The Green Rush: Bay Area cities prepare for the potential passage of Prop 19

In California, 2010 could be remembered as the year when marijuana went legit.

If Proposition 19 is approved by voters in November, what could be the state's largest cash crop – with an estimated annual value of $14 billion – would be sold and taxed like alcohol or cigarettes. According to the state Legislative Analyst's Office, Prop 19 could potentially yield hundreds of millions in tax and fee revenues as well as significant savings in corrections spending.

Several Bay Area cities are trying to get ahead of the curve by proposing laws that encourage the sale and cultivation of marijuana. Berkeley, Oakland, Richmond and San Jose have all put forth proposals to regulate and tax cannabis sales. Last week, Oakland made national headlines when the city council approved a proposal permitting four industrial marijuana cultivation facilities. City officials estimate an annual windfall of up to $38 million.

KALW’s Ali Winston has been looking at the various legalization proposals, and he joined KALW's Hana Baba in the studio.

*     *     *

HANA BABA: So, what are these cities proposing exactly, and how does that change the current state of affairs?

ALI WINSTON: Well, what we're seeing right now is a number of cities throughout the state trying to get out in front of Proposition 19 and make sure that they get revenue right off the bat from marijuana sales, be it for medical use or adult use, recreational use. So what we're seeing is proposals from Oakland, Berkeley, Sacramento, Stockton, Richmond, Long Beach, San Jose is expected to put one forth--they're putting forth proposals to tax marijuana at a rate of two to five percent for medical use, and about ten percent for recreational use. So they're looking to get pretty serious revenue out of these sales. Oakland alone expects up to $38 million annually from marijuana sales.

BABA: So, notably absent from that list of cities is San Francisco. Why is that?

WINSTON: Well, San Francisco has said that they don't believe that cannabis sales should be taxed, so they haven't put forth a regulatory structure. But a lot of other cities are, and I spoke with James Anthony, an attorney who works with the growers and distributors about those other municipalities.

JAMES ANTHONY: What you've seen in the last couple of weeks, and we'll see until, oh, the next week or two in the middle of August, is a rush by cities to get tax language on the November ballet. They're up against that deadline, if there is to be a tax on medical cannabis or on adult-use cannabis, that tax has to go on the November ballot.

BABA: So, Ali, how are people reacting to these proposals? Are the producers happy?

WINSTON: Here's the thing: for the most part, it seems like the customers are really happy with the idea of bringing marijuana out and into the open, be it for medical use or recreational use. It takes away some of the stigma and allows cities to generate revenue without unpopular tax hikes. But there are concerns. Small- and mid-sized growers are really concerned about being crowded out of the industry by large-scale operations such as these four industrial-sized grows that have been approved recently in Oakland.

BABA: Which are what exactly? Do they take the form of something as big as a factory farm? How big is it?

WINSTON: Something like that. One facility that's been proposed would be about 100,000 square feet large and would produce 21,000 pounds of pot annually with probably about $60 million worth of marijuana being sold from it. It has people really worried. I spoke with one grower recently, Dan Scully, who supplies organic marijuana to the Harborside Health Center dispensary.

DAN SCULLY: It's very important that they keep in mind the small growers, if they really want this to be controlled and regulated and taxed. They have to be aware of the people who are currently producing and try not to shove them into the black market.

WINSTON: I should note that the Oakland City Council has agreed to revisit the issue of allowing small and medium growers after they come back from their recess. But the only reason that this was even considered was because of really sustained protests by small and medium growers during the public debates over the ordinance.

BABA: So if we're talking about these large, industrial-sized factory farms, there has got to be an environmental impact as well.

WINSTON: That's right -- Oakland's plan has been discussed as having a negative environmental impact. First of all, only indoor grows will be allowed, and given the size of the proposed facilities, they would use a ton of electricity and possibly a lot of pesticides as well. In Berkeley by contrast, the ordinance that has been proposed would allow outdoor facilities and would also require growers to use organic methods wherever possible and control the use of pesticides and such chemicals.

BABA: So this is all setting the stage for the possible passage of Prop 19. Does it look like legalization is a lock for November?

WINSTON: No, not by a long shot. Prop 19 has to pass, and right now the polls are pretty close. And there's something else to think about, come November -- the attorney general's race between San Francisco District Attorney Kamala Harris and Los Angeles District Attorney Steve Cooley. The attorney I spoke with, James Anthony, had a lot to say about this issue and believed that it could really impact local growers.

JAMES ANTHONY: The Republican candidate for attorney general, Steve Cooley, who is currently the Los Angeles County district attorney, has made it quite clear that in his legal opinion, any sales of medical cannabis is illegal under state law. This has been a major contributing factor to the utter failure to regulate in the city of Los Angeles, and it could only be disastrous for the medical cannabis movement as well as for cannabis liberation more generally.

WINSTON: On the other hand, if Kamala Harris becomes the state's next attorney general, things could look a lot different because she's been really supportive of marijuana legalization. So in the end, the attorney general's race is just about as important as Prop 19 is.

Should marijuana be sold and taxed? Let us know what you think on our Facebook page.

Follow Ali Winston’s blog about marijuana and the criminal justice system at KALW News’ Informant.