An initiative to legalize the sale of marijuana in California will be on the ballot this fall. It's sparked a debate about how the measure could affect people whose livelihoods are tied to the marijuana industry. But even without full legalization, a massive shift is underway in California's booming pot economy. It's pushing down wholesale pot prices to levels not seen in some areas in a generation. Now, it's threatening to leave some growers in the dust.
THE EMERALD TRIANGLE
For years, the area connecting Humboldt, Mendocino and Trinity counties -- known to some as the Emerald Triangle -- has been a center of pot cultivation, and a target of federal drug agents. The war on pot has helped keep prices high and profits rich for growers willing to take the risk. But now that is changing. A more liberal approach to pot and a rush of growers and entrepreneurs is finally bringing wholesale pot prices in California back to earth.
Charlie Custer, a local writer and activist, is helping chart the uncertain future for the marijuana industry in northern California. Custer says, "Ever since Europeans came here, it's been boom and bust and cycles of exploitation. And we're finally arriving at the end of the longest rush of true prosperity this county's ever seen."
Five years ago some outdoor pot growers in the area say they could command a premium of four to five thousand dollars per pound. This year prices for some high-quality grades have dropped to under $2000, according to interviews with 12 growers and a federal agency that monitors the marijuana trade. Mendocino County sheriff Tom Allman says he's seen pot going for even less.
"The lowest price I heard that was this year, in 2010, was in Boonville, at $800 per pound. That's rock bottom low," explains Allman. Allman also says in some cases growers simply can't get rid of their processed pot. "We arrested a man who had?800 pounds of processed. 800 pounds of processed. And we asked him, 'What are you going to do with 800 pounds of processed? And he said: 'I don't know."
Some growers are surviving the bad times. Matt Cohen runs a medical-marijuana collective from his organic farm near Ukiah.
Like pot growers throughout the region, Cohen is preparing the ground for the spring planting. He's avoided the worst of the downturn by cultivating pot and distributing it directly to patients in his collective, under the state's medical marijuana law. But many other growers -- who sell pot to brokers both legally and on the black market -- are still sitting on huge stockpiles from the fall harvest. Cohen says they either can't find buyers, or won't accept cut-rate prices. "It's dropping by 20 percent each year. And I know people, and they're living from credit card to credit card. They're not even making money. It's just a lifestyle that they're in and the alternative is to go do what?" says Cohen.
A CHANGING MARKETPLACE
As recently as last December, things were still pretty upbeat. But owner and long-time grower Tim Blake says the mood has darkened since then. Some of the region's outdoor growers are being eclipsed by indoor-pot operations, which are booming in cities, towns and rural areas around the state. Indoor-grown pot is favored by many dispensaries, and consumers and can fetch higher prices. "There's a tremendous amount of concern, border-lining on fear," says Blake. Blake says part of the problem is with the outdoor growers themselves. Some of their pot just isn't good enough to compete in a more discriminating marketplace. They're growing the wrong strains, and they're not paying close enough attention to how the buds look.
"What's happening is the people that don't have quality product aren't selling it. So they're the ones that are creating this panic. Most of the people that have a quality product and are willing to sell it at a decent price are doing okay. So it really comes back down to that, just like in every other agricultural industry. When you get too many vineyards, and too many people growing vines out there, then only the good ones make it," explains Blake.
But Allen St. Pierre, director of the National Organization for the Reform of Marijuana Laws, says California's pot isn't quite like wine yet. Large legal restrictions still limit distribution channels. However, he says marijuana in California is starting to behave like any other commodity market. "Location, employment costs, opportunity costs, investments for the whole overhead -- those now seem to be dictating what you're paying for cannabis," explains St. Pierre.
The lower prices aren't just affecting growers. Anna Hamilton, an activist who organized a recent public forum on the future of the marijuana industry in Humboldt County, says pot money supports all sorts of businesses, schools, hospitals, community radio and even the local fire department. With wholesale prices down, contributions from growers are starting to dry up.
Hamilton says, "There has been business foreclosures, store-fronts closing. There's a lot of instability and anxiety." Hamilton has been criticized as overly pessimistic, but she thinks the slide will worsen. "The talk around town is, this is the last year, grow big. And at the end, the market's flooded, the price has dropped below $2000. It's collapsing on itself."
Still, elsewhere in California there's a new generation of entrepreneurs who are finding ways to make lots of money in state's transforming pot economy.
