Oakland's City Council late Tuesday adopted regulations permitting industrial-scale marijuana farms, a plan that some small farmers argued would squeeze them out of the industry they helped to build.

To address concerns from smaller farmers, the council pledged to create regulations on regulating small- and medium-size marijuana farms this year. Council members and proponents of marijuana cultivation regulation viewed the proposal as smart public policy: It would generate revenue, ensure that fire and building codes are enforced, keep neighborhoods safe from robberies, and further position Oakland as the center of the state's cannabis economy.

"It's really important for Oakland to be a vital part of that growth and development for licensed facilities," said Councilwoman Rebecca Kaplan.

But many of the folks on the front lines of the young industry say it will change the culture of what they've built.

They say industrial farms will turn a grassroots economy into a corporate one, driving down costs but also eroding the quality of the marijuana, which state voters defined in 1996 as medicine.

The most influential critic was Steve DeAngelo, owner of Oakland's Harborside Health Center, the largest medical marijuana dispensary in the nation.

His dispensary buys from some 500 different growers, meaning Harborside offers about 100 varieties at any time. Permitting only industrial operations would reduce variety, he said.

"Government should not choose the winners and losers but create a level playing field," he said. "Some people might prefer mass production, assembly-line cannabis that costs less. Others might prefer cannabis grown by a master gardener in a smaller plot.

"Let the market sort it out," he said.

The regulations will award permits to four indoor marijuana farms. There will be no size limit, but there have been proposals for farms as large as 100,000 square feet - about the size of two football fields.

DeAngelo said he would prefer farms of various sizes.

The regulations will require applicants to have a minimum of $3 million worth of insurance, hire security and pay a $211,000 annual permit fee.

The city will be begin to issue permits in January and will allow the industrial farms to sell only to medical cannabis dispensaries.

But if state voters pass Prop. 19, a November initiative that would legalize recreational use of marijuana, proponents believe the city would be well situated for the booming industry.

By regulating certain growers, Oakland also plans to crack down on illegal grows, said Arturo Sanchez, an assistant to the city administrator.

His comments immediately prompted hissing and booing in the crowd.

Oakland has long been pushing the boundaries of marijuana legalization.

In 2004, voters passed Measure Z, declaring marijuana a low concern for law enforcement. In 2009, voters passed Measure F to tax medical cannabis at 1.8 percent.

The taxation, believed to be the first of its kind in the nation, was a step toward legalization.