Legal Cannabis Farm Study Surprises Industry and Government

A new study conducted for a potential large-scale grower suggests that Oakland could make $2 million a year in tax revenue.

The groundbreaking study showing how the City of Oakland could make $2 million per year licensing a medical cannabis growing warehouse caught many locals by surprise this month. Even though city officials and the cannabis industry are looking toward licensing large-scale grows allowed under state law SB 420, the hard numbers appear to be the first of their kind. Economist Joanne Brion of Brion and Associates, who did the six-month, $16,000 report, said she was surprised at how potent an economic force cannabis is.

“My gut instinct said that this would be a great revenue and job generator for the city,” she said. “But after running the numbers, I went, ‘Wow, that’s really a job generator.'”

Brion’s report found that licensing a seven-acre cannabis growing facility near I-880 at the Embarcadero would create up to 371 union jobs, paying an average salary of $53,700 a year. The site could produce an average of 58 pounds of cannabis per day, and generate gross revenues of around $59 million per year. The site would grow an estimated quarter of 1 percent of the estimated 8.6 million pounds of cannabis cultivated annually in California.

Jeff Wilcox, founder of AgraMed — a nonprofit mutual benefit company set up in Oakland specifically to cultivate medical cannabis — commissioned the study. Wilcox, a retired construction company owner, wants to redevelop a seven-acre parcel abutting the Harborside Health Center, which is the West Coast’s most prestigious medical cannabis dispensary.

The entrepreneur in him looked at the growing medical cannabis industry and, after consulting with Harborside founder Stephen DeAngelo, concluded a large-scale indoor cannabis farm was an opportunity.

But Wilcox has three teenage children in Lafayette. Morally, he said he was concerned about getting into medical cannabis, but after talking to his kids — who can get pot easier than alcohol — and activists like retired Orange County Judge James Gray, Wilcox said taxing and regulating the widely used drug poses less risk to his kids than the current de facto legalization Californians enjoy.

Wilcox — who is also now on the Tax Cannabis 2010 steering committee — went to the City of Oakland last year and asked if it was interested in licensing large-scale grows. When officials said yes, he sought economists willing to run the numbers and publish the findings on what would be among the first large-scale, licensed medical cannabis farms in the country. It wasn’t easy. Three turned down the work before he found Brion and Associates, a fifteen-year-veteran of urban economics.

“Funny, some of my friends didn’t want to do the work,” Brion said. “I guess it’s still controversial. My interest is public policy. And you can only make good public policy if you have good information.

“We had to do a lot of research,” she continued. “These aren’t like standard studies. It is the first analysis on large-scale medical cannabis growing.”

The biggest caveats are the wholesale price of medical cannabis and how much the city might tax it. “The price, of course, will vary,” she said. “The other big caveat is the potential production tax the city might charge.”

Brion estimates the average wholesale price per pound of medical grade cannabis at $2,800. The city could tax it anywhere from the current retail tax rate of 1.8 percent to up to 5 percent in her analysis, generating anywhere from $1.1 million to $2.9 million in taxes off gross annual revenues. It would be among the most labor-intensive work in the Bay Area, she said.

Oakland Assistant to the City Administrator Arturo Sanchez said the city council is looking at issuing a moratorium on medical cannabis cultivation as a prelude to a Public Safety Committee meeting that will examine what large-scale growing license regulations would look like. “Sometime over the summer the council will make up its mind whether to regulate it, allow it, or not,” Sanchez said.

Licensing large-scale grows would be a win-win-win, Wilcox said. Such grows would increase public safety, increase medicine quality, and raise funds and create jobs for the city.

The medical cannabis cultivation moratorium is scheduled to appear before the Oakland City Council June 1, and the Public Safety Committee meeting on growing regulation is scheduled for June 8.

‘Oaksterdam A Model American Business,’ Union Leaders Say

The unprecedented unionization of Oaksterdam University this month serves as a model for the entire country and a significant boon to the Tax Cannabis 2010 ballot initiative, which could get tens of thousands of more votes by appearing on a union slate this fall, according to labor and management involved.

A slate is a letter to a set of voters telling them who and what to vote for. Politicians covet their appearance on official slates of either Democratic or Republican parties, as well as special interest groups such as teachers and union workers. It’s essentially free advertising, and Oaksterdam founder and Tax Cannabis 2010 creator Richard Lee said Tax Cannabis 2010 seeks a spot on the union slate this fall. Ron Lind, president of UFCW Local 5, who now represents Lee’s roughly 100 employees, said it’s too early to specify how California’s powerful union will endorse Tax Cannabis 2010, but they’re discussing it.

The unionization this week of Oaksterdam and five affiliated businesses serves as a model for American unionization, Lind noted.

“We believe that every union organization campaign should be the way this was conducted in Oaksterdam.”

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