10/19/2010 11:41 am ET Updated May 25, 2011

Proposition 19: After Federal Threat, Pot Stores Consider Limits

This story comes courtesy of California Watch

By Michael Montgomery

Pressure from the Obama administration could force some California cities to rethink plans to open retail pot stores and commercial cultivation centers if voters approve Proposition 19 next month.

"We will be willing to confront the federal government, up to a point," said Oakland City Council President Jane Brunner. "And that is going to be if we start getting penalized or we could jeopardize being arrested."

Prop. 19 allows adults 21 and older to grow up to 25 square feet of marijuana and possess up to an ounce. But what is triggering alarm in Washington is a clause authorizing cities and counties to approve commercial cultivation and retail sales for recreational users, something that could make California the most pot-friendly place in the world.

No city has gone further than Oakland in outlining plans for the building of a massive legal pot industry, with downtown hash bars and industrial farms capable of producing marijuana for much of the Bay Area. All this new business could earn the city millions if Oakland voters approve a special ballot measure imposing a 5 percent tax on all marijuana sales.

But not if the Obama administration has its way. With Prop. 19 running even or ahead in some polls, Attorney General Eric Holder last week threw down the gauntlet, vowing to "vigorously enforce" federal marijuana laws even if California voters approve the ballot measure.

"Let me state clearly that the Department of Justice strongly opposes Proposition 19," Holder said in a letter to nine former Drug Enforcement Administration chiefs. "If passed, this legislation will greatly complicate federal drug enforcement efforts to the detriment of our citizens."

The measure, wrote Holder, "would provide a significant impediment to ... efforts by law enforcement to target drug traffickers who frequently distribute marijuana alongside cocaine and other controlled substances."

The federal government classifies marijuana as a Schedule One narcotic alongside LSD and heroin.

Some marijuana advocates expect the Obama administration to file suit if Prop. 19 passes. Others say the measure could upset a truce between federal agents and California over the state's medical marijuana program.

"I think it will open up a new order of conflict between the state and the feds," Santa Clara University law professor Gerald Uelmen told the Sacramento Bee. "Now, if we open the door to lawful cultivation and distribution for recreational use, I think there will be a very strong reaction."

Jeff Wilcox, an East Bay businessman with plans to open a 100,000-square-foot pot farm in Oakland, said the city isn't trying to scrum with the feds over marijuana laws.

"This is not a political fight. This is a way for Oakland to revive itself, raise millions in tax revenue and take money away from dangerous street gangs," he said.

Council member Brunner said Oakland would closely analyze the federal government's legal position if voters approve Prop. 19, and then decide on a course of action, including whether to move forward with licensing retail pot shops.

"The city of Oakland has always been willing to push the envelope," she said. "But at some point there is a question between pushing the envelope to (committing) a criminalized act."