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Legality of Medical Pot Plan Unclear

More than 100 people signed up to give public comment on the issue of industrial marijuana cultivation at an Oakland City Council meeting July 20, 2010
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More than 100 people signed up to give public comment on the issue of industrial marijuana cultivation at an Oakland City Council meeting July 20, 2010
With cannabis factories, Oakland enters uncharted legal territory

Update: This story has been updated to include statements from attorney William Panzer, who co-authored California's original medical marijuana law.

The Oakland City Council Tuesday voted in favor of a controversial proposal to permit giant medical marijuana-growing factories, but new questions are emerging about how these entities will fit into the state’s medical marijuana laws. The warehouses will be the first of their kind in California, and some say they could usher in an era of mechanized cannabis production and make Oakland ground zero for large-scale pot cultivation. 

But the facilities, which could generate much more medical marijuana than Bay Area residents consume, have drawn criticism for their size and potential to supply cannabis to dispensaries throughout the state.

“It’s arguably legal under state law,” said Dale Gieringer, director of California NORML. “Depending on how they structure it, it’s also arguably illegal under state law.”

Marijuana cultivation has until recently been largely unregulated, a legal gray area. But several municipalities have stepped in to set some rules: Mendocino started a permitting program run by the county sheriff, Long Beach has passed a requirement that dispensaries grow all of the marijuana they sell, and Berkeley is asking voters to grant permission for six marijuana production outfits of up to 30,000 square feet.

But the sheer size of the Oakland facilities, coupled with their industrial capacity, sounded to some like a far cry from the grassroots system envisioned by Proposition 215, the 1996 law that originally legalized medical marijuana in the state. 

"When we drafted 215, the intent was to help patients," said William Panzer, an Oakland-based attorney who co-authored the proposition. "It wasn't drafted to help pot-preneurs."

Panzer feels more strongly than many in the industry that medical marijuana should not be sold for a profit, and he has serious doubts about Oakland's ordinance.

"One, it's not legal under state law by any stretch of the imagination," he said. "Two, if they do it I bet you dollars to donuts the feds are going to come in and squash it."

Some on the City Council echoed Panzer's concerns.

“As the growers become larger and larger and the vision becomes to sell throughout the state, they have to remember that it’s still about the patients,” said Oakland City Council member Nancy Nadel, who voted against the industrial growing facilities at Tuesday night’s council meeting.

State rules about medical marijuana cultivation are somewhat murky, and the city attorney has expressed concern that some forms of industrial cultivation could violate them, according to Nadel. That could have serious consequences, such as federal enforcement. The Obama administration has directed federal agents not to raid operations that comply with state law.

The city attorney’s office could not be reached for comment.

Lawyers in the state attorney general's office haven't yet had a chance to evaluate Oakland's pot factory legislation, so they can't comment on its legality, said spokeswoman Christine Gasparac. But she pointed to a set of guidelines, released in 2008, that specify how medical users can form groups to cultivate and distribute cannabis. The guidelines warn that “law enforcement officers should be alert for signs of mass production.”

Panzer said the guidelines are not favorable to Oakland's plan.

"I don’t read from the attorney general guidelines that you can set up a football stadium-sized grow and sell marijuana—I think it’s advised that you don’t do that," Panzer said.

In a statement released Wednesday by the Office of National Drug Control Policy, Director Gil Kerlikowske called the permitted medical pot factories “the latest example of ongoing efforts to legitimize, through local ordinances, activities that remain illegal under Federal law.”

The Department of Justice took a more measured tone.

“The Department focuses its investigative and enforcement activities involving marijuana on large-scale drug traffickers whose conduct is often inconsistent with both federal and state law,” Department of Justice spokeswoman Laura Sweeney wrote in an e-mail.

One way to demonstrate compliance with the state’s medical laws would be to take more cues from the pharmaceutical industry, according to Michael Sautman, the Bay Area-based CEO of Bedrocan International, a division of a Dutch company that grows cannabis for pharmacies in the Netherlands under a contract from the Dutch government. Sautman hopes the U.S. Food and Drug Administration will ultimately approve his company's pharmaceutically standardized medical marijuana as a medicine.

“The higher the level of science and medicine that is applied, the more it will provide a basis for federal authorities to find greater acceptance of the system,” said Sautman, who consulted with Oakland City Council member Rebecca Kaplan’s office during the development of the pot factory permit regulations.

Sautman said his company won’t apply for one of the permits, but he could consult with permit applicants on how to build a facility like his company's 10,000-square-foot space in the Netherlands that “is highly efficient and fully in compliance with World Health Organization standards for pharmaceuticals.”

These kinds of factory operations sounded risky to some in the medical marijuana industry. As members of the City Council debated permitting four giant medical marijuana growing factories at a public safety commission hearing last week, one man told the council, “what you are going to do is create four huge targets for the federal government.” 

In Mendocino County, 69-year-old Joy Greenfield is also skeptical. She has the distinction of being both the first to apply for the medical marijuana cultivation permit program run by the Mendocino County sheriff and the first in the program to be raided by the U.S. Drug Enforcement Administration.

The sheriff, who could not be reached for comment, told the local Ukiah Daily Journal that his office had not revealed Greenfield’s operation to the feds. A DEA spokesperson declined to discuss the reason for the raid because the case is under court seal.

When agents showed up at her property a few weeks ago, Greenfield said they ripped down the 99 plants in her garden, which had been inspected by the sheriff and was on the verge of receiving a permit.

“It obviously didn’t protect me,” said Greenfield, who later spoke to a DEA agent on the phone about the raid.

“I said, ‘I have been through the sheriff’s program,’” she said. “And he said, ‘We don’t care.’”

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