Oaklanders are in the middle of one of their biggest marijuana moments in city history.
Last week, its city council approved a vast, but controversial, expansion of Oakland’s medical-pot industry. The vote came the same day as Mayor Libby Schaaf’s announcement that Oakland’s biggest dispensary, Harborside Health Center, had prevailed in its federal-forfeiture court case. Also last week, a coalition of activists dubbed Let’s Get It Right, California announced all of the Golden State would be voting on legalization of adult-use marijuana in the November 8 election.
Feds give up Harborside attack
In a major victory for medical marijuana nationwide, Oakland officials announced at a press conference on the steps of City Hall on May 3 that federal prosecutors were dropping their years-long effort to seize the property of Harborside Health Center, the city’s largest medical-cannabis dispensary.
Harborside is now safe from closing its doors under forfeiture threat and will head to court in June to face the industry’s next biggest challenge: a punitive federal tax law that levies 85 percent on cannabis sales (which are still illegal according to federal law).
“The two largest issues facing the cannabis industry now are banking and their unfair taxation by the Internal Revenue Service under Section 280-E,” explained Harborside attorney Henry Wykowski. “It is highly prejudicial. It was never meant to apply to state-authorized cannabis dispensaries. It was meant to target street drug dealers.”
The attorney said the dispensary wouldn’t back down. “Once again, Harborside is going to stand in the forefront of the industry and take that case on,” he said.
Harborside’s tax trial is set for June 6 in San Francisco. Wkykowski hopes to set an industry precedent by winning that case with its argument for why such a debilitating business tax should not be imposed.
The dispensaries federal-forfeiture case dismissal is still pending final approval, however. The U.S. attorney will not comment on pending cases, it told reporters. Wykowski said he would have been happy to wait until he had a signed copy of the forfeiture dismissal from the federal government, but Oakland Councilmember Rebecca Kaplan released the news of a deal, and Harborside went along with it.
Wykowski said federal prosecutors had him and Harborside owner Steve DeAngelo sign a dismissal agreement after a week of negotiations this past April. “To the best of my knowledge, all of the claimants have signed the stipulation for dismissal. We are awaiting the U.S. Attorney to file it,” he said.
The attorney speculates federal prosecutors gave up on the Harborside case in response to overwhelming public opinion, and also because of the potential for setting a massive legal precedent in favor of medical marijuana. Harborside said it was going to defend itself in court using Congress’ Rohrabacher-Farr Amendment, which defunded the Department of Justice’s war on medical pot.
Is the Harborside case the end of federal medical cannabis prohibition in America? “I would hope,” Wykowski responded.
Congressman Dana Rohrabacher of Orange County said every state-legal cannabis business in America should feel heartened by the Harborside dismissal.
“There is hope that the government will get out of our personal lives,” Rohrabacher said. “This is a great day for freedom in America.”
Mixed reaction to Oakland’s new pot rules
Oakland’s medical-cannabis industry is set to expand. But the city’s own Cannabis Regulatory Commission is frustrated by dead-of-night amendments to city rules, which some argue will cripple existing cannabis-industry employment practices and business growth.
Up to eight additional medical-cannabis dispensaries per year will be opening in Oakland, as well as more licensed delivery services. There will also be the creation of the city’s first-ever licenses for cultivation farms, edible kitchens and product-testing labs.
The Oakland City Council voted unanimously after midnight on Wednesday, May 4, to pass two updates to its cannabis ordinances, which green-lighted a vast expansion of licensed and regulated medical-pot activity in response to state-level regulations. The council didn’t begin hearing the items until 11 p.m. on Tuesday night, May 3, and finally finished voting at around 1 a.m. the next day.
Updates to the number of dispensaries permitted in the city, as well as new delivery laws and industry licenses, have been a work in progress for sixteen months at the Oakland Cannabis Regulatory Commission. Yet the Council still managed to surprise many at last week’s meeting.
Councilmember Desley Brooks led a contentious effort to introduce an Equity Permit Program amendment. These new equity rules would mandate that half of all additional pot business licensees go to applicants who live in areas of Oakland where more people are arrested for marijuana-related offenses.
Brooks reportedly told the Cannabis Regulatory Commission she was “disgusted” with reports of racial bias in the legal pot trade, and her goal is to reward underserved communities as well as formerly incarcerated Oaklanders with “priority” for new cannabis licenses.
The specific language was widely opposed by the city’s own Cannabis Regulatory Commission, and even some minority advocacy groups. “We made it so any little guy could start,” said Oakland Cannabis Regulatory Commission member Matt Hummel. “[Brooks’ amendment] promises to add layers of corruption and attorney’s fees.”
Oakland’s new equity rules now conflict with state’s medical pot law, according to Oakland Cannabis Regulatory Commissioner and California NAACP cannabis task force adviser Sean Donahoe. He said the provision will not result in benefits for disadvantaged communities, but instead more exploitation.
“They were just happier to pass something, rather than look too closely at the details,” he argued.
No new cannabis permits will be issued in Oakland without a corresponding equity permit. But Donahoe said those convicted of marijuana offenses and living in disadvantaged communities often don’t have funding for a modern cannabis business, or might be incapable of raising investment under the new rules. “This will create a licensing bottleneck that discourages present operators from moving into regulated conditions,” he said.
Medical-cannabis operators who live outside Brooks’ designated priority areas, or those who avoided incarceration through, for instance, plea deals, are also unfairly disadvantaged.
“Everything was well-intentioned, but the council had not educ––ated themselves,” Donahoe said.
The members of Supernova Women, an all-female group of minority canna-business advocates, also opposed the Brooks equity amendments, saying they “very likely will create a number of unintended consequences.”
Oakland’s updates to its medical-cannabis ordinance must come back to council for a second reading in thirty days. But Hummel said he fears the amendments are unstoppable.
“People are really discouraged,” he said. “Either the industry is going to evolve around it, or we’re going to find out it’s a clusterfuck in a year.”
Legalization makes November ballot
California’s latest effort at pot legalization officially launched last week, on May 4, in downtown San Francisco. An all-star cast of politicians, law-enforcement officials, activists and medicine experts showed up, and the event drew thousands of press mentions and has electrified the electorate with the possibility that cannabis could be fully legal for adults on November 9.
But the Let’s Get It Right California campaign is far from a sure bet. A poll released last Wednesday found a narrow 50 percent majority of Bay Area residents in support of legalization. Forty-one percent were opposed, while 9 percent were undecided.
Normally, initiative campaigns want polling to kick off in the 60 percent range, because opposition forces typically will peel away swing voters during a campaign, experts say.
According to reports, that opposition is going to include a strange-bedfellows mix of conservative law-enforcement groups, such as the California Police Chiefs Association; the California Teamsters; “stoners against legalization” such as the Small Farmers Association; and in all likelihood Sen. Dianne Feinstein.
Gov. Jerry Brown has not taken a stance on the latest adult-use legalization effort, but in the past has said that legal cannabis might hurt California’s global competitiveness.
Let’s Get It Right California has the support of Lt. Gov. Gavin Newsom, the California Medical Association, UC San Francisco professor Dr. Donald I. Abrams, former Los Angeles Police Department Deputy Chief Stephen Downing, former president of the California Fish and Game Commission Michael Sutton, California NAACP President Alice Huffman, the Drug Policy Alliance, Marijuana Policy Project, National NORML, Rep. Dana Rohrabacher, and travel writer Rick Steves, among others.
About twent groups filed legalization initiatives with the California Secretary of State, but only Let’s Get It Right raised sufficient funds and collected enough signatures to put the Adult Use of Marijuana Act, or AUMA, on the ballot. Time has run out for other groups to submit signatures to qualify for November.
Organizations supporting Let’s Get It Right raised 240-times as much money as other pot-legalization groups, some $3.3 million in political donations versus opponents’ $13,635, according to the nonprofit MapLight.
It’s worth noting that opponents have defeated pot-legalization initiatives with just a fraction of funding before, including Proposition 19 in 2010.