Snickers. The article put out a call for the identity of the laced candies' maker.

In March 2005, according to a court document filed by DEA agent William Armstrong, an anonymous e-mail to the DEA fingered Martin's Tainted Inc. as the candies' source.

The DEA launched its investigation two months later and employed a paid informant who knew Martin to help, according to the document. The informant bought $1,260 worth of Tainted products, including Stoner bars priced at $4 each, Mr. Greenbud bars at $8 each and $20 jars of laced peanut butter, according to the document.

The DEA also said that Tainted Inc. has purchased close to four tons of chocolate for about $14,600 from Guittard Chocolate Co. in the last two years.

The three others charged along with Martin are Jessica Sanders, Michael Anderson, and Diallo McLinn. All are free.

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Owner of pot-candy factory surrenders on federal drug charges

by Henry K. Lee, San Francisco Chronicle
October 4th, 2007



<table class=posttable align=right width=300><tr><td class=postcell><img class=postimg width=300 src=bin/martin_mike1.jpg alt="Michael Martin holds his 3-year-old son in front of the federal building in Oakland. Martin turned himself in and is free on bail. Chronicle photo by Kurt Rogers"></td></tr><tr><td class=postcell><img class=postimg width=300 src=bin/martin_mike2.jpg alt="Michael Martin, 33, in front of the federal building in Oakland where there was a small press conference. Martin was heading to San Francisco to turn himself in. Chronicle photo by Kurt Rogers"></td></tr><tr><td class=postcell><img class=postimg width=300 src=bin/martin_mike3.jpg alt="Michael Martin holds his 3-year-old son prior to the press conference in front of the federal building in Oakland. Chronicle photo by Kurt Rogers."></td></tr><tr><td class=postcell><img class=postimg width=300 src=bin/martin_mike4.jpg alt="Michael Martin holds his 5-month-old son as his attorney addresses the media in front of the federal building in Oakland. Chronicle photo by Kurt Rogers "></td></tr></table>The owner of an Oakland marijuana candy factory surrendered Thursday to face federal drug charges, but not before blasting the U.S. government for what he called an unfair attack by federal bullies on ailing patients who rely on medical marijuana.

He was later released on a $300,000 bond.

Michael Martin, 33, of El Sobrante was one of four people charged last week in connection with Tainted Inc., which started as a boutique business that made chocolate truffles and grew into a large marijuana-candy maker that bought chocolate by the ton, authorities said.

"I believe truly in my heart that I have done nothing wrong," Martin said outside the Oakland Federal Building. He was joined by his wife, Elinor, their sons, 3-year-old Tyler and 5-month-old Lucas, and supporters who held signs reading, "DEA: Keep your hands out of the medical marijuana cookie jar."

Martin, his attorney Sara Zalkin and J. Tony Serra, the famed lawyer who also supports medical marijuana, then left for the Federal Building in San Francisco because the magistrate in Oakland was unavailable. U.S. Magistrate Nandor Vadas released Martin on bond.

Martin said he joined the medical-marijuana movement after seeing his father die painfully of prostate cancer in 2002 after a 10-year battle. His father refused to use marijuana because of a federal ban on all types of the drug. Martin said he uses medical marijuana to ease pain after a fall left him with seven screws and a steel plate in his left heel. He said he also has degenerative cartilage in his right knee.

Three Tainted employees were arrested by federal Drug Enforcement Administration agents last week, but Martin was a fugitive, federal prosecutors said.

Martin disputed that assertion, saying that he had simply been on vacation with his family at the time his factory on 61st Street in North Oakland and the defendants' homes were raided. During one arrest, an agent shot and paralyzed a Doberman pinscher named Doobie, supporters said. The incident is under DEA investigation.

Authorities said Tainted made candies with names that played off popular legal treats: Buddafinga, Mr. Greenbud, Stoners. The business also made other pot-laced items such as cookies, ice cream, peanut butter, granola bars and even barbecue sauce, according to the DEA.

The investigation bears similarities to DEA raids in Oakland last year in which five people connected with a company called Beyond Bomb were convicted of making marijuana-laced treats with names like Munchy Way, Rasta Reece's and Puff-a-Mint Pattie.

In federal marijuana cases, defense attorneys are barred from telling jurors that companies supply medical cannabis products through licensed dispensaries to qualified patients. Proposition 215, the initiative approved in 1996 by state voters, legalized growing and using marijuana for medical purposes with a doctor's recommendation. Under federal law, marijuana used for any purpose is illegal.

Over the past two years, Tainted bought nearly 4 tons of chocolate from Guittard Chocolate Co. in Burlingame for more than $14,000, Armstrong wrote. Tainted's candies and other food items sold for $2.50 to $20 apiece, depending on the strength of the product, authorities said.

Martin; Tainted's operations manager Jessica Sanders, 30, of San Leandro, and couriers Michael Anderson, 42, of Oakland and Diallo McLinn, 35, of Oakland, were charged with conspiracy to manufacture or distribute controlled substances.

Sanders, Anderson and McLinn are free on $200,000 bond. All four defendants are due back in U.S. District Court in Oakland on Oct. 26.

E-mail Henry K. Lee at hlee@sfchronicle.com.

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Pot Candy Dealer Turns Himself In

KGO ABC Channel 7
Thursday, October 04, 2007 | 1:00 PM

<span class=postbigbold>After Federal Agents Make Raid </span>

By Katie Hammer

OAKLAND, Calif., Oct. 4, 2007 (KGO) -- A man who makes edible marijuana products for medical patients turned himself in this morning to federal authorities after they raided his Oakland factory. He had a lot of supporters today at the federal courthouse in Oakland.

Before heading to San Francisco to turn himself into federal authorities Michael Martin came to Oakland he was joined by a group of about 20 supporters who came to plead his case to the public.

Martin owns a manufacturing company that makes marijuana laced chocolates. He sells the candy to cannabis clubs. He said he is doing nothing wrong but federal agents raided his business last week when he was out of town. They say they found more than 40 marijuana plants, a handgun, marijuana laced candy bars and cash. Martin hopes federal agents will stop raids on medical marijuana providers. He said his products have helped people with pain for several years.

"I stand here frightened and scared for my family. We are good people with good intentions and do not deserve to be vilified and blatantly lied about in order for the government to justify their moral unfounded assault on medical cannabis," said Michael Martin, Tainted Inc..

Three other people were arrested in last week's raid. Unlike California law, Federal law does not recognize medical uses for marijuana. If Martin is convicted he could face up to 20 years in prison and a fine up to $1 million dollars.

(Copyright ©2007 KGO-TV/DT. All Rights Reserved.)

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Dellums wants DEA to stop threatening pot club landlords


KSBY TV 6 - December 21, 2007 8:44 PM ET

OAKLAND, Calif. (AP) - Mayor Ronald Dellums is upset that the Drug Enforcement Agency is threatening landlords who lease space to medical marijuana dispensaries as a way of cracking down on the shops that are legal under California law.

Several clinics throughout the state are being evicted by property owners who have been told they could be brought up on federal drug charges and have their buildings seized for aiding in the distribution of an illegal drug.

Dellums, a former congressman, sent a letter yesterday to the chairman of the House Judiciary Committee asking for help getting the DEA to back off.

A medical marijuana advocacy group says the oldest dispensary in San Francisco, the Compassionate Care clinic in the Castro District, is scheduled to shut down today after being evicted by a fearful landlord.

Meanwhile, lawmakers in Merced County voted this week to permanently ban pot clubs from opening there. California voters passed a proposition legalizing medicinal marijuana in 1996, but several counties and cities have outlawed dispensaries within their borders.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Dellums seeks probe of 'threats' to pot sites

InsideBayArea
By Kelly Rayburn, STAFF WRITER
Article Last Updated: 12/22/2007 05:39:37 AM PST


OAKLAND — Mayor Ron Dellums has asked a long-time former colleague, U.S. Rep. John Conyers, D-Mich., to investigate the federal Drug Enforcement Administration's use of "threatening letters" to target medical cannabis dispensaries throughout California, including at least one in Oakland.

The DEA has sent hundreds of letters to people who own property on which cannabis dispensaries are operating. A DEA official called the notices a "courtesy" even though they threaten landlords with imprisonment and property forfeiture.

The DEA's focus on the dispensaries — and the city's response to it — highlights the discord in federal and state laws on marijuana: California voters approved Proposition 215, supporting medical usage, in 1996, but federal law outlaws marijuana. And the DEA has warned cannabis dispensary owners that relying on state law is not a valid defense against federal charges.

Dellums spokesman Paul Rose said the mayor was representing his constituents' interests in broaching the issue with Conyers, the chairman of the House Judiciary Committee.

"The city of Oakland believes in compassionate care," Rose said. "The people of California voted to support medical cannabis. ... The mayor was discouraged to learn of the DEA's actions, which were in opposition to the will of the residents of this city."

Dellums wrote in the letter, which was also addressed to Rep. Lamar Smith, R-Texas, the committee's ranking Republican, that Oakland has a "long history of successful regulation" of its four licensed dispensaries.

"The DEA's recent surge tactics, such as the dissemination of threatening letters to property owners and unrelenting raids that continue to place citizens in harm's way, undermine state and local authority, and jeopardize the integrity of state law," Dellums wrote. "We urge the House Judiciary Committee to expeditiously hold hearings and examine this very important issue."

A committee spokeswoman said she was not sure whether Conyers had yet received Dellums' letter. Conyers said earlier this year that he was concerned about the issue, but no date for any congressional hearings has been set.

In a prepared statement, DEA Special Agent in Charge Javier Pena said, "The DEA San Francisco Field Division Office has sent out letters as a courtesy to the landowners to inform them of the suspected marijuana distribution center operating on their property. The DEA is committed to enforcing our nation's drug laws and will continue to work to keep our neighborhood communities safe from drugs and the negative ripple effects they cause."

Some say the DEA's priorities are poorly placed. Dellums' appeal to Conyers followed a similar appeal by the City Council earlier in the week.

In a resolution requested by Councilmember Nancy Nadel (Downtown-West Oakland), a staunch medical cannabis advocate, the council voted to urge congressional hearings as soon as possible.

Oakland officials had hoped the city's regulation of cannabis dispensaries would keep the DEA away.

The city adopted new guidelines on cannabis in 2004, nipping a then-burgeoning medical marijuana market and limiting the number of cannabis dispensaries to four.

At least one of the four — the Coffeeshop Blue Sky, formerly called SR-71 Coffeeshop, in the 300 block of 17th Street — has received a letter.

Owner Richard Lee could not be reached for comment Friday.

Bruce Mirken, communications director for the Marijuana Policy Project, called the DEA's actions "outrageous" and "damaging."

"They're trying basically to get landlords to do their dirty work," he said. "They don't have enough agents to close down the dispensaries and they're trying to get landlords to do it for them."

Mirken added, "The wheels don't turn in Washington, D.C., as fast as we would like them to, but this does appear to have gotten Chairman Conyers' attention — and that's a good first step."

Conyers became chairman of the House Judiciary Committee following the Democrats' takeover of Congress following the 2006 election. Dellums served with him in Congress for 27 years.

"They've known each other for a long time and they have a very good relationship," Rose said.


Contact Kelly Rayburn at 510-208-6435 or krayburn@bayareanewsgroup.com.

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Oakland School Turns Out Pot Club Pros

The Associated Press
By LISA LEFF – February 25, 2008

OAKLAND, Calif. (AP) — You know you're in a different kind of college when a teaching assistant sets five marijuana plants down in the middle of a lab and no one blinks a bloodshot eye.

Welcome to Oaksterdam University, a new trade school where higher education takes on a whole new meaning.

The school prepares people for jobs in California's thriving medical marijuana industry. For $200 and the cost of two required textbooks, students learn how to cultivate and cook with cannabis, study which strains of pot are best for certain ailments, and are instructed in the legalities of a business that is against the law in the eyes of the federal government.

"My basic idea is to try to professionalize the industry and have it taken seriously as a real industry, just like beer and distilling hard alcohol," said Richard Lee, 45, an activist and pot-dispensary owner who founded the school in a downtown storefront last fall.

So far, 60 students have completed the two-day weekend course, which is sold out through May. At the end of the class, students are given a take-home test, with the highest scorer — make that "top scorer" — earning the title of class valedictorian.

Before getting to Horticulture 101, the hands-on highlight of Oaksterdam U, the 20 budding botanists, entrepreneurs and political activists at a recent weekend session sat politely through two law lectures and a visiting professor's history talk.

In the lab, Lee measured plant food into a plastic garbage can and explained how, with common sense, upgraded electrical outlets, a fan and an air filter, students can grow pot at home for fun, health, public service — or profit.

Lee explained to his students how to prune and harvest plants, handing the clipping shears to a woman who wasn't sure how close to the stalk to cut without damaging it. He offered his thoughts on which commercial nutrient preparations are best, as well as the advantages of hydroponics, or soil-free gardening.

During a discussion of neighbor relations, he warned against setting boobytraps to keep curious kids out of outdoor gardens.

Students gave various reasons for enrolling. Some said they were simply curious. Others said they wanted tips for growing their own weed, although judging from the questions, a few were ready for the graduate seminar Lee recently added to the curriculum.

Jeff Sanders, 52, said he has been buying medical marijuana since 2003, but wants to open a dispensary in the San Joaquin Valley because he doesn't like having to drive up to San Francisco and paying the markup.

"I see it as a good thing. You are giving back to the community," Sanders said.

Patrick O'Shaughnessy, 37, said he started smoking pot regularly for the first time about a year ago to treat his chronic migraines, depression and anxiety. After attending class, he said felt more confident about growing his own, which he wants to do because the dispensary he frequents often sells out of his favorite strain.

Oaksterdam U draws its name from the jokey nickname for a section of Oakland where some of California's earliest medical marijuana dispensaries took root. The nickname in turn was inspired by the city of Amsterdam, in Holland, where pot use is tolerated.

At one point, the Oaksterdam neighborhood had at least 15 clubs and coffee shops selling pot, a number that dwindled to four when the city started issuing permits and collecting taxes from them a few years ago.

California was the first of a dozen states that have legalized marijuana use for patients with a doctor's recommendation. Despite periodic raids by federal drug agents and the threat of prosecution, clubs and cooperatives where customers can buy the drug of their choice have proliferated; California has 300 to 400, according to advocacy groups.

Entry-level workers are paid a little more than minimum wage, while "bud tenders," can make over $50,000 a year, and owners and top managers more than $100,000, Lee said. But there's also a certain amount of risk — and not just financial, but legal.

Michael Chapman, an assistant agent in charge with the Drug Enforcement Agency's San Francisco office, said authorities are aware of Oaksterdam U and don't see any reason to shut it down. Talking about marijuana is not illegal, and while a small amount of pot is kept on the premises, the DEA tries "to concentrate our case work on the most significant violators," he said.

Still, Chapman said he doesn't like Lee's effort to wrap cannabis education in a cap and gown.

"I think they are sending the wrong message out to the community and it's something that could only facilitate criminal behavior," he said.

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Friday, March 27, 2009

Oakland council could raise cannabis tax rate

San Francisco Business Times - by Vasanth Sridharan

Three Oakland city council members have proposed raising the business tax rate on medical marijuana sales to $12 or $24 per $1,000 of gross receipts. The current rate is $1.20.

The council members, Rebecca Kaplan (at-large), Nancy Nadel (district 3), and Jean Quan (district 4), said in an agenda report that the move would bring in an additional $200,000 to $400,000 in annual revenue.

Richard Lee, president of Oaksterdam University, an Oakland-based trade school for the cannabis industry, said that he has been working with the city council on this proposal. He also said the industry is fully behind it.

“We believe we should be paying more taxes, and we want to help the city more in its economic crisis,” Lee said.

He also said that the taxes should extend beyond the cannabis clubs and be applied to suppliers, and nurseries. Lee estimates that medical marijuana in Oakland is a $20 million industry, and that further taxing will help further legitimize it.

The council members could not immediately be reached for comment.

Read the entire agenda report here.

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Oakland takes step toward medical marijuana tax

By Kelly Rayburn
Oakland Tribune
Posted: 04/07/2009 07:34:56 PM PDT

OAKLAND — A proposal to increase the business tax on Oakland's four medical marijuana dispensaries won the support of a four-member City Council committee Tuesday, and it could be headed for the ballot July 21.

The tax increase is billed as one way to generate a small amount of additional revenue from medical marijuana dispensaries, which require more oversight than typical businesses, for a city facing a deficit that could reach $65 million in the 2009-10 fiscal year.

What remains in dispute is what the new tax rate should be. The council's finance committee Tuesday sent the proposal on to the full council, which could set the proposed tax rate at anywhere from $12 to $24 for every $1,000 in gross receipts.

The dispensaries, which now pay the same business tax as other retail operations, are on board with an increase from the $1.20 per $1,000 in receipts currently paid.

But James Anthony, an attorney for Harborside Health Center, one of the four legally operating dispensaries, said the proposed tax should be no higher than $14 per $1,000 if the city expects support.

"I'm afraid if it goes too high, we will have a patient revolt," he said. "And one thing that medical cannabis activists are good at is winning elections."

Anthony suggested a tax increase to members of the council about a month ago, he said. He said paying a higher tax rate could show the 120 jurisdictions across the state that have banned medical marijuana sales that "medical cannabis dispensaries are good neighbors" that can help provide cities with revenue.

Richard Lee, owner of the Coffeeshop Blue Sky, had a similar take, but said he would support any tax between $12 and $24 per $1,000, and does not expect a "patient revolt." He said Coffeeshop Blue Sky would take the financial hit, without passing costs on to patients.

The full council will take the item under consideration April 21. If passed by voters, the new tax could generate between $200,000 and $400,000 in additional annual revenue, depending on what rate is proposed.

Councilmember Nancy Nadel (Downtown-West Oakland) joined Councilmember Jean Quan (Montclair-Laurel) on Tuesday in supporting a rate of $14 per $1,000. Councilmember Ignacio De La Fuente (Glenview-Fruitvale) said he will push for $24 per $1,000.

For now, the July 21 ballot includes measures to reduce mandated spending on youth programs, increase the city's Hotel Tax and close a loophole in the city's Real Property Transfer Tax ordinance to ensure transfers of real estate through corporate mergers or acquisitions are taxable.

Quan has also proposed a quarter-cent city sales tax increase, but the idea has drawn opposition from other council members and faces a difficult road to the ballot.

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April 8, 2009

Cannabis tax may not bring in millions to Oakland

San Francisco Business Times by Vasanth Sridharan


The proposed increase in the cannabis tax rate that was approved by an Oakland City Council committee on Tuesday may not bring in millions to the city, as was previously assumed.

The increase would put the tax rate for cannabis at $12 or $24 per $1,000 in gross receipts -- 10 to 20 times more than it is today. Using 2007 numbers from the four licensed cannabis dispensaries in the city, the city council estimated that the tax would bring in an additional $200,000 to $400,000 in revenue to the city annually.

However, Councilwoman Nancy Nadel said in an interview on March 30 that the dispensaries were estimating that 2008 revenue was much larger, and she said that the tax rate increase could bring in “a couple million” to the city. But the dispensaries may have been overly optimistic. Xiaojing Wang, policy analyst in Nadel's office, said that the increase in 2008 was not that significant.

In 2007, the dispensaries’ gross receipts were $17,917,560. In 2008, the receipts were $21,177,482 -- which would mean about $250,000 to $500,000 in additional revenue.

But that doesn’t necessarily mean that the revenue prospects won’t increase. Councilwoman Nadel said that since U.S. Attorney General Eric Holder announced that the federal government would not be prosecuting legal medical marijuana dispensaries, applications for cannabis ID cards have increased, meaning demand for medical marijuana could be going up as well.

The proposal will go in front of the entire Oakland City Council later this month, but since it requires the creation of a new tax classification, it also has to be approved by the voters.


Email Vasanth Sridharan at vsridharan@bizjournals.com / (415) 288-4966


<center><small>All contents of this site © American City Business Journals Inc. All rights reserved.</small></center>

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<table class="posttable" align="right"><tr><td class="postcell"><img class="postimg" width="320" src="bin/lee_richard.jpg"></td></tr></table>Oakland finds peace with its pot clubs

John Diaz
The San Francisco Chronicle
Sunday, July 19, 2009


It is a warm weekday afternoon in uptown Oakland, and all's quiet on 17th Street, save for the steady revolution of customers in and out of the Coffeeshop Blue Sky.

"Just imagine," said Richard Lee, nodding at the familiar scene, "if you had four liquor outlets in all of Oakland. It's ridiculous."

Blue Sky is one of four medical marijuana dispensaries in the city. Lee is owner of the coffee shop and president of the 2-year-old Oaksterdam University, two blocks away, where 3,000 students have gone through courses on everything from hydroponics to staying within the boundaries of the ever-shifting law on medical marijuana.

Marijuana customers are ushered into the Blue Sky's back room, past the racks of tiny plants for sale ($12 each), only after showing their medical-marijuana card to a security guard, who records the number. Customers choose from a menu of marijuana, which sells for $30 for an eighth-ounce of medium grade, $40 for high grade.

Lee brings out a platter of marijuana-laced goodies for sale: cookies, fudges, Italian dressing, peanut brittle, olive oil, tea, jelly, pesto, lollipops, lemon bars.

"I have a stockpile at the house," a man in his 20s said of the lemon bars. "Awesome. They're awesome."

He gets his order of marijuana to go in a brown paper bag. "Hey, thanks for making us all happy, man," he tells Lee.

Oakland's medical marijuana outlets have engendered acceptance in a city that once was in the front lines of the war between state and federal drug laws. In 2001, the U.S. Supreme Court upheld the shutdown of an Oakland dispensary, finding no exemptions in federal drug law for medical necessity.

Oakland is now in the vanguard of medical marijuana, only this time as a model of tranquility. On Tuesday, the balloting will close on Measure F, which would make Oakland the nation's first city to have a business-tax category for cannabis operations.

Until now, the dispensaries have been paying a baseline rate of $1.20 per $1,000 of gross receipts. Passage of Measure F would create the separate category for cannabis business, at a rate of $18 per $1,000 of sales. The dispensaries already assess sales tax on purchases.

Oaksterdam's Lee, whose for-profit dispensaries sell about $3 million worth of marijuana a year, could see his annual tax burden rise by $50,000. Yet he supports Measure F, as does just about the entire Oakland establishment, including police and community groups.

Lee knows that an industry that produces revenue for government tends to be looked upon more favorably in the halls of government.

"We see this," he said, "as a step toward legitimizing the industry."

<span class="postbigbold">Waves of anxiety</span>

Nearly 13 years after the passage of Proposition 215, which approved the medical use of marijuana in California, the application of the law remains a work in progress. President Bill Clinton's administration responded to Prop. 215 by filing civil suits against pot clubs the sprouted across the state; President George W. Bush's administration raided and prosecuted medical marijuana suppliers.

Candidate Barack Obama said states should be allowed to make their own rules on medical marijuana. His attorney general, Eric Holder, signaled in February that the president would keep his campaign promise, and the raids on California pot dispensaries would end.

Then, in May, the U.S. Supreme Court declined to take up a lawsuit by San Diego and San Bernardino counties, which sought a definitive ruling on whether federal drug laws trumped the state's medical marijuana law.

But the truce with Washington has brought anything but a sense of relief to cities and counties that suddenly faced the prospect of new and expanded dispensaries in their communities. In the past two months alone, moratoriums on new dispensaries were passed or extended from beach towns (Santa Cruz, Oceanside) to the foothills (Nevada City) to the valleys (Sacramento, Hemet) and to the suburbs (Orinda, Escondido). Conservative or liberal, politicians in those towns share a common anxiety: a wave of new or expanded dispensaries they do not have the means to control.

<span class="postbigbold">Reefer madness: The L.A. story</span>

"What is happening in Los Angeles is an absolute freaking disaster."

Those are not the words of an anti-marijuana crusader. That is the observation of Bruce Mirken of the Marijuana Policy Project.

"As much as we think marijuana should be legal and regulated, you do have to have a reasonable set of rules," Mirken said. "Folks can argue about the fine details, but nobody - at least nobody sane - thinks marijuana is like Coca-Cola. It needs sensible controls."

Four years ago, Los Angeles had just four storefront dispensaries. As dispensaries began to proliferate, the city in 2007 passed a moratorium on new ones - but, in a colossal misjudgment, created a hardship exemption. Hundreds of medical-marijuana entrepreneurs exploited the loophole.

The city has moved to tighten its rules, but not before Los Angeles found itself with an estimated 600 to 800 dispensaries.

"I think that the policy of the federal government is unfortunate. ... I think the policy of this state is Looney Tunes," Los Angeles Police Chief William Bratton said after Holder's suggestion that the raids would end. "They pass a law, then they have no regulations as to how to enforce the darn thing and, as a result, we have hundreds of these locations selling drugs to every Tom, Dick and Harry."

<span class="postbigbold">Medicine? Sometimes</span>

It would require a willful suspension of disbelief to think that all the marijuana being sold at California's dispensaries is being used for medicinal purposes. Proposition 215 was advertised as a way to provide compassionate relief to people suffering from AIDS, cancer, glaucoma and other serious conditions for which it has shown to be effective. But there are no limitations on ailments for which physicians can recommend marijuana - and a cottage industry has emerged of doctors who openly advertise on referrals for everything from chronic pain to PMS.

Lee was asked if he knew of any would-be customer who could not get a medical referral. "Um," he hesitated, "pretty much no. All you need is $150" for the required medical examination.

Rebecca Kaplan, the Oakland city councilwoman who helped write Measure F, said she had no illusions about the composition of the customer base at the dispensaries.

"It's an interesting question. ... I don't want to say it's perfect," Kaplan said. "Is medical cannabis any less medical than medical Viagra?"

<span class="postbigbold">Oakland's reality check</span>

Kaplan also knows that Oaksterdam University and the dispensaries have proved to be good neighbors in a part of town that needs people and businesses. They sweep the sidewalks, they donate to local causes, they join civic groups. Unlike Berkeley and San Francisco, Oakland does not allow pot smoking at its dispensaries.

"Nothing crazy at all," said Kiana McGill, a clerk at A Diva's Closet, a fashion store next to the Blue Sky. "There's not a lot of noise or anything like that ... they have good people, good security."

They also have a mission beyond the bottom line, which is why Richard Lee is so willing to accept a fifteenfold increase in his business tax.

Lee, 46, has been determined to advance the legalization of marijuana ever since he waited 45 minutes for Houston police to respond after he was carjacked at gunpoint in 1991.

"The problem was that police were spending more time looking for people like me and my friends than going after the sociopaths and predators," he said.

In Oakland, the issue of marijuana as a police priority was pretty much settled with the 2004's Measure Z, which made it law enforcement's lowest concern.

"The nice thing about our police is they don't have their head in the clouds," Kaplan said. "The police in Oakland know what real crime is - and this is not that."

<span class="postbigbold">Conflicts and contradictions</span>

Even as Oakland pushes the boundaries of regulation and taxation, the gaps and contradictions in pot laws remain profound. In many areas of the state, medical-marijuana patients have to drive many miles to find a dispensary. If they come to Oakland's Blue Sky, they are allowed a 4-ounce limit per purchase, instead of the 1-ounce limit for locals.

Across the bay, San Francisco started tightening its controls on dispensaries four years ago, requiring a $7,000 permit and annual reviews. The number of pot clubs dropped from 40 to two dozen - and complaints from neighboring businesses and residents have fallen.

"Since we were working with no instruction at the state level, and always looking over our shoulders at the feds, we had to work with the tools we had," said San Francisco Supervisor Ross Mirkarimi.

<span class="postbigbold">The legalization question</span>

Gov. Arnold Schwarzenegger recently said, "I think it's time for debate" on the legalization of marijuana. An April Field Poll showed that 56 percent of Californians favored legalization. The state Board of Equalization added fuel to the debate last week when it calculated that legislation by Assemblyman Tom Ammiano, D-San Francisco, to legalize marijuana and tax it at $50 an ounce would generate $1.4 billion a year in taxes.

Ammiano's bill is stalled for the year, though he said the issue "feels like it has more traction than it ever has," especially as budget woes heighten quests for revenue and concerns about the costs of enforcing ineffective drug laws.

And even though a legalization initiative is being drafted for 2010 - one that would give wide latitude to cities and counties to regulate cultivation and sales - there is disagreement among advocates about whether the issue's moment has arrived.

"It might be a little early," conceded Oaksterdam's Lee.

For now, advocates of legalization will have to settle for an incremental step: a new business-tax category in Oakland that could bring the city several hundred thousand dollars a year.

"I don't think it's a turning point ... but it starts the ball rolling," said Oakland City Attorney John Russo, who as a City Council member helped tighten regulation of the dispensaries. "As cities start taxing pot and making money, other government entities are going to start asking: 'Why aren't we getting in on this revenue stream?' "

John Diaz is The Chronicle's editorial page editor. You can e-mail him at jdiaz@sfchronicle.com.


<small>This article appeared on page E - 2 of the San Francisco Chronicle</small>

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<span class="postbold">See:</span> Tax Prozac, not medical marijuana - Examiner.com | 20 Jul 09

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Cash-strapped Californian city to put hefty sales tax on marijuana

<span class="postbigbold">Oakland's levy on medical cannabis seen as way to raise revenue and step toward legalisation</span>

The Guardian | 23 Jul 09

Voters in the San Francisco Bay city of Oakland have overwhelmingly approved a 15-fold increase in sales tax on medical marijuana sold at dispensaries in the city.

Oakland, like the state of California and cities and other states across the country, faces a crippling budget shortfall, and medical marijuana users and suppliers cheered the tax increase as a way to raise revenue and a step toward legalisation.

In a ballot this week, 80% of voters approved the tax.

"The passage of this first-in-the-nation tax further legitimises cannabis-based enterprises in Oakland and elsewhere," Allen St Pierre, director of the National Organisation for Reform of Marijuana Laws, said.

"These outlets are contributing to the health and welfare of their local communities, both socially and now economically.

"At a time when many municipalities are strapped for tax revenues and cutting public services it is likely that public officials in other cities will begin considering similar proposals."

The tax – $18 per $1,000 of marijuana sold – is expected to raise about $300,000 (£182,000) in new revenue per year. The amount is a puff of smoke compared with the $83m (just over £50m) budget gap the city has struggled to close.

"It's one more victory in a big war," said Richard Lee, president of Oaksterdam University, an Oakland school that trains medical marijuana retailers. "It's a lot better than being arrested and thrown in jail," he told the New York Times.

The new tax comes as California and other states are taking tentative steps toward legalisation of marijuana, a drug widely available in every urban, suburban and rural community in America, and one that President Obama has acknowledged he used as a young man.

Massachusetts voters recently opted to decriminalise possession of an ounce or less of marijuana.

In Cook county, which surrounds Chicago, legislators this week voted to reduce the penalty for possession of 10g or less of marijuana with a $200 ticket instead of jail.

And in California, which in the 1990s became the first state to legalise medical marijuana, the state legislature will later this year take up a bill that would wholly legalise and tax the drug – an effort to cure a $26bn budget crisis.

Earlier this year, Obama's top law enforcement official, Eric Holder, reversed course from the Bush administration and said medical marijuana suppliers and growers who otherwise complied with state law would not be prosecuted.

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<span class="postbold">See:</span> Selling out the medical marijuana movement - Examiner.com | 24 Jul 09

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<small>Friday, Jul. 24, 2009</small>
Is Marijuana the Answer to California's Budget Woes?

By Tom McNichol / San Francisco | Time


Proponents of marijuana legalization have advanced plenty of arguments in support of their drug of choice: marijuana is less dangerous than legal substances like cigarettes and alcohol; pot has legitimate medical uses; the money spent prosecuting marijuana offenses would be better used for more pressing public concerns.

While 13 states permit the limited sale of marijuana for medical use, and polls show a steady increase in the number of Americans who favor legalization, federal law still bans the cultivation, sale or possession of marijuana. In fact, the feds still classify marijuana as a Schedule I drug, one that has no "currently accepted medical use" in the U.S. (Watch a video on medical-marijuana home delivery.)

But supporters of legalization may have been handed their most convincing factor yet: the bummer economy. Advocates say that if state or local governments could collect a tax on even a fraction of pot sales, it would help rescue cash-strapped communities. Not surprisingly, the idea is getting traction in California, home to the nation's largest supply of domestically grown marijuana (worth an estimated $14 billion a year) and biggest state budget deficit (more than $26 billion).

On July 20, Governor Arnold Schwarzenegger and California legislative leaders reached a tentative budget agreement to plug the state's deficit, but it would involve making sweeping cuts in education and health services as well as taking billions from county governments. Democratic state assemblyman Tom Ammiano has introduced legislation that would let California regulate and tax the sale of marijuana. The state's proposed $50-per-oz. pot tax would bring in about $1.3 billion a year in additional revenue. Ammiano's bill was shelved this session, but he expects to introduce a revised bill early next year. (See TIME's photo-essay "The Great American Pot Smoke-Out.")

If the state legislature doesn"t act, perhaps California voters will. One group is preparing to place a statewide initiative for the November 2010 ballot that would regulate and tax the sale of marijuana for Californians 21 years of age and older. Tellingly, the group spearheading the measure calls itself TaxCannabis2010.org, stressing the revenue advantages of marijuana legalization. The group hopes to collect the required 650,000 voter signatures by January to place the measure on the ballot.

"There's no doubt that the ground is shifting on marijuana," says Ethan Nadelmann, executive director of the Drug Policy Alliance, which promotes alternatives to the war on drugs. "The discussion about regulating and taxing marijuana now has an air of legitimacy to it that it didn"t quite have before. And the economy has given the issue a real turbo-charge." (Read "Can Marijuana Help Rescue California's Economy?")

The legalization effort is getting serious consideration from surprising quarters. In May, Schwarzenegger publicly called for a large-scale study to determine whether to legalize and tax marijuana.

"I think it"s time for a debate," the governor said at a news conference. "I think we ought to study very carefully what other countries are doing that have legalized marijuana and other drugs." (See a TIME photo-essay on cannabis culture.)

In California, medical-marijuana sales are already taxed, and one community recently grabbed for a bigger slice of the pot pie. Residents in Oakland on July 21 overwhelmingly approved a ballot measure that would make the city the first in the country to establish a new tax rate for medical-marijuana businesses. The measure, which a preliminary count shows passed with 80% support, considerably hikes the tax Oakland marijuana dispensaries pay on sales, from $1.20 per $1,000 in receipts to $18 per $1,000.

A Field Poll conducted in California this spring showed that 56% of the state's registered voters support legalizing and taxing marijuana as a way of offsetting some of the budget deficit. Several national polls have shown that more than 45% of American adults are open to legalizing pot, about double the support a decade ago.

Yet even the most ardent marijuana advocates aren't expecting nationwide legalization anytime soon. Instead, any action is likely to come on the state and local level. For now, all eyes are on cash-strapped California, where high taxes could take on an entirely new meaning.

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The following is an excerpt:

Bruce Cain | NewAgeCitizen

Is Anderson Cooper Censoring the Discussion of Alternative Approaches to Re-Legalizing Marijuana?

The other day I was listening to fellow activist Casper Leitch's webcast "Time for Hemp." On the show he had two luminaries of the movement to comment on the recent 80% landslide vote in favor of taxing Marijuana in Oakland, California. The first guest on the show was Dennis Peron, who was one of the original authors of the first Medical Marijuana Initiative: Proposition 215 in 1996. Also on the show was Ed Rosenthal who has been writing about Marijuana Cultivation for decades through High Times and other Magazines.

You can listen to it in its entirety at this link:

http://www.time4hemp.com/podcast/music/ ... lution.mp3

Here are some excerpts of what they had to say:

Time For Hemp Partial Transcript with Dennis Peron and Ed Rosenthal:

Casper Leitch: CL
Dennis Peron: DP
Ed Rosenthal: ER
[About half way through the audio file]

<table class="posttable" align="center" width="80%"><tr><td class="postcell">

CL: The Medical Marijuana Tax has now passed in Oakland California. Some people think it to be a wonderful thing, overly exciting and a sign of progress. Others consider it to be a little strange. We have on the line today someone that helped place the first Medical Marijuana Law on the books with Proposition 215. Dennis Peron is one of the authors of Proposition 215.

Did you ever think you would see a day, when you woke up in California, and found that Marijuana was being taxed?

DP: It has taken a strange course of events, none of which I anticipated. And it is a strange thing in California because in California and the other states, medicine is not taxed. Now all of a sudden our medicine has to be taxed. And I don't "get" this tax. It seems like we are trying to buy our way into this thing: to buy our way into acceptance. And I don't think that is the way to go. It's like buying our way to "keep the bear away from us" by feeding it. And I have to tell you about the bear. You have to keep feeding the bear or else they're going to get rid of it (e.g., Medical or Legal Marijuana). So if you start feeding it, you're going to have to keep feeding it. And taxes here, taxes there. And we're really being taxed with over 20 million getting busted. That's our tax.

And I know it sounds good to say, "let's just tax our way out of this thing." But you can't. This is a moral crusade. And it's a moral crusade on their side and a moral crusade on our side. We believe in plants and I don't think we should have to tax ourselves to get it to be free. And I just think it is wrong to do it and I support the idea of getting Marijuana to be accepted and it is being accepted because people voted for it. They think it is a medicine. So the idea is that we have to start feeding the bear money to get him to stay away from us. We have won and eventually the courts are going to come down on their side and say hey Mr. Peron says all use is medical. Therefore Proposition 215 Legalized Marijuana and maybe through the back door. So we go through the back door and they go through the back door. But now we have these taxes. So now we can money out of these guys (e.g., Marijuana Consumers) and I think that is wrong.

CL: Now their are some people that say we are working within the system by making this happen and they point out that the government is going to have its hand in everything and this might be a reasonable way to make it acceptable across the entire United States.

DP: Oh, I know. Its a way of acceptance. But it is the wrong way of getting acceptance. We are gaining acceptance because it is a good medicine, a beneficial medicine, a safe medicine that saves peoples lives. You can't get more righteous than that.

CL: OK. Do you have a dispensary in Oakland?

DP: No, I'm not into that I'm glad to say. I'm totally out of that. Now I'm just operating a "Bud and Breakfast" . . .

==========================


Ed Rosenthal: :Ask Ed" Grow Column

CL: Are you excited by the new tax that has taken place there in Oakland?

ER: This initiative that the voters just passed. The 1.8 percent tax on the revenue from all businesses associated with the sale of Marijuana. Now it's not that I'm opposed to the tax, per se. And I know Oakland needs the money. But in California there is no sales tax on prescription medicine. And Marijuana coming from the dispensaries all needs a recommendation from a doctor. So they're not treating Marijuana as they are treating other medicines. Instead this initiative is treating Marijuana much like alcohol because bars and other establishments in Oakland that serve alcohol, also have to pay a 1.8 percent tax. And I think that if they want to tax Marijuana it would be fine to tax recreational Marijuana. But I don't think that patients should have to pay a sales tax. If you hear the club owners, or other public officials, they say, "Oh no, the patients won't pay it." But everyone knows that ultimately the patients will pay it. It doesn't' come out of the profits of the distributors it comes directly from the patients. And I don't think that patients should have to pay a tax for their medicine.</td></tr></table>

So isn't it rather odd that the Mainstream Media doesn't allow Dennis Peron, the author of the very first Medical Marijuana Initiative, to voice his opposition to "taxing and regulating" Medical Marijuana? Isn't it rather odd that the Mainstream Media doesn't allow Ed Rosenthal to point out that Marijuana is the only medicine that we allow to be taxed.

This is simply part of the plan to "manufacture consent" for a "tax and regulate" model to eventually legalize Marijuana. But, unlike the MERP Model there are 3 important things it cannot accomplish:

(1) It will not Destroy the Drug Cartels
(2) It will not allow the sick access to free medicine
(3) It will not provide a counterbalance to the liberties lost in the wake of 911.

Once the MERP Model becomes law the police will no longer have any excuse to break down you door in order to see if you are growing too many Marijuana plants.

There are most definitely advantages to such a model that allows individuals the right to cultivate without being taxed or regulated.. So why doesn't the public get to even consider the "pros" and "cons" of such an approach?

After all we are not trying to monopolize the debate. But we do believe that the MERP Model should have a place in every future Mainstream Media "propaganda piece" regarding Marijuana. It should also have a place at every future meeting of the Marijuana Policy Project, the Drug Policy Alliance and NORML. But so far we have been essentially censored by these groups, just as we have been censored by the Mainstream Media.

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OAKLAND CANNABIS TAX MEASURE BAD MODEL FOR MEDICAL CANNABIS MOVEMENT, BAD FOR PATIENTS

<span class="postbigbold">The Green Cross San Francisco Weighs in: Steps Towards Cannabis Legalization in California will Adversely Affect Patients & Demean Medical Use</span>

Updated - 08/20/09 | The Green Cross


July 25, 2009 -- Last week, voters in Oakland overwhelmingly passed Measure F, which created a new business tax rate for “Cannabis Businesses” of $18 for each $1,000 in gross receipts from business activity, an astronomical increase from the previous “Retail Sales” tax rate. Proponents of this tax say that this is the first step towards legalizing adult use of cannabis. The Green Cross in San Francisco says that this is the first step towards pricing out patients and demeaning the medical movement.

Legislators from medical cannabis-friendly cities, from Los Angeles, to Santa Cruz, to San Francisco, have heralded the Oakland initiative as a model for cities to use to increase revenue in hard economic times. However, these officials are overlooking two important distinctions: in 2004 voters in Oakland passed Measure Z, which made adult cannabis use the lowest law enforcement priority. Although legislative bodies in other cities, including San Francisco, have passed similar policies, the Oakland measure was more comprehensive in that it both actively called for the lobbying of legalization and it led to the opening of private “Measure Z” non-patient, adult-use (i.e. non-medical) cannabis clubs. In addition, Oakland is home to only four medical cannabis clubs- a monopolistic concentration of ownership that allows the Oakland clubs to generate high profits and therefore absorb the new tax instead of passing it on to their patients. Clubs in other cities are not in such a position.

The Green Cross supports decriminalization, and approves and defends personal choice for all Californians. In addition, The Green Cross opposes any legislation, rule or regulation that aims to limit or restrict, in any way, an individual’s right to grow cannabis. However, The Green Cross has been, and continues to be, adamant that cannabis is medicine, and should be used under a doctor’s supervision and with a doctor’s recommendation. Cannabis must be used responsibly, and some in the medical community are concerned that the recent push for adult-use legalization could adversely affect patients and demean medical use.

Medical Cannabis Dispensaries are taxed at the state and local level, through sales tax, payroll tax, and income tax. Levying higher taxes, like those resulting from the Oakland measure, will result in higher prices for patients. Proponents say these taxes are a way to legitimize and justify general adult use. However, such a sin tax only works to punish patients, the only members of the California adult population who currently are allowed to purchase cannabis legally.

Punishing patients to gain social acceptance of a rushed unproven experiment involving general adult use is irresponsible and unfair. The medical community has worked hard to fight for the rights of patients and caretakers. Kevin Reed, President of the The Green Cross may have said it best, when he commented that “this frantic, ‘we need money, legalize now’ movement may totally derail what we have been tirelessly working for during the last thirteen years. Proponents of legalization run the risk that people may not like what they see, and if the legalization-for-all social experiment fails, it could bring the medical cannabis movement down with it.”

California Assemblyman Tom Ammiano (D-SF) is currently working on a bill to legalize adult use of cannabis in California. This bill would leave California medical cannabis law untouched, thereby protecting the rights of patients and caregivers. Perhaps the citizens of California should allow for this process (one which requires diligent research and investigation) to yield results before embarking on a completely different route towards adult legalization. However, one thing is certain- any route by which Californians use to get to the destination of general adult-use legalization cannot be one that runs over and intrudes on the rights and privileges of patients and caregivers who use cannabis for medical purposes.

The Green Cross is a fully licensed and permitted medical cannabis collective that has been operating in San Francisco since 2004. The Green Cross strives to keep prices low, and delivers quality medical cannabis to qualified patients in the City and County of San Francisco. For more information, please call Kevin Reed at 415-648-4420 or email him at kevinreed@thegreencross.org.

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Oakland voting on pot tax backed by advocates

Matthai Kuruvila, The San Francisco Chronicle

Sunday, July 19, 2009


At Coffeeshop Blue Sky on 17th Street in Oakland, patrons can buy lemon bars filled with 10 doses of cannabis hash with a recommendation from a doctor. Get there fast. The "edibles" here fly off the shelves.

Walk over to the Patient ID Center, and you can buy commercial machines that can trim the leaves off of cannabis quicker than you could do with scissors.

And over at Club Z, members of the underground club don't need prescriptions and are sampling the varieties of pot before they buy.

People may be debating legalizing marijuana in other parts of the state and nation. But here in the nine-block cannabis district of Oakland known as Oaksterdam, it's hard to argue that it's not here already.

"At this point, dude, seriously, let's just face the fact that everybody is smoking," said Jaime Galindo, who gave a reporter a tour of Club Z. "Bus drivers, cops - your grandma."

Measure F has no formal campaign opposition.

Oakland voters may take the city, the longtime epicenter of the cannabis legalization movement, to yet another threshold Tuesday. Measure F, one of four measures on a mail-only ballot due Tuesday, would establish a new 1.8 percent tax for "cannabis businesses" - believed to be the first of its kind in the nation.

"We're moving toward being accepted like Budweiser beer," said Richard Lee, whom High Times magazine deemed in its February issue as "the mayor of Oaksterdam."

The tax, which Lee and other advocates sought, is imposed on the gross receipts from nearly every aspect of the cultivation, production or sale of marijuana and its derivatives - all of which happen in Oaksterdam.

The colonists of early America declared "no taxation without representation," but cannabis advocates want taxation to get representation.

And Measure F is a harbinger.

Polls show majorities of the state and nation favor legalization, and cannabis proponents are preparing a statewide legalization and taxation measure for the November 2010 ballot.

Oakland's measure is expected to generate only $294,000 annually - a meager sum for the city of Oakland's $414 million budget. But the state Board of Equalization estimated last week that the state would take in $1.4 billion if a cannabis legalization bill introduced by Assemblyman Tom Ammiano, D-San Francisco, were to pass.

There are also other motivations.

In Oaksterdam, non-cannabis businesses say the cannabis businesses help their bottom line.

"The traffic that it brings to the neighborhood is great," said Gertha Hays, owner of A Diva's Closet, a women's clothing store.

Brandon Anderson drove from Martinez to buy a sixteenth of an ounce for $22 and a $10 hash chocolate candy from Coffeeshop Blue Sky. (He passed on the cannabis-laden cookies, brownies, lollipops, pesto, peanut butter and jelly.)Anderson, who has a prescription for anxiety and pain relief, said he'd be happy to pay the tax, he said, because "it's a way to give back to the community and generate money."

Local and state politicians have hardly held back on their views. Lee showed a letter in his office from Don Perata, the former state senate majority leader, who is now running for mayor of Oakland.

"Sooner or later," Perata wrote in blue ink on the letter, "we'll get legalization."

<span class="postbold">In Insight:</span> Oakland's evolution from pariah to pioneer on medical marijuana. E2

<span class="postbold">Pot, by the numbers</span>

Percent of Californians who support legalization and taxation of marijuana: 56

Percent of Americans who support legalization of marijuana: 52

Amount taxation of marijuana might bring in to the state: $1.4 billion

Amount Measure F would bring in revenues to the city of Oakland: $294,000

Sources, in order: Field Poll, Zogby Poll, state Board of Equalization, Oakland City Auditor Courtney Ruby

E-mail Matthai Kuruvila at mkuruvila@sfchronicle.com.

<small>This article appeared on page C - 1 of the San Francisco Chronicle</small>

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Oakland pot tax fuels statewide campaign

By Peter Hecht | Sacramento Bee
Posted: 08/03/2009 11:58:00 PM PDT
Updated: 08/03/2009 11:58:51 PM PDT


OAKLAND — Bill O'Donnell illegally self-medicated himself with marijuana for years for a combat injury and post-traumatic stress from military service in Vietnam. It landed him in jail once for possession.

Today, O'Donnell, 58, legally selects medical marijuana pot brands from the "bud tender" at the Coffeeshop Blue Sky in downtown Oakland. And he feels proud the dispensary soon will pay taxes on his purchases — thanks to Oakland's passage of the nation's first cannabis taxation law on July 21.

"I've gone all the way from doing 60 days in jail to paying taxes on this," O'Donnell said. "I'm glad to help out — legitimately."

When 80 percent of Oakland voters approved a gross receipts tax that charged the city's four pot dispensaries $18 for every $1,000 in revenue, they added political smoke to efforts in other California cities to treat municipal budget deficits by taxing medical marijuana revenues.

The Oakland vote also stoked a calculated self-taxation movement by cannabis advocates. Oakland medical pot dispensaries that all but begged to pay new taxes are backing a 2010 ballot initiative drive to legalize marijuana for personal use and soothe the Golden State's fiscal woes with more than $1 billion in state cannabis taxes.

"This is just one tax of many. It's one battle in a big war," said Richard Lee, owner of Coffeeshop Blue Sky. "It's a reverse tax revolt: No taxation without legalization."

Lee, founder of TaxCannabis2010.org, also is president of downtown Oakland's Oaksterdam University, an unusual trade school that teaches marijuana cultivation, retail management and advocacy.

He says the school expects to donate $500,000 for signature gathering for the proposed California Cannabis Initiative.

The Oakland tax vote and the broader intentions of pro-pot activists alarm some law enforcement and anti-drug use groups.

"We're concerned about the storefronts that are trying to legitimize this," said Lori Green, a spokeswoman and parental advocate for the Coalition for a Drug Free California. "It's just another tactic to mainstream marijuana use into our everyday life. Later on, we're going to pay triple or more in costs of new addictions than any new taxes are going to cover."

Oakland City Council member Rebecca Kaplan, who won unanimous support for her resolution to put the Measure F pot dispensary tax before voters, said the tax on cannabis sales could generate $1 million for the city.

Originally, the Oakland city auditor estimated the tax would produce $300,000 annually. But Kaplan said Oakland is seeing a surge in medical marijuana licenses and sales after U.S. Attorney General Eric Holder announced federal authorities will no longer prosecute dispensaries operating under California's 1996 medical marijuana law.

Kaplan said Oakland's new tax, which takes effect Jan. 1, reflects "the world in the way it has already changed.

"I do definitely see this as a shift in the political winds in terms of how people are talking about medical marijuana, marijuana reform and budgeting," Kaplan said.

In Los Angeles, City Council member Janice Hahn recently introduced a motion to create a "cannabis business tax" she said could generate up to $32 million a year from as many as 400 Los Angeles pot dispensaries.

Hahn said the pot tax motion, cosigned by fellow councilman and former police union leader Dennis Zine, was inspired in part by the state's fiscal raids on local budget coffers.

The newly approved state budget borrows $2 billion from local governments and takes another $1.7 billion in redevelopment funds. It would transfer nearly $113 million from Los Angeles to the state this fiscal year, according to a Web site.

"They're coming after even more money from the municipalities," Hahn said. "It really was a motivation to say, 'Hey, here's a new business cropping up — pardon the pun. Let's explore how we can create a new category for cannabis and tax them on their gross sales.'

"Maybe that will mean some services we won't have to cut, some jobs we won't have to get rid of and some police officers we can keep."

The city of Sacramento last month imposed a 45-day moratorium on new medicinal marijuana businesses after an estimated two dozen pot dispensaries opened in town. But the city is working to draft an ordinance governing the establishments — a move that could eventually open the door to imposing a local cannabis tax.

"Everything is on the table right now," said City Council member Sandy Sheedy, who said the city is "starting from scratch" in deciding what to do about its burgeoning medical marijuana trade. "We were watching the vote on that (in Oakland). I was a little surprised it won by 80 percent."

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July 23, 2009 | The New York Times
Marijuana Supporters Welcome a Tax Increase

By JESSE McKINLEY

OAKLAND, Calif. — Perhaps only in the sometimes hazy world of medical marijuana could higher taxes be considered good news.

But sure enough, supporters of medical marijuana were pleasantly pleased Wednesday after Oakland voters overwhelmingly approved a huge tax increase — 15 times the former rate — on sales at the city’s handful of permitted medical marijuana dispensaries.

Believed to be the first of its kind, Measure F received nearly 80 percent of the vote, a landslide that pot professionals hailed as a significant step in the legitimization of the cannabis industry.

“It’s one more victory in a big war,” said Richard Lee, president of Oaksterdam University, a downtown storefront where the aroma of marijuana pervades the sidewalk. “It’s a lot better than being arrested and thrown in jail.”

Medical marijuana has been legal in California since 1996, but its dispensaries and their proprietors have periodically faced crackdowns from federal authorities who do not recognize the state law, which was passed as Proposition 215. Supporters of the drug’s medical use have been cheered, however, by recent remarks from Attorney General Eric H. Holder Jr. that those abiding by state law will not be made a target by federal agents.

California, whose $26 billion budget crisis has dispirited many residents, has toyed with the idea of legalizing marijuana, with a bill that would legalize and tax the drug scheduled to be taken up by the Assembly later this year. The dispensaries already pay some $18 million a year in state sales tax, according to the Board of Equalization.

Laura Thomas, deputy state director for the Drug Policy Alliance in San Francisco, which lobbies for changes in drug policy, said the recession was forcing many states to consider “untouchable topics” as potential revenue streams. “In hard budget times people are willing to be more creative,” Ms. Thomas said.

In Oakland, Measure F raises the tax on “gross receipts” at a handful of dispensaries to $18 per $1,000 worth of goods sold, and is expected to raise about $300,000 in new taxes. That is not much money — the city just closed an $83 million budget gap — but even so, a spokesman for Mayor Ron Dellums said the mayor was grateful for “all measures that will help with our budget situation.”

For Mr. Lee, who plans to introduce a ballot measure this week — with an eye toward getting it on the ballot in 2010 — seeking to legalize personal, nonmedical use of the drug, the election victory means he would pay about $42,000 more in taxes. Not that he minds.

“This tax,” he said, “is a lot cheaper than lawyers.”

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Welcome to Potopia

<span class="postbigbold">A nine-block section of downtown Oakland, Calif., has become a modern marijuana mecca—and a model for what a legalized-drug America could look like. Why the stars are aligning for the pro-weed movement.</span>

By Jessica Bennett | Newsweek Web Exclusive

Oct 15, 2009


On the corner of Broadway and 17th Street in downtown Oakland, nudged between a Chinese restaurant and a hat shop, Oaksterdam University greets passersby with a life-sized cutout of Barack Obama and the sweet smell of fresh marijuana drifting from a back room. Inside, dutiful students flip through thick plastic binders of the day's lessons, which, on a recent Saturday began with "Pot Politics 101," taught by a ponytailed legal consultant who has authored a number of books on hemp. The class breaks for lunch around noon, and resumes an hour later, with classes on "budtending," horticulture and cooking, which includes a recipe for "a beautiful pot pesto." There are 50 students in this class, the majority of them Californians, but some have come all the way from Kansas. In between lectures, the university's founder, Richard Lee, 47, rolls in and out on his wheelchair greeting students, looking the part of a pot school dean in Converse sneaker, aviator glasses, and a green "Oaksterdam" T-shirt.

Locals refer to the nine-block area surrounding the university as Oaksterdam—a hybrid of "Oakland" and the drug-friendly "Amsterdam," where marijuana has been effectively legal since 1976. Nestled among what was once a rash of vacant storefronts, Lee has created a kind of urban pot utopia, where everything moves just a little bit more slowly than the outside world. Among the businesses he owns are the Blue Sky Coffeeshop, a coffee house and pot dispensary where getting an actual cup of Joe takes 20 minutes but picking up a sack of Purple Kush wrapped neatly in a brown lunch bag takes about five. There's Lee's Bulldog Café, a student lounge with a not-so-secret back room where the haze-induced sounds of "Dark Side of the Moon" seep through thick smoke, and a glass blowing shop where bongs are the art of choice. Around the corner is a taco stand (Lee doesn't own this one) that has benefitted mightily from the university's hungry students.

An education at Oaksterdam means learning how to grow, sell, market, and consume weed—all of which has been legal in California, for medicinal use only, since 1996. For the price of an ounce of pot and a couple of batches of brownies (about $250), pot lovers can enroll in a variety of weekend cannabis seminars all focused on medicinal use. But "medicinal" is something of an open joke in the state, where anyone over age 18 with a doctor's note—easy to get for ailments like anxiety or cramps, if you're willing to pay—can obtain an ID card allowing access to any of the state's hundreds of dispensaries, or pot shops. ("You can basically get a doctor's recommendation for anything," said one dispensary worker.) Not all of those dispensaries are legally recognized, however: there's a growing discrepancy over how California's laws mesh (or don't mesh) with local and federal regulations. But Oakland is unique in that it has four licensed and regulated dispensaries, each taxed directly by the city government. This past summer, Oakland voters became the first in the nation to enact a special cannabis excise tax—$18 for every $1,000 grossed—that the city believes will generate up to $1 million in the first year. Approved by 80 percent of voters, and unopposed by any organization, including law enforcement, the tax was pushed by the dispensary owners themselves, who hope the model will prove to the rest of California that a regulated marijuana industry can be both profitable and responsible. "The reality is we're creating jobs, improving the city, filling empty store spaces, and when people come down here to Oakland they can see that," says Lee, who smokes both recreationally and for his health, to ease muscle spasms caused by a spinal chord injury.

The arguments against this kind of operation are easy to tick off: that it glamourizes marijuana, promotes a gateway drug, leads to abuse. Compared to more serious drugs like heroine, cocaine or even alcohol, studies have shown the health effects of marijuana are fairly mild. But there are still risks to its consumption: heavy pot users are more likely to be in car accidents; there have been some reports of it causing problems in respiration and fetal development. And, as the director of the National Institute on Drug Abuse, Dr. Nora Volkow, put it recently, there are a number of medical professionals, and many parents, who worry that the drug's increased potency over the years has heightened the risk of addiction. "It's certainly true that this is not your grandfather's pot," says Mark Kleiman, a drug policy expert at the Univerisity of California at Los Angeles.

Nevertheless, like much of the country, Oakland is suffering economically. The city faced an $83 million budget deficit this year, and California, of course, is billions in the red. So from a public coffers perspective, if ever there were a time to rethink pot policy, that time is now. Already in Sacramento, there is a legalization measure before the state assembly that the author claims could generate $1.3 billion in tax revenue. And while analysts say it has little hope of passing (it faces strong opposition from law enforcement), the figures prompted even Gov. Arnold Schwarzenegger—who's vetoed every marijuana-related bill to come across his desk—to proclaimed that "It's time for a debate." On a federal level, marijuana is still illegal—it was outlawed, over the objections of the American Medical Association, in 1937. But in February, Attorney General Eric Holder stunned critics when he announced that the feds would cease raiding medical marijuana dispensaries that are authorized under state law. "People are no longer outraged by the idea of legalization," wrote former San Francisco mayor Willie Brown in a recent op-ed. "And truth be told, there is just too much money to be made both by the people who grow marijuana and the cities and counties that would be able to tax it."

Harvard economist Jeffrey Miron has estimated that the cost of cannabis prohibition is $13 billion annually, with an additional $7 billion lost in potential tax revenue. Even the students at Lee's Oaksterdam cite the job market as a reason for showing up: one man, there with his 21-year-old son, told NEWSWEEK he'd lost his business in the housing bust; another was looking for a way to supplement his income as a contractor. "Alcohol prohibition, the result of a century-long anti-alcohol crusade, was fairly quickly repealed in part because of the onset of the Great Depression," says Craig Reinarman, a sociologist at UC Santa Cruz and the coauthor of Crack in America. "I think we're in a similar situation now, where states are so strapped for money that any source of new revenue is going to be welcomed."

Oakland has become a kind of test lab for what legalized marijuana might look like. City Council member Rebecca Kaplan tells NEWSWEEK that the new tax revenue will help save libraries, parks, and other public services, and that the once-destitute area where Oaksterdam now thrives has seen a clear boost. Over the past six years, 160 new businesses have moved into downtown Oakland, and the area's vacancy rate has dropped from 25 percent to less than 5, according to Oakland's Community and Economic Development Agency. And while that can't be attributed to Oaksterdam directly, some local business owners believe it's played a key role—particularly as it relates to local tourism. Lee hosts 500 students at Oaksterdam University each month—about 20 percent of them from out of state—and has graduated nearly 4,000 since he opened the school in late 2007, inspired by a "cannabis college" he discovered on a trip to Amsterdam. The Blue Sky Coffeeshop serves about 1,000 visitors a day, half of them from out of town, and neighboring stores say the traffic has helped drive business their way. Regulation, say advocates, has also made consumption safer. They say it gets rid of hazardous strains of the drug, and eliminates the crime that can accompany underground dealing.

Presently, 13 states allow medical marijuana, with similar legalization campaigns underway in more than a dozen others. And a number of cities, such as Oakland and Seattle, have passed measures making prosecution of adult pot use the lowest law enforcement priority. Now Lee, along with an army of volunteers, has begun collecting signatures for a statewide legalization measure (for Californians 21 and over) that he plans to place on the November 2010 ballot. Backed by former state Senate president Don Perata, he's already collected a fourth of the needed 434,000 signatures, and pledged to spend $1 million of his own funds to support the effort.

In California, where voters rule, getting an amendment on the ballot doesn't take much more than a fat wallet, but the amount of attention Lee's campaign has received has drawn attention to just how far American attitudes have changed over the past decade. In April, an ABC/Washington Post survey showed that 46 percent of Americans support legalization measures, up from 22 percent in 1997. And in California, a recent Field Poll showed that 56 percent are already on board to legalize and tax the drug. "This is a new world," says Robert MacCoun, a professor of law and public policy at UC Berkeley and the coauthor of Drug War Heresies. "If you'd have asked me four years ago whether we'd be having this debate today, I can't say I would have predicted it."

The fact that we now are debating it—at least in some parts of the country—is the result of a number of forces that, as MacCoun puts it, have created the perfect pot storm: the failure of the War on Drugs; the growing death toll of murderous drug cartels; pop culture; the economy; and a generation of voters that have simply grown up around the stuff. Today there are pot television shows and frequent references to the drug in film, music, and books. And everyone from the president to the most successful athlete in modern history has talked about smoking it at one point or another. "Whether it's the economy or Obama or Michael Phelps, I think all of these things have really worked to galvanize the public," says Paul Armentano, the deputy director of the National Organization for the Reform of Marijuana Laws and the coauthor of a new book, Marijuana Is Safer; So Why Are We Driving People to Drink?"At the very least, it's started a national conversation."

That conversation, in some sense, has always existed. In 1972—a year after President Nixon declared his "War on Drugs"—the National Commission on Marijuana and Drug Abuse urged Congress to decriminalize possession of marijuana for personal use. That never happened, in part because marijuana regulation has always been more about politics than actual science, say advocates. But these days, the masses, at least in California, seem to be heading toward greener, shall we say, pastures. "This is sort of the trendy thing to do right now, but I also think there's an expectation that the time has come to simply acknowledge the reality," says Armentano. "Hundreds of thousands of Californians use marijuana, and we should regulate this commodity like we do others." It's a fight that's heating up. And the pro-pot crowd in Oakland is ready to light the way.

With Jennifer Molina