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Oakland Seeks to Double the Number of Medical Marijuana Dispensaries, Increase Permit Fees

Daily Dose 2010-10-13 0 comments

By Ryan Van Lenning, published on

Oaksterdam's Dale Sky Jones speaking to a crowd about medical marijuana policy

While some cities are seeking to restrict or even impose a temporary moratorium on new medical marijuana dispensaries, Oakland will be considering doubling the number of dispensaries within its jurisdiction.

The city is seeking to increase the number of permitted dispensaries from four to eight and increase the annual dispensary permit fees from $30,000 to $60,000. It also is seeking to require a $5,000 application fee.  The Oakland City Council Public Safety Committee will consider new amendments to the city’s medical marijuana code Tuesday night.

Three main reasons for the proposed changes were offered in a document submitted to the Public Safety Committee by Councilmembers Reid and Kaplan.

First, there is a desire to increase competition and diversity among dispensaries. There is a concern that a small number of dispensaries will control the market supply and prices.  The document reads,

“By expanding the number of dispensaries, the city will ensure that it does not promote a situation where the market is dominated by a small number of participants who are able to collectively exert control over supply and the market prices of medical cannabis, and insure that the diversity and different communities of Oakland are served by encouraging that dispensaries reflect and serve the cultural and geographic diversity of Oakland.”

Second, there is a desire to meet the demand for business opportunities.  The City Administrator currently has a waiting list of interested applicants and the Small Business Assistance Center gets weekly calls from those interested in opening a dispensary.

Finally, there is a desire for increased fee revenue to meet the costs of permitting and regulating the emerging medical marijuana sector. Currently the application process and the cost of monitoring is not cost-covering.  The proposed application fee of $5,000 will cover the administrative costs of reviewing, scoring, and selecting the permit awardees.

A doubling of the annual permitting fee from $30,000 to $60,000 will cover the expected costs of staff to monitor, audit, and regulate dispensaries.  These FTEs would include two administrative assistants, two code enforcement inspectors, two tax auditors, .75 tax enforcement officer, and a half-time deputy city attorney.

Last year, Oakland’s four permitted dispensaries generated $28 million dollars in gross sales last year, according to the city’s Business Tax Revenue Division.

The proposed changes are separate from this summer’s approval of four large-scale cultivation facilities and Measure V on the November ballot, which would increase the tax rate of medical cannabis businesses from the current $18 per $1,000 to $50 per $1,000 of gross receipts.