Oakland’s City Council on Tuesday approved an ordinance that could make it the first city in the state to permit industrial marijuana production, a path-breaking decision that could spur the commercialization of a crop largely grown in hidden gardens.

The plan would authorize four potentially enormous pot factories, but makes no provision for the hundreds of growers who now supply Oakland’s four dispensaries, which sold $28 million in marijuana last year. The council, however, promised it would develop a plan for these growers before permits are awarded next year for the four large-scale marijuana operations.

“This is a monumental step forward,” said Dale Gieringer, an Oakland resident and the longtime head of California NORML, which backs the legalization of marijuana. “It really means moving into the era of industrial-scale operations and Oakland means to do it big.”

The 5-2 vote came after two hours of testy debate between pot growers who argued the proposal could destroy their livelihoods and businessmen who said it could turn Oakland into the Silicon Valley of pot, create jobs and generate new tax revenues. The audience booed, hissed and talked back, causing City Council President Jane Brunner to repeatedly admonish the crowd.

Steve DeAngelo, who runs Harborside Health Center, the city’s largest dispensary, led a campaign to urge the council to accommodate these growers in the ordinance.

“These growers are not anonymous miscreants burning down houses and bringing crime to neighborhoods,” said DeAngelo, who buys marijuana from more than 400 growers. “They are real people, decent people with families to support.”

Jeff Wilcox, a businessman who has presented the most detailed plan for a marijuana factory, warned the council that if it did not act quickly, it would lose the momentum to other cities, such as Berkeley, which plans to ask voters to approve six large-scale commercial operations.

“You’ve got an issue here,” he said. “You’re late.”

The proposal has ignited a contentious debate in Oakland over whether the city should be in the business of deciding who gets to be a marijuana mogul. The annual permit fee would be $211,000, a high barrier for smaller growers. Many fear that after years of risking federal prosecution, they will be shut out just as Oakland seeks to legitimize pot cultivation.

But Rebecca Kaplan and Larry Reid, the two council members who drafted the proposal, want the city to exert more control over cultivation, including setting up a city staff that would routinely inspect the four operations. They say it could eliminate violent robberies, fires caused by faultily wired grow houses and excessive use of pesticides.

Bringing what has been a secretive and lucrative cash business into the open would also allow Oakland to tax it, potentially adding millions of dollars to its ailing budget. The city, which has led the state in its innovative approach to marijuana, was the first to adopt a pot tax, which is 1.8%, but is considering asking voters to approve a substantial increase.

Oakland keeps a list of people who have expressed interest in the permits. On Tuesday afternoon, Arturo Sanchez, who oversees the city’s marijuana regulations, said it had 192 names.

But much of the attention has focused on just a few successful businessmen who have been vocal about their plans and their intent to win permits. They have money, buildings, proposals and ready access to the council members, but only recently became interested in medical marijuana.

Wilcox, a retired construction firm owner, wants to convert a complex of aging industrial buildings he owns along Interstate 880 into what could be the world’s largest pot factory, raising about 58 pounds of marijuana a day, more than enough to handle Oakland’s consumption.

Two other entrepreneurs, Dhar Mann and Derek Peterson, partners in a hydroponics store called iGrow, have a team already working on designs for a multi-level operation in a 57,000-square-foot warehouse that they have an option to lease. Peterson said he had no doubt their proposal would win a permit.

john.hoeffel@latimes.com