Oakland could go to pot in a big way with four proposed factory farms

Oakland could approve a plan Tuesday to set up four marijuana factory farms, a step that could usher in the era of Big Pot.

The proposal is a testament to just how fast the marijuana counterculture is transforming into a corporate culture. And it has ignited a contentious debate in Oakland that could spread as cities face pressure to regulate marijuana cultivation and find ways to tax it.

“Everybody knows it’s going bigger and big money is moving in,” said Dale Gieringer, an Oakland resident and prominent marijuana activist. As the state edges toward legalization, he said, more businessmen will seek to capitalize on a fast-growing market in a recession-hindered economy, forcing cities to make difficult choices on how to exert control.

If the City Council approves the plan, one Bay Area businessman has already made it clear that he intends to apply for a cultivation permit. Jeff Wilcox, who owned a successful construction firm and has already incorporated as AgraMed, hopes to convert his empty industrial buildings near Interstate 880 into an enormous production facility. He plans to manufacture growing equipment, bake marijuana edibles in a 10,000-square-foot kitchen and use two football fields of space to grow about 58 pounds of marijuana every day, many times the amount now sold in Oakland.

What caught the City Council’s attention was Wilcox’s projection that he could hire 371 employees and pay at least $1.5 million a year in taxes. Oakland faces severe budget deficits and has already let go of 80 police officers.

Last week, a council committee sent to the full council the proposal to allow four large cultivation operations, worried that a delay might allow other cities to get the jump on Oakland. “I do want to encourage a few large growers because I think that’s where the industry’s going, and I don’t think you’re going to be able to hold that back,” Councilwoman Jean Quan said.

But it has ignited intense opposition from medical marijuana activists, dispensary operators and growers in Oakland, who complain that the plan fails to include the growers who have risked federal prosecution for years to supply the city’s four dispensaries. Normally secretive, they have started to speak out.

“It’s not providing a pathway for folks to become more legitimate,” said Dan Grace, an owner of Dark Heart Nursery, which raises about 10,000 pot clones a month in a 3,000-square-foot space. Grace said that his operation could triple its size — if Oakland allowed it.

Oakland takes pride in setting new marijuana precedents. It was the first city to regulate dispensaries, make marijuana crimes the lowest police priority and enact a special tax on marijuana. And Richard Lee, who operates one of its dispensaries, put the marijuana legalization initiative on the November ballot.

Even if Oakland approves the plan, it faces a serious obstacle: the feds. The Obama administration’s policy is to leave medical marijuana operations alone if they are in “clear and unambiguous compliance with state law.” In a memo, one council member wrote “this proposal is not legal under state law according to our city attorney.” City Atty. John Russo’s office declined to release his memo, citing attorney-client privilege.

Drug Enforcement Administration agents remain on the hunt for major growers. This month, agents raided a collective in Mendocino that was complying with the county’s new cultivation ordinance, ripping out all 99 of its plants. The San Francisco DEA office referred questions on the Oakland proposal to the drug czar’s office, which called it “the latest example of ongoing efforts to legitimize, through local ordinances, activities that remain illegal under federal law.”

Said James Anthony, an Oakland lawyer who thinks the proposal should accommodate smaller growers: “There are no giant cannabis factories anywhere in the world, and it strikes me as a rather odd assumption that the first one is going to come into existence in the United States of America. I don’t know. Maybe.”

Oakland’s proposal, drafted by council members Rebecca Kaplan and Larry Reid, would still allow small unregulated cultivation in homes but is intended to supplant hundreds of larger operations, establishing the four industrial operations “as the only legal model.”

They argue that medium-size operations, often in gutted homes and illicit warehouses, are a hazard, causing electrical fires and drawing violent crime.

Many cities and counties are grappling with this issue.

Some, such as Redding and Tehama County, have placed strict limits on marijuana growing. . Long Beach has required its dispensaries to grow all of their marijuana on site. In Los Angeles, the City Council did not explicitly require collectives to grow on site, but the city attorney’s office says that state law requires it.

And Berkeley, like neighboring Oakland, decided earlier this month to ask voters in November to approve six marijuana production operations of up to 30,000 square feet each.

Under Oakland’s proposal, the four operations would pay an annual fee of $211,000, which would support a city staff to ensure they are operated safely and securely. But opponents see it as a steep barrier to entry and have proposed a sliding scale based on size.

“The ordinance basically sets up an oligopoly,” said Gieringer, the longtime head of California NORML, which advocates for legalization. “I don’t think we want just four humongous growers, not just Wal-Marts. We’d like to see lots of microbreweries, rather than Budweisers.”

Steve DeAngelo runs Harborside on the Oakland waterfront, the largest legal marijuana retailer in the world. From his bright, airy dispensary, he and his 80 employees serve more than 600 patients a day, selling about 8 pounds of marijuana in about 100 varieties. He has nurtured a network of more than 400 patient-farmers, as he calls them. Fearing for their livelihoods, he has stirred up much of the opposition. “Any new system that is created needs to have a role for these pioneers,” he said. “It’s not the role of government to decide the winners and losers in the marketplace.”

Standing next to about 60 thriving, 5-foot-tall plants sprouting from 30-gallon buckets, David Fry, a longtime Oakland grower, said he has little sympathy for these growers. “Why do it? It’s not legal,” he said. His operation, he said, is a by-the-book collective with members who share the work and the costs.

Scores of applicants are expected for the four permits, which would not be issued until January, but two businessmen who have been public about their dreams have galvanized opponents, who resent their wealth and recent arrival on the scene.

Wilcox declined to discuss his proposal until after Tuesday, when the council could vote. But when he spoke last week at the committee hearing, he appeared sensitive to the criticism. “I do not want and never want to monopolize this industry,” he said. “I think we should open up some of these facilities for safe sanctuaries for the small- and medium-sized growers.”

Dhar Mann made a lot of money brokering mortgages and escaped before the implosion. In January, he opened iGrow, a 15,000-foot hydroponics superstore , pitching it as the first to cater openly to medical marijuana growers. He also founded the University of Cannabis to teach cultivation classes. And he continues to envision new ventures at a rapid clip. “I really saw the pot industry as one with future growth,” he said.

Mann said he has assembled a team to design an energy-efficient proposal for a large cultivation facility that would stack pallets of pot plants as high as five levels.. “This is the natural next step,” he said. “If it is not Oakland, it’s going to be some other city that’s going to do it.”

john.hoeffel@latimes.com