After weathering the fear of federal prosecution and competition from drug cartels, California’s medical marijuana growers see a new threat to their tenuous existence: the “Wal-Marting” of weed.

The Oakland City Council on Tuesday will look at licensing four production plants where pot would be grown, packaged and processed into items ranging from baked goods to body oil. Winning applicants would have to pay $211,000 in annual permit fees, carry $2 million worth of liability insurance and be prepared to devote up to 8 percent of gross sales to taxes.

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The move, and fledgling efforts in other California cities to sanction cannabis cultivation for the first time, has some marijuana advocates worried that regulations intended to bring order to the outlaw industry and new revenues to cash-strapped local governments could drive small “mom and pop” growers out of business. They complain that industrial-scale gardens would harm the environment, reduce quality and leave consumers with fewer strains from which to choose.

“Nobody wants to see the McDonald’s-ization of cannabis,” Dan Scully, one of the 400 “patient-growers” who supply Oakland’s largest retail medical marijuana dispensary, Harborside Health Center, grumbled after a City Council committee gave the blueprint preliminary approval last week. “I would compare it to how a small business feels about shutting down its business and going to work at Wal-Mart. Who would be attracted to that?”

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