Welcome to Potopia

On the corner of Broadway and 17th Street in downtown Oakland, nudged between a Chinese restaurant and a hat shop, Oaksterdam University greets passersby with a life-size cutout of Barack Obama and the sweet smell of fresh marijuana drifting from a back room. Inside, dutiful students flip through thick plastic binders of the day's lessons, which, on a recent Saturday began with "Pot Politics 101," taught by a ponytailed legal consultant who has authored a number of books on hemp. The class breaks for lunch around noon and resumes an hour later, with classes on "budtending," horticulture, and cooking, which includes a recipe for "a beautiful pot pesto." There are 50 students in this class, the majority of them Californians, but some have come all the way from Kansas. In between lectures, the university's founder, Richard Lee, 47, rolls in and out on his wheelchair greeting students, looking the part of a pot-school dean in Converse sneakers, aviator glasses, and a green "Oaksterdam" T shirt.

Locals refer to the nine-block area surrounding the university as Oaksterdam—a hybrid of "Oakland" and the drug-friendly "Amsterdam," where marijuana has been effectively legal since 1976. Nestled among what was once a rash of vacant storefronts, Lee has created a kind of urban pot utopia, where everything moves just a little bit more slowly than the outside world. Among the businesses he owns are the Blue Sky Coffeeshop, a coffeehouse and pot dispensary where getting an actual cup of Joe takes 20 minutes but picking up a sack of Purple Kush wrapped neatly in a brown lunch bag takes about five. There's Lee's Bulldog Café, a student lounge with a not-so-secret back room where the haze-induced sounds of "Dark Side of the Moon" seep through thick smoke and a glass-blowing shop where bongs are the art of choice. Around the corner is a taco stand (Lee doesn't own this one) that has benefitted mightily from the university's hungry students.

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An education at Oaksterdam means learning how to grow, sell, market, and consume weed—all of which has been legal in California, for medicinal use only, since 1996. For the price of a half ounce of pot and a couple of batches of brownies (about $250), pot lovers can enroll in a variety of weekend cannabis seminars all focused on medicinal use. But "medicinal" is something of an open joke in the state, where anyone over age 18 with a doctor's note—easy to get for ailments like anxiety or cramps, if you're willing to pay—can obtain an ID card allowing access to any of the state's hundreds of dispensaries, or pot shops. ("You can basically get a doctor's recommendation for anything," said one dispensary worker.) Not all of those dispensaries are legally recognized, however: there's a growing discrepancy over how California's laws mesh (or don't mesh) with local and federal regulations. But Oakland is unique in that it has four licensed and regulated dispensaries, each taxed directly by the city government. This past summer, Oakland voters became the first in the nation to enact a special cannabis excise tax—$18 for every $1,000 grossed—that the city believes will generate up to $1 million in the first year. Approved by 80 percent of voters, and unopposed by any organization, including law enforcement, the tax was pushed by the dispensary owners themselves, who hope the model will prove to the rest of California that a regulated marijuana industry can be both profitable and responsible. "The reality is we're creating jobs, improving the city, filling empty store spaces, and when people come down here to Oakland they can see that," says Lee, who smokes both recreationally and for his health, to ease muscle spasms caused by a spinal cord injury.

The arguments against this kind of operation are easy to tick off: that it glamorizes marijuana, promotes a gateway drug, leads to abuse. Compared with more-serious drugs like heroin, cocaine, or even alcohol, studies have shown the health effects of marijuana are fairly mild. But there are still risks to its consumption: heavy pot users are more likely to be in car accidents; there have been some reports of it causing problems in respiration and fetal development. And, as the director of the National Institute on Drug Abuse, Dr. Nora Volkow, put it recently, there are a number of medical professionals, and many parents, who worry that the drug's increased potency over the years has heightened the risk of addiction. "It's certainly true that this is not your grandfather's pot," says Mark Kleiman, a drug-policy expert at the University of California at Los Angeles.

Nevertheless, like much of the country, Oakland is suffering economically. The city faced an $83 million budget deficit this year, and California, of course, is billions in the red. So from a public-coffers perspective, if ever there were a time to rethink pot policy, that time is now. Already in Sacramento, there is a legalization measure before the state assembly that the author claims could generate $1.3 billion in tax revenue. And while analysts say it has little hope of passing (it faces strong opposition from law enforcement), the figures prompted even Gov. Arnold Schwarzenegger—who's vetoed every marijuana-related bill to come across his desk—to proclaim, "It's time for a debate." On a federal level, marijuana is still illegal—it was outlawed, over the objections of the American Medical Association, in 1937. But in February, Attorney General Eric Holder stunned critics when he announced that the feds would cease raiding medical-marijuana dispensaries that are authorized under state law. "People are no longer outraged by the idea of legalization," wrote former San Francisco mayor Willie Brown in a recent op-ed. "And truth be told, there is just too much money to be made both by the people who grow marijuana and the cities and counties that would be able to tax it."