City’s Medical Pot Sales Reach $35 Million In 2010

Most sectors of the economy are pretty grim right now, but that assessment doesn’t include the medical marijuana business in Oakland, California.

The city is projecting that Oakland’s three dispensaries will sell between $35 million and $38 million worth of cannabis this year, reports Zusha Elinson at. That means about three and a quarter tons of marijuana — 104,000 ounces, or 4.2 million joints.

The total has been getting higher and higher since Oakland started keeping track in 2004, when the dispensaries paid taxes on $4.2 million worth of sales. The figures are derived from the business tax paid to the city by dispensaries on their gross receipts.

​Harborside Health Center, in particular — the largest dispensary in the Bay Area — was mentioned by David MacPherson, Oakland’s revenue manager who provided the numbers. Harborside reports bringing in annual revenue of about $20 million.

“Harborside has jumped up in the top percent of businesses in the city,” MacPherson said.

Like many other cities, Oakland is in dire financial straits. Things are so bad that the city was forced to lay off 80 police officers earlier this year, and the budget deficit is now at $32 million.

And, of course, city politicians are hoping that cannabis will fill the budget gap. Plans are afoot to allow more dispensaries, beyond the three already existing. The city is also eying large marijuana cultivation operations that would bring yet more tax revenue — although Obama’s Justice Department has threatened to intervene if Oakland follows through on that plan.

This year city voters approved raising the tax on pot dispensaries from 1.8 percent to 5 percent. With the new rate, the city expects to haul in $1.5 to $1.8 million in taxes this year, according to MacPherson. Last year, pot shops paid $435,000 in business tax to the city.

In addition to Harborside, two other licensed dispensaries operate in Oakland: Coffeeshop Blue Sky, which is run by Prop 19 backer Richard Lee, and Purple Heart Patient Center.

While still being dwarfed by Oakland’s sports industry (the Raiders, A’s and Golden State Warriors had revenues of $475 million in 2009) and car dealerships ($370 million), the city’s pot business is closing in on the hotel industry, which brought in about $81 million last year.

Steve DeAngelo, who runs Harborside, is skeptical of the city’s projections. He claimed that revenue at Harborside is staying flat at around $20 million a year because of more competition from the growing number of dispensaries in neighboring cities, such as San Jose, which now has 98 pot shops, according to the city.

“Our sales have not climbed by 30 to 40 percent,” DeAngelo said. “I think the city may be a bit overly optimistic.”

Richard Lee, founder of Oaksterdam University, said his Coffeeshop Blue Sky dispensary brings in “a couple of million.”

Government authorities are becoming increasingly interested in the revenue stream flowing through dispensaries. Even the feds are sniffing around; the IRS is currently auditing Harborside

The only way that dispensary money is tracked publicly is if cities require special taxes such as Oakland’s. In neighboring Berkeley, the city estimated earlier this year that its three pot shops are selling about $18.5 million worth of marijuana this year.

The Board of Equalization estimates that statewide in California, between $700 million and $1.3 billion worth of medical cannabis is being sold this year, bringing the state sales taxes of between $58 million and $105 million.

The Bay Citizen. With more than 20 dispensaries, an ounce of marijuana can cost as little as $140 in San Francisco, according to industry sources. In Oakland, where the number of dispensaries is limited to three, the ounces have held steady at about $350 an ounce. Although the price of pot is reportedly plummeting in places like San Francisco, the price of an ounce has held steady in Oakland, reports. With more than 20 dispensaries, an ounce of marijuana can cost as little as $140 in San Francisco, according to industry sources. In Oakland, where the number of dispensaries is limited to three, the ounces have held steady at about $350 an ounce.

Interestingly, if you divide the 4.2 million joints sold in Oakland this year by the total population of the city — 446,000 — that amounts to every man, woman and child in the city smoking just under 100 joints in 2010.