City Of Oakland Considers Ways To Share In Pot Profits

Enlarge this image toggle caption Justin Sullivan/Getty Images Justin Sullivan/Getty Images

In California, the city of Oakland was the first to regulate and tax medical marijuana dispensaries. Now, some city leaders see the industry's profits and are proposing to take a bigger piece of the action. The Oakland City Council is voting later this month on a pot profit-taking plan.

Harborside Health Center in Oakland is the largest medical marijuana dispensary in the nation.

Its executive director, Steve DeAngelo, says his dispensary brings in about $30 million in annual revenues.

"We've created over a 150 well-paying jobs and we're the second largest retail taxpayer in the city," he says.

DeAngelo says Harborside pays about $1.5 million in taxes every year.

His operation is one of eight licensed dispensaries in Oakland. But there are scores of other pot businesses that operate semi-legally, meaning they pay taxes but they are not fully licensed. And now the city wants to license them, too, but at a price.

Enlarge this image toggle caption Robert Gauthier/Los Angeles Times via Getty Images Robert Gauthier/Los Angeles Times via Getty Images

The exploding cannabis industry has the city rethinking how much the dispensaries should pay the city to operate and who gets those licenses. City Councilwoman Desley Brooks is leading that effort.

"When you look at this industry across the United States and in Oakland, the vast majority of people who are making money in this industry are white males," she said during a recent city hearing.

Harborside's DeAngelo says he's sympathetic with effort to diversify the industry. But he has problems with Brooks' other plan to charge dispensaries 25 percent of their profits.

"And the courts have really been very, very consistent in ruling that a government agency is not allowed to take private property in that fashion," he says.

The debate over whether they city should demand medical marijuana profits comes as it is still grappling with how to promote diversity in the industry.

Enlarge this image toggle caption Richard Gonzales/NPR Richard Gonzales/NPR

Last spring, the City Council voted to expand the industry by giving preferences for licenses to pot entrepreneurs who did jail time for marijuana offenses or for those who live in certain East Oakland neighborhoods — like Brooks' district — that are predominantly black and Latino.

"We need to make sure that there is equity in this industry and we need to make sure that Oaklanders have an opportunity," Brooks said.

For example, under current rules, drug felons applying for a cannabis license have to own at least 50 percent of their business.

Dale Geringer, director of the California chapter of National Organization for Reform of Marijuana Laws, or NORML, opposes the preference program.

"These rules go well beyond what any other legal industry has to put up with and they are supposedly addressed at equity problems which are not even caused by this industry but rather by the laws that prohibited it," Geringer says.

More than a few people around the city worry that the controversy over profits and preferences could drive away the medical marijuana industry from Oakland.

Terryn Buxton is among them. He's an entrepreneur who sits on a commission that advises the city on how to deal with the marijuana business.

"I'm from Oakland and I'm born and raised here. I'd like my business to be here," he says. "But I do not know if we're going to have an environment our business can survive in."