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Placemaking for Pot Smoking

Potential legalization of marijuana presents California cities the chance to do a different type of 'greening.' Josh Stephens reports on the land use challenges of regulating California's most lucrative crop.

Oaksterdam University sounds like a fantasy conjured up in an extra page of a sophomore's lab book. No doubt, many a shaggy high schooler would prefer it to Harvard or Yale. But Oaksterdam University is no fantasy. It is a real institution, and though its portmanteau name refers to a wondrous land of buds, brownies, and herbal medicine, the university exists in a very real place.

Photo: The exterior of Oaksterdam University.
Image courtesy of Flickr user jdnx.

Just what does Oaksterdam University teach? Exactly what you think.

As hobbyists and entrepreneurs flock to downtown Oakland and pay $250 for a weekend workshop or $650 for a semester-long seminar to learn the fine points of cultivation, processing, and marketing of medical marijuana, public officials in California are facing questions that were probably not raised in their urban planning classes. How many more Oaksterdams should there be? And where they should go? These are the questions that now confront public officials in each of the nearly 1,000 cities and towns in the state, where by November 3, marijuana may officially become legal again.

Reefer Sanity?

Make no mistake: 74 years after the film Reefer Madness cemented the connection between deviance and getting high, medical marijuana is already quasi-legal. But if the Regulate, Control, and Tax Cannabis Act of 2010 passes November 2, it would strip away the medicinal veneer of cannabis use and simply make it legal for anyone over age 21 to possess, grow, and use marijuana, hemp, and related products. The measure, which has been officially approved for the ballot after backers submitted the more than 400,000 required signatures, would also authorize the state to impose taxes on the sale and cultivation thereof, and would give local jurisdictions broad leeway to permit, prohibit – and tax – its cultivation and sale.

Many say it's about time for a product that is unofficially the biggest cash crop in the United States.

A widely cited 2006 study "Marijuana Production in the United States" by researcher Jon Gettman valued California's share of the $35.8 billion national marijuana crop at $13.8 billion, making it the single most valuable harvest, legal or illegal, in any of the 50 states. But, even as medical marijuana has become commonplace, the state and most of its cities have regulated it only haphazardly.

After California voters legalized medical marijuana in 1996, the drug-cum-medicine gained further legitimacy in fits and starts until, in 2008, California Attorney General Jerry Brown issued guidelines confirming that marijuana collectives could in fact operate as retail establishments as long as they served only members and did not reap inordinate profits. This announcement, coupled with the proliferation of "prescriptions" that recommended the use of marijuana for everything from anorexia to anxiety to insomnia, the marijuana "dispensary" was born. Some cities, however, were not prepared to regulate a nonexistent land use.

"Dispensary is a term that does not exist in law," said Humboldt County Supervisor Mark Lovelace, one of many California officials who have had a hand in crafting local marijuana policy. "It's basically the storefront facility for a cooperative."

Defining where "legal" marijuana could go was like fencing in a pasture for unicorns.

"Planning gets caught somewhere in the middle," said Dale Clare, Executive Chancellor of Oaksterdam University and spokesperson for the Tax Cannabis 2010 campaign. "You're trying to zone for over-the-counter retail sales while claiming that all of that is basically illegal activities."

In Los Angeles, the regulatory void was filled by equal parts compassion and profiteering. It's estimated that up to 800 dispensaries proliferated throughout the city, ranging from the demure, zen-inspired Farmacy to a former KFC that borrowed the chicken restaurant's initials and transposed them into "Kind For Health," "Kind" being a synecdoche for "kind bud." It was the worst nightmare for both detractors and supporters of marijuana legalization.

"Some of those progressive localities were among the first to both regulate medical marijuana and create model ordinances that controlled the distribution of medical marijuana," said Stephen Gutwillig, California state director of the Drug Policy Alliance. "Cities like Los Angeles sat on their hands while dispensaries proliferated."

Los Angeles' quick rise to the position of retail marijuana capital of the world forced the city council to play catch-up earlier this year and pass an ordinance that would close roughly 600 rouge dispensaries and place complex restrictions on those that were allowed to remain.

City planners estimated the appropriate number of dispensaries per each of the city's 35 planning areas and came up with between two and six, depending on the respective areas' populations. Dispensaries may not locate near residential areas or places where children congregate, and they may be no less than 1,000 feet from each other. They must have controlled entries and cannot use flashy signage or advertising.

"The recommendations we came up with ensured that there would be potentially medical marijuana collectives located within all the community plan areas in the city," said Alan Bell, senior planner at the Los Angeles Department of City Planning, who led the crafting of the marijuana ordinance. "We'd limit the number so that we could have a limited number that we could enforce and monitor."

Photo: A neon pot leaf sign in a dispensary.
Image courtesy of Flickr user thetruthabout...

Legalize It

The disarray in Los Angeles may be nothing compared to what awaits the state next. If public officials fail to anticipate what may happen in November, when customers will no longer need the pretense of a prescription in order to smoke out to their hearts' content – and when even conservatives cities will have to weigh the merits of two different types of green.

The California Board of Equalization estimates that cannabis could yield roughly $1 billion per year in direct tax revenues. Its analysis notes that increased cannabis use may take a bite out of alcohol tax revenues. Then again, it says that further gains may be found in reduced law enforcement costs. In short, there is no perfect answer for whether, and to what extent, cities should embrace marijuana.

Could a drug-no matter its tax value-still listed on the Drug Enforcement Agency's Schedule 1 list actually go from contraband to commodity in the span of a few years? An April 2009 Field poll of registered voters found 56 percent in favor of its legalization and taxation. A SurveyUSA poll last month came up with the exact same number in favor of legalization, with only 42 percent opposed.

And even those numbers may underestimate the number of voters who ultimately side with legalization, say supporters. Oaksterdam University Chancellor and Spokesperson for the Tax Cannabis campaign – which is sponsored by the university and its founder Richard Lee – said that she expects what she describes as a "Reverse Bradley effect," referring to the 1982 California gubernatorial election in which more voters expressed support for African-American candidate Tom Bradley in pre-election polls than actually voted for him.

"I've had very interesting feedback from an inordinate amount of people who say, 'I can't come out publically, when it's me and the voting booth, I'm voting yes,'" said Clare.

While many countries worldwide have decriminalized marijuana to the extent that its use will not lead to arrest or penalties, California is poised to become the only jurisdiction in the world that not only allows the recreational use of marijuana but also implicitly endorses its sale and cultivation via taxation.

Policymakers who may have held their breath and remained silent while going along with the "Just Say No" mantra of the national drug war have now exhaled and brought forth a policy discussion as earnest as the War on Drugs was futile. The prospect of cannabis legalization has given them a chance to craft their own responses to the industry, rather than accept the federal government's traditional zero-tolerance approach.

"What I see is that we have an opportunity through regulation to be able to compute the harm from the industry and mitigate that harm and make those who are causing the harm to, for the first time, have to actually pay for those impacts, which is what regulation does," said Lovelace.

The Commodification of Pot

It's clear enough that cannabis legalization appeals to a broad range of Californians -- not just hippies and college students. Benefits that could accrue to liberal and conservative alike include reduced crime and suffocation of drug cartels, reduced costs to the criminal justice system, revenue generation, and the simple acknowledgement of perhaps the most widespread but not-yet-legal economic and recreational activity in the state.

The legalization of medical marijuana has already brought out the rent-seekers – economic actors who want to cash in on the opportunities brought by the change in the political climate – and many of them are, predictably, lobbying fiercely for the passage of the Tax Cannabis Act, in part under the pretense that it will more than pay for itself.

"Bringing the massive black market into the light of day, bringing it under the rule of law also creates opportunities for economic development and job creation, and to create a reasonable culture of responsible marijuana consumption," said Gutwillig.

A report authored by Dale Gieringer, California Director of the National Organization for Reform of Marijuana Laws (NORML), in October proposes that a legal cannabis market could generate between $2.7 and $4.5 billion in state excise tax revenue, several hundred million in local sales tax revenue, and $12 - $18 billion in spinoff activity, including that from tourism and coffee shops. The report compares the pot market to the $12.3 billion in-state wine market and the $51.8 billion in overall economic activity that it generates.

Oakland has took an early lead in capturing a share of that revenue through Measure F, a ballot initiative that authorized the city to raise the tax on "Cannabis business" from the 1.2 percent citywide sales tax to 1.8 percent. That's a pittance compared to what some Tax Cannabis supporters say they are willing to pay.

Steve DeAngelo, executive director of Harborside Health, a large-scale dispensary based in Oakland said that cities could "easily" impose a tax of 20 percent on production without even raising the retail price, since legalized producers would likely be able to cultivate it more cheaply than they do today. The after-tax retail price would therefore be the same, or less, than it is today.

Under Oakland's current tax regime, DeAngelo said that his dispensary is on track to bring in $20 million in revenues and, in turn, send $360,000 to the city of Oakland through the Measure F tax. The city, with a $114 million budget deficit last year, is currently considering filing for bankruptcy.

The statewide figures, however, are based on estimates current black market activity. The actual figures could be much higher, or much lower.

"If anyone tells you they know how big the legal market in California is, they're lying," said USF's Murphy. "Lots of folks are throwing numbers out. We have no clue."

As for proponents' claims of tax windfalls and the wisdom of liberating marijuana from the black market economy?

"It's totally disingenuous," said Murphy. "I don't want to rip them or anything like that, but there were a whole lot of people involved in passing Prop 215 who were, ‘wink, wink, nudge, nudge.' That's what this is now too." Murphy added that he generally supports legalization and, "from the cost-benefit perspective, sees no good reason to have real harsh laws restricting marijuana use."

Gieringer said that, regardless of however large or small the revenues may be, "some people say [taxation is] the worst possible reason to legalize marijuana."

Photo: A cafe in Oakland, CA.
Could this Oakland cafe be the new face of marijuana use? Image courtesy of Flickr user lfl.

Green-Light Districts?
Cities that choose to both regulate marijuana sales and cultivation without stifling them need not re-invent their land-use laws but can instead follow the model of bars and restaurants.

Oakland City Councilmember Rebecca Kaplan, who authored Measure F, said that Oakland's embrace of marijuana relies in part on the issuance of special activity permits, which, she said, give the city the oversight it needs to ensure that the businesses are conforming to the city's regulations. "Which is different from something that's handled as permit that comes with the land, which can often be in perpetuity," said Kaplan. "That has allowed us to have a level of rigorous oversight because the facilities have to come in every year for a hearing where there's an opportunity to take that permit away."

What the Regulate, Control and Tax Cannabis Act of 2010 does not do is prescribe how cannabis should be regulated, controlled, and taxed. Nor does it dictate where pot can be sold or grown. It leaves those complex decisions up to cities and counties, which many consider both a blessing and a curse.

"In Prop 215 we used a process to make a policy without regard for how it would be implemented. That's a lousy way to make policy," said Univ. of San Francisco Professor of Politics Patrick Murphy, who specializes in drug policy. "We've got a similar situation on the horizon now where we will be making another very broad, very vague policy and say, 'locals, figure it out.'"

"Hundreds of city councils and county boards of supervisors will have to make the decision under a great deal of scrutiny whether to regulate marijuana sales to adults to begin with and then how to do it," said Gutwillig.

Entrepreneurs and advocates have become so common that they are more of a cliché than a novelty; what is more rare are policymakers who have a clear handle on how to navigate the strange new world that the Tax Cannabis Act may deal them. The situation highlights the notorious oddity of the California initiative system, which often asks voters to affirm, or reject, sweeping statements of principle and then forces state and local officials to figure out how to implement – and interpret – the voters' wishes.

Localities that fail to confront and plan for marijuana legalization could end up with shady growers in every basement and retailers setting up shop in every vacant storefront and shuttered fast food joint. Meanwhile, those that prohibit marijuana will lose the potential revenue too. Those that do plan, according to some proponents, are going to have to craft land use ordinances that both uphold public safety and allow businesses to flourish.

"I think that the land use issues are going to be our biggest issues," said Eureka City Councilmember Linda Atkins, who authored a marijuana ordinance that is now under discussion in the city. "We have a lot of Victorian houses, and when people convert them to grow houses .the houses rot and catch on fire. If there was a broader legalization, it might become more difficult."

Cities that do not choose to ban the sale and cultivation of cannabis outright face a dazzling array of regulatory mechanisms, from taxation schemes to permitting to inspection regimes to, not insignificantly, land use controls.

In Los Angeles, once the City Council and City Attorney determined their optimal number of medical dispensaries the task fell to the Department of City Planning was directed to keep dispensaries away from residential areas and places where children congregate, including school and playgrounds. But, fearing that these restrictions would lead to the clustering of stores into cannabis ghettos, city planners have also required that they be spaced at least 1,000 feet apart, and they have prescribed a limited number of dispensaries per each of the city's 35 plan areas, according to the plan areas' respective populations. While this approach reflects the troublesome side of marijuana, some believe that it stigmatizes what is, ostensibly, a legitimate medicine.

"It's unfortunate that they're treating medical facilities like strip clubs," said Clare, whose goal is something more genteel.

Economic Development
Oaksterdam University does not award Ph.D.s or even bachelor's degrees – and it not accredited – but it does bring in a steady stream of students who enroll for multi-day workshops on the horticulture, cultivation, preparation, and distribution of cannabinoids as well as on pot history, legal issues, and the business of dispensing. It is also the lynchpin in a newly burgeoning neighborhood on the edge of downtown Oakland and has, according to both its proprietors and city officials, been a godsend for neighboring businesses.

"At the time there was not much else going on there," said Kaplan. "They were essentially moving into a place where there was a lot of vacant space. They did a fair bit to clean up the area. There were dispensary owners out in the morning sweeping the sidewalks." Ada Chan, Kaplan's policy analyst for economic development, said that local hotels have been, at times, sold out and full of Oaksterdam students.

When city coffers are cached out and when the state of California, itself $19 billion in the red this year, has announced plans to divert over $2 billion from local redevelopment funds to school funds (a plan that was upheld by the Sacramento Superior Court this week), marijuana may prove as effective a redevelopment tool as any.

Moreover, a retail scheme coordinated with local production could created a tightly closed economic loop that keeps money circulating within the city, thus creating multipliers that are absent from the sale and production of many other consumer goods.

"Cannabis should be distributed in a fashion that does not create a huge artificial, manufactured market," said DeAngelo. "I would like to see the profits from the sales of cannabis flow back to our communities to pay for our schools, our hospitals, and our museums, rather than seeing them flow back into the hands of private corporations."

"I do see using it as a further economic development tool. Part of what's in the pipeline for Oakland is to be looking at production and cultivation," said Kaplan. "There isn't yet still effective permitting and regulation for that. I think that could contribute significantly to jobs and economic development in Oakland."

The prosperity of the Oaksterdam neighborhood offers a glimpse of one end of the spectrum of legalization: entire neighborhoods dedicated to marijuana tourism, replete with places to get high, spend the night, satisfy the munchies, and commune in peace with fellow travelers. While current medical marijuana regulations forbid on-site consumption, the November ballot measure explicitly permits on-site consumption if cities choose to allow and zone for them.

"Certainly I think it would be good for there to be spaces in society where people could go to socialize, to have a meal, and to ingest some cannabis," said DeAngelo.

"Why go to Amsterdam when you can go to Oaksterdam? We can keep our dollars here," said Clare. "While we're bringing in students to come to Oaksterdam, we're also improving the city and putting more money in the coffers because of all the folks who are coming to stay."

The potential to stoke a neighborhood by allowing Amsterdam-style "coffee shops" in fact could achieve many of the popular New Urbanist goals, including pedestrian activity and neighborhood-focused economies. Indeed, Amsterdam, with its cozy pedestrian streets, vibrant public life, and distinctive architecture is often hailed as one of the world's most pleasant cities. Whatever smoke emanates from
coffeehouses is more than offset by the populace's widespread embrace of bicycling.

"Places that are appropriate for street cafes are appropriate for coffee shops in general," said Gieringer. "If you've been to Amsterdam you see how coffee shops pretty much fit in."

"I've found that like-minded people tend to coalesce," said Clare. "They tend to come together and share their joys and experiences together, so this would be similar to that. Maybe it's just a block, maybe it's a neighborhood or maybe just a couple of businesses side by side that become a destination."

The types of outlets that appeal to tourists will not necessarily be the same as those that simply sell medicine to patients. Understanding the difference, and knowing how to capitalize on them, will be one of many matters that planners will have to take up.

"The question is what kind of outlet? Would you have cafes, walk-in clubs where people could smoke marijuana, or would it all be in package stores or something like that?" said Gieringer. "Of course there are siting issues and zoning issues all up the kazoo."

Photo: The Arcata Hotel in Humbolt County.
The Arcata Hotel in Humbolt County. Image courtesy of Flickr user donbrr.

Pot Tourism
While nearly every California city will have a local market for pot sales and urban farmers, the real money may be in attracting visitors from outside California's borders, where prohibition remains the rule. Just as individual stores compete with each other, entire cities and counties may find themselves competing over marijuana customers just as they do over tourists, convention-goers, and businesses.

"I expect what will happen is a gradual phase-in," said NORML's Gieringer. "There will be places that exploit this and pick up tourist dollars, kind of like Las Vegas, and then new places will come in and compete, kind of like Atlantic City, and then it will spread everywhere as gambling pretty much has in the United States."

While Oakland has jumped into the lead, the competition to become the Amsterdam of California is only just beginning.

"I think it could [accommodate an Amsterdam], because California can accommodate so much. There's so much space, both literally and figuratively," said Murphy. "We can handle what happens in San Francisco and what happens in Orange County and everything in between."

Likewise, in small towns and rural areas, the race may be on to see which can perfect a version of pot tourism based on the wine country model. Indeed, connoisseurs refer to an infinite number of variations of flavor, feel, and psychoactive effects - replete with synesthetic metaphors and comparisons to fruit -- that are every bit as complex, and esoteric, as those associated with wine.

"There are different levels of opportunities for different areas," said Clare. "You may find that in wine country they actually follow the wine country model. It's more of a B&B where people come out to experience varietals and classic strains that are hard to come by and more expensive in the higher end."

The early favorite in that race to provide the perfect marijuana getaway would be the towns of the so-called Emerald Triangle counties of the north coast -- Mendocino, Humboldt, and Trinity -- where cannabis, often of legendary quality, has long been a way of life among the area's mix of hippies, students, libertarians, and, indeed, drug lords. Ever since the timber industry went into freefall in those counties, pot has become the crop of choice, although, according to Lovelace, not all of them are living a peaceful, "ego-groovy lifestyle up in the hills."

The area is famous for strains such as "Humboldt Gold" and "Humboldt HeadBand," the latter of which has been touted as the "best marijuana ever" resulting from "supposedly a cross of OG Kush (a pheno of Chemdawg) and Sour D [(Chemdawg x Mass Super Skunk/NL)x DNL]" according to a typically geeky post on StrainReview.com.

This close attention to genetics has resulted in hundreds of mom-and-pop Monsantos dedicated to the development, cultivation, and appreciation of countless strains of designer weed. "If I had to make a wild guess, just because of the lengthy association we've had with it up here there's going to be value to the Humboldt name," said Lovelace.

Ironically, legalization has the potential to decimate the Emerald Triangle economy. Whereas the area has historically been a remote stronghold of black market cultivation and a subculture all its own, the passage of the Tax Cannabis Act would usher in competition from growers literally all over the state.

These prospects, whether rural or urban, put planners in the unusual situation of devising land use schemes to maximize public benefits and revenue for something that used to be confined to back alleys and unsavory streetcorners. For those who are skittish about that prospect -- or just uncertain about how to plan for pot – they have ample reason to get up to speed.

"I know plenty of people who will throw out there that this will be the worst tragedy ever and I talk to people who say it will be great and it will turn us into the Napa Valley of pot," said Lovelace. "For us it's not so much of an economic development opportunity so much as mitigating the effects on the economy and mainstreaming them."

And what of Los Angeles, where the new wave of reefer madness has only recently crested?

"I don't know," said Bell, the Los Angeles city planner. "We'll see what happens if it gets on the ballot and it gets approved."


Josh Stephens is the editor of the California Planning & Development Report www.cp-dr.com. A version of this story appears in the June 16 issue.

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