California city Oakland has approved draft legislation moving it a step closer to legalizing the large-scale production of medical marijuana, a city council clerk said on Wednesday.

“The proposition passed the first reading at the city council by five yes, two nos and one abstention,” said Crystal Bing, legislator recorder for the city clerk’s office.

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“Now it has to go for a second reading which will happen on July 27th,” she told AFP.

If adopted, the measure would take effect on January 1, 2011 and would make Oakland — across the bay from San Francisco — the first US city to authorize large-scale production of marijuana, which is legal for medical use only in the town.

Those arguing in favor of the measure cited the tax benefits it could bring to Oakland, which is struggling with public deficits along with the rest of California.

They said other cities and regions were already moving forward with plans to allow factories to mass produce medical marijuana, which is used by sufferers to ease the symptoms of a range of ailments.

“It’s really important for Oakland to be a vital part of that growth and development for licensed facilities,” council member Rebecca Kaplan was quoted as saying by the San Francisco Chronicle.

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The move is opposed however by some small-scale marijuana growers, who fear factory production of the drug will push them out of the market.

The vote comes as Californians are set to vote in November on whether to completely legalize marijuana, which has been available to users with a doctor’s prescription in the state for the last 14 years.

The legislation being put to the vote in November would allow any person in the state over 21 to possess an ounce (28 grams) of marijuana and cultivate the drug for personal use in a plot no larger than two square meters.

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If California voters approve the law, the state would become the first to legalize the drug, which remains illegal at the federal level.