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General Lee 

Can Oaksterdam weed magnate Richard Lee push legalization over the top?

One day last month, Richard Lee was able to snatch a few minutes of freedom from the chaos of his daily life at his Oaksterdam University, the centerpiece of Oakland's marijuana district. In the previous 15 minutes he had checked the enrollment figures for a growing workshop he was scheduled to teach that weekend, made a snap decision about some future students who said they were promised reduced tuition and had his photo taken for High Times magazine, constantly consulting with his assistant while rolling around the aisles on two floors of his flagship business.

Finally he came to rest in an upstairs conference room with windows looking out over Broadway, and there he sparked up a joint. A lanky, clean-cut Texan with nerdy wireframe glasses, technically 47 years of age, Lee has gotten around on a wheelchair since he suffered a spinal cord injury 20 years ago. It seems to have slowed him down not at all. Between puffs, he spoke in the drawl of his native state about his most ambitious political brainchild -- the "Regulate, Control and Tax Cannabis Act of 2010," also known as Proposition 19, which, if voters approve it in November, would end marijuana prohibition in the state of California.

Lee mused about the vocal opposition his initiative has received to date, which has come in two forms. Naturally the religious right, and associated hardcore law & order types, stand opposed to legalization. More surprisingly, though, some big-name figures in the medical marijuana movement, such as San Francisco's Dennis Peron, stand against the measure on the grounds that government would have a role in regulating the marijuana trade. Lee couldn't help but marvel at these erstwhile allies.

"If the narcs don't kill me, the growers will," he said. "Or these hippie peace and love kind of guys from the ’60s and ’70s: 'We don't want to be regulated and pay taxes. It should just be free for everybody to grow! Peace and love!'" Lee is not a hippie.

What are Prop. 19's chances? Most public polls released recently show the initiative trailing somewhat. The most recent Field Poll showed the initiative barely trailing at 48-44 percent against. (The poll carried a 3.2 percent margin of error.) The leadership of the California Democratic Party decided two weeks ago to take no position on the initiative. The party's major statewide candidates for office -- Sen. Barbara Boxer and gubernatorial aspirant Jerry Brown -- have actively come out against it.

On the other hand, it would be a mistake to underestimate Lee. In just a few short years he has built a massive empire around medical marijuana. He owns a coffee shop-style medical marijuana dispensary, a supply store, a nursery selling starts and, of course, the flagship Oaksterdam University, offering non-accredited classes in cultivation, politics, law, business and even marijuana cookery. (The university also has its own off-site gift shop, as well as three affiliate schools around the country -- in Sebastapol, Los Angeles and Flint, Mich.)

More importantly, though, Lee is an uncommonly canny political player, at least on his own home turf in Oakland. His enterprises are now woven into the very fabric of city government. Local ballot measures he has championed have put millions in the the city treasury at a time of cutbacks and layoffs. The few blocks of downtown he has colonized are now lively, clean areas of the city that draw visitors from around the world. One of Lee's companies prints an Oaksterdam tourism map. The medical marijuana movement has a visibility and legitimacy in Oakland unequaled anywhere else in the state, and much of that can be traced back to Lee's savvy.

For folks who pray for legalization, and for those who fear it, the question is whether or not Lee can replicate his success at the municipal level with a statewide initiative. How for-real is he? Locally, a lot depends on the answer to that question. Black-market marijuana is a huge part of the Humboldt County economy -- if the voters pass Prop. 19, we will quickly be thrown into turmoil. A recent analysis from the RAND Corporation predicted that legalization would drop the price of marijuana by nearly 80 percent -- more than enough to put most small Humboldt County growers out of business.

There's every reason to be concerned. The team Lee has put together for the Prop. 19 campaign is very real indeed.

"I've been around a lot of very professional political operations. I'd like to think that I've run some professional political operations on my own," said Aaron Houston, executive director of Students for a Sensible Drug Policy, during a visit to Oaksterdam last month. "I mean -- it's very, very good. They are good. They have got it down. It'll be the most professional marijuana campaign you've ever seen."

Lee's rise to prominence in Oakland started out slowly enough. He moved to the city in 1997, one year after Proposition 215 legalized marijuana for medical use in California. He started growing pot for a buyer's collective, and after two years he founded his own coffeeshop-style marijuana dispensary. He named it "Bulldog Coffeeshop," after a famous marijuana cafe in Amsterdam.

It was a welcoming climate for people looking to get their start in the industry. Unlike most jurisdictions, the city of Oakland had become accustomed to working with the medical cannabis industry early on, says John Geluardi, author the book Cannabiz: The Explosive Rise of the Medical Marijuana Industry, which will be published in October. The city was working with legendary marijuana horticultural guru Ed Rosenthal, even granting him an official city title to permit him to grow pot for patients within the city's borders. According to Geluardi, Lee's early genius was to cement this relationship with official legislation that would work to the benefit of both parties.

"I think [Lee] took what was a good, casual relationship between city officials and dispensary owners and made it official," Geluardi said.

At first, Lee worked through the auspices of the Oakland Civil Liberty Alliance, a political action committee that he founded. In 2004, the OCLA sponsored a citywide initiative -- Measure Z -- that would direct the Oakland Police Department to make enforcement of marijuana laws its lowest priority. In a city infamous for its high rates of violent crime, the measure passed by a 2-1 vote.

A couple of years later, Lee championed a different initiative, one that would increase the amount of business taxes paid by marijuana industries in the city fifteenfold. This initiative, Measure F, passed by an even greater margin in July 2009. Fully 80 percent of the Oakland electorate voted in favor. The city would only collect an infinitesimal increase in tax revenue -- around $300,000 per year, at least at first -- but it sent a message that the marijuana industry was a friend of the city.

All of which set the table for the city of Oakland's most startling embrace of the industry to date: the decision, earlier this month, to license four mega-sized industrial warehouse growing operations, a measure passed by the Oakland City Council earlier this month. The city is already receiving hundreds of applications for the licenses, and some bidders estimate that each warehouse might be able to pump out something like 50 pounds of product per day.

It's unclear how much Lee participated in the drafting of this latest City Council effort, though Councilmember Rebecca Kaplan, a strong Lee ally, was one of the two sponsors of the ordinance. In any case, Lee's political attention had by then moved away from Oakland and onto a larger stage. In 2009, he convened a group of people -- lawyers, activists, businessmen and government types -- to start discussing and drafting what would become the Tax Cannabis ballot initiative.

The measure they came up with has several parts. Firstly, it establishes absolute baselines for people who want to grow for personal consumption. Anyone, anywhere in the state, would be able to devote 25 square feet of their own property to growing their own weed. At the same time, it would introduce penalties for anyone providing marijuana to minors, or to consuming marijuana in the presence of a minor. ("Minors," in this case, defined as anyone under 21 years of age).

In the case of marijuana as a commerical activity, the initiative is much trickier. It follows on the heels of existing California medical marijuana law, such at it is, by charging local jurisdictions -- cities and counties -- with developing their own guidelines for commercial operations. One county might decide to ratchet down on the marijuana trade as much as possible, while others might throw open the flood gates and try to attract as much of the industry as possible. Local jurisdictions can also set their own tax and licensing rates for commercial marijuana farms, and they may also increase the amount of space that someone can use to legally grow their own. One invariable criticism is that the initiative, if passed, would make for a messy patchwork of commercial marijuana law in the state, and would punt enforcement off to strapped local governments.

Lee said that this patchwork approach, with each city council and board of supervisors deciding for itself how much marijuana it wants to permit, is the most politically viable route to legalization.

"This is following the history of alcohol prohibition," he said last month. "Same thing happened there. Not every state legalized right away when federal prohibition ended. Even to this day, states handle it totally differently. Different cities and towns have different laws, about how many alcohol permits they allow, and different zoning regulations."

Besides spearheading the drafting of the initiative, Lee spent around $1.5 million to fund a signature-gathering effort, according to campaign finance disclosure statements filed with the California Secretary of State's office in April. (At the time, Lee's contributions, through Oaksterdam U. and a related entity, S.K. Seymour LLC, amounted to nearly all of the money the campaign had raised to that date. Another round of financial disclosure, covering fundraising and expenditures through June 30, is due next week.)

But last month the Tax Cannabis campaign was starting to seriously gear up for the fight, and Lee said that his own role in it was growing "less and less every day." The campaign's political headquarters had set up shop just a couple of doors down from Oaksterdam University, and had staffed itself with veteran political operatives and fresh-faced volunteers from around the country. Staffers were abuzz with their newest recruit, a New Jersey student who had apparently taken the bus across the country and shown up at the headquarters unannounced, asking to be put to work. There was a tableful of campaign literature spread out at the entrance, behind a wall of posters telling the stories of people who have been incarcerated for growing marijuana. Whiteboards tracked press coverage of the campaign and charted the increase in the campaign's number of Facebook fans.

It is a slightly low-rent office in a slightly low-rent neighborhood, and it had the vibe of a grassroots, up-from-the-people political effort, which in some ways it is. Organizers are depending on the plausible idea that this is the one thing on the November ballot in California that is going to motivate young people, idealists and infrequent voters to get out to the polls. Voting for it would make a concrete change in California society, the broad outlines of which are easily grokked. A "yes" vote for Prop. 19 is the most defiant protest vote available in November -- a protest against Drug War policies going back to the Reagan era and beyond.

In fact, though, the top levels of the Tax Cannabis campaign are stuffed with top-level political veterans from the Obama and Clinton years. Chris Lehane, a Clinton spin doctor during the Monica Lewinsky years who now works as a public relations manager in Sacramento, is donating his services to the campaign. Blue State Digital, the consultancy that ran Barack Obama's groundbreaking Internet strategy, is now performing the same services for Tax Cannabis. The campaign is being coordinated by Doug Linney, president of The Next Generation, a political firm that has managed many successful ballot initiatives and candidacies for the California State Legislature. That's on top of volunteers from allied organizations, including Aaron Houston's Students for a Sensible Drug Policy, that will be throwing all their resources into Tax Cannabis well before November.

But if it seems that the campaign hasn't yet really turned on the gas, that's because it hasn't. The election is a little more than three months away, and the buzz around it hasn't quite built to a level that is driving people crazy to get to the polls. Is the campaign saving its ammunition for the home stretch, or is it failing to generate enough excitement?

Last year, shortly after Tax Cannabis qualified for the ballot, Lee estimated that the pro-legalization campaign would need to raise between $10 and $20 million to compete in November. On Tuesday, when the next set of finance documents are due to be released, we'll know if the campaign has been able to hit that mark, or at least come close to it. If not, it will have to try to step up its grassroots, volunteer get-out-the-vote effort. In the meanwhile, the April round of campaign finance documentation showed that the opposition was in even worse shape, at the time -- it had yet to gather any contributions at all.

Humboldt County's name is still synonymous with high-quality weed nearly everywhere you go. But the world is edging away from prohibition -- not only California and the nation, but the entire developed world -- and in the meanwhile we have lost some of our market advantage. In preparing for legalization, there is little doubt that we are a few years behind cities like Vancouver, Denver and especially Lee's Oakland. The local marijuana economy is comprised of thousands of small- to mid-sized growers, operating clandestinely and thoroughly dependent on the price controls offered by government-enforced prohibition. If marijuana went for, say, $300 per pound wholesale -- and under Prop. 19, there's no reason why it wouldn't go that low or lower -- then the entire Humboldt County marijuana industry would all but go belly-up overnight.

Lee is unsympathetic. "The long and short of it is, it is black-market prices right now, and there's nothing we can do to keep little mom-and-pop places going that were making the money they were making before," he said. "It's gotta come down."

This is a legitimate consumer-protection argument, and the businessman in Lee can't be blamed if he has foreseen and prepared for the sudden price drop that will occur with legalization (or for the more gradual, continuous drop in price if Prop. 19). If anyone is well positioned to make the leap from quasi-furtive success in the marijuana gray market to out-and-out industry moguldom in a world where weed is legal, he is that person. He has capital, resources, a solid political base and a huge stake in the high-profile "Oaksterdam" brand. Oakland growers will soon possess a warehouse operation pumping out product on an unprecedented industrial scale.

Unsurprisingly, the survival of the Humboldt County economy in the face of legalization isn't among Lee's top concerns at the moment. That's something that we're going to have to figure out for ourselves -- the more quickly, the better. Even if Prop. 19 fails at the polls, the industry will continue its slow march out of the closet, driving prices down toward what they would be if the marijuana trade operated in anything like a free market. Nevertheless, when prompted Lee was happy to spare a few brain cycles woodshedding ideas for us.

"Well, the tourism factor," he said. "You got beautiful redwoods, you got beautiful country up there. You have stuff to offer that we don't have."

But what about our marijuana? Good old Humboldt County/Emerald Triangle sinsemilla, organic and grown in the sun -- the variety that made our name? Indoor, energy-intensive pot, with its exotic varietal names and chemically engineered effects, has already taken most of the medical dispensary market, and looks to take even more with legalization.

"The outdoor, I was thinking they'll have to start making a lot of hash out of that," he said. "Bring a hash resurgence to the country. We haven't seen hash in the United States to any degree since the ’70s, since it was coming into the country from Lebanon. Midnight Express. That holds a lot of history, right there."

To people who take pride in Humboldt County's reputation in the world of weed, such an idea is a slap in the face. There are local efforts to adapt to the coming reality; a group called the Humboldt Medical Marijuana Advisory Panel has been holding forums around the county to seek ideas, and another Southern Humboldt group, treading in Lee's footsteps, has formed something called the "707 Cannabis College." People are starting to talk more openly about forming growers' cooperatives, organic or "salmon-safe" certifications, promotion of "Humboldt County" as a marijuana appellation a la Burgundy or Bordeaux. But almost no government action has been taken to date, and while the local industry has plenty of ingenious business people, none of them have pushed beyond the gray market to seriously imagine the day when the internal contradictions of the war on marijuana inevitably fall apart.

Oaksterdam is drinking our milkshake.

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Hank Sims

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