Is Pot King of Cash, Or Have People Puffed Up the Profit?

Kym Kemp / Wednesday, Aug. 15, 2012 @ 9:50 a.m. / marijuana

UPDATE 1:33 PM:  I made an error in my math calculations in the article below.  Instead of saying 1/10th of the land in Humboldt produces the same amount of pot as Redwood Valley, I said 1/100th.  So even though I’m perfectly comfortable with the figure that would result from that, let’s just scrub this piece and look at some other facts.

According to Jennifer Budwig, a local banker who has written a paper on this, says about 200,000 plants are seized in Humboldt Co. annually. Law enforcement thinks they get about 1 to 2% but to be safe, she said, let’s say they get 10% or 2,000,000 plants are grown in Humboldt. Then, for various reasons, she estimates 28 percent of pot grown is indoor and 72 percent is pot grown is outdoor. She uses another conservative estimate to figure out how much pot comes from each plant. But she basically says,

Indoor is 1 lb. per 10 plants x 3 harvests per year at $2,500 per lb.

168,000 plants = $420,000,000

Outdoor is 1 lb. per plant x 1 harvest per year at $1,500 per lb.

1,440,000 plants = $2,160,000,000

And she comes up with the big number of $2,600,000,000. Yes, that is 2 billion, 6 hundred million in Humboldt Co. alone. Way bigger than the 1 billion I offer as the conservative number below.

But there are other numbers that we could look at also.  For instance, the Campaign Against Marijuana Planting figures here say that in 2010 over 4 million plants were seized by them in California (not by anyone else, such as local sheriff’s departments, so a lot more was gathered that year.) Even if we say that each plant is only worth $250 because we don’t know how much is indoor and how much is outdoor (though we could easily surmise that as it is CAMP that most is outdoor and most would bring in a minimum $1000 per plant) the resulting amount seized is worth $1,000,000,000—one billion dollars.  Matching this up against these authors’ estimate, CAMP — working in California only — seized something between a quarter and half as much pot as eventually made its way to market throughout the nation. Heck, by CAMP’s own account it doesn’t even seize a quarter of the pot produced in California.

I understand that unless you live in a pot-producing area, the numbers of pounds produced can seem unbelievable.  In fact, those of us who live here are often astounded but as a grower I talked to told me—nearly 80 percent of the people on his block grow indoors.  In rural watersheds, the percentages of residents growing are often closer to 90 percent and some of them are really big growers responsible for thousands of plants, or 26,000 like the Hoopa bust below. With those kind of numbers, a billion dollars seems incredibly small to come from our county. And four billion produced in the nation seems impossibly small.

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Marijuana isn’t king of the cash crops, says a new book by a team of experts. It isn’t even a prince.

The impressively credentialed authors collaborated to create an objective primer on the most asked questions about cannabis. “Marijuana Legalization: What Everyone Needs to Know” is designed to cover the majority of social questions around the plant, from the pluses and minuses of consuming it to current law.

What they also do, according to the Center for Investigative Reporting’s Michael Montgomery (one of my favorite journalists), is claim that the entire nation’s consumption of marijuana comes in around $2.1 billion to $4.3 billion per year.

Wow. That number would topple cannabis from top cash crop in a hurry. California grapes alone are worth over $2 billion. Compare this to the previous best guess by NORML’s Jon Gettman — that marijuana is a $35.8 billion industry. Gettman’s report, which named California as the largest producing state at nearly $14 billion, was widely cited as proponents of legalization tried to estimate the possible taxable income available from the legalization of marijuana.

The authors of this new book argue that pot production numbers are inflated. They say, “Analyses purporting to support the claim [that marijuana is the nation’s leading cash crop] must contort the numbers, citing the retail price of marijuana but the farm-gate price of other products, or pretending that all marijuana consumed in the United States is sinsemilla, or ignoring the fact that most marijuana used in the United States is imported, or simply starting with implausible estimates of U.S. production.”

Possibly the numbers of plants just sound implausible to someone who isn’t here on the ground in the Emerald Triangle. We’re used to large numbers. This month, the Humboldt County Sheriffs Office busted a pot plantation on Hoopa tribal grounds. It took 30 officers four to five hours just to cut down the 26,600 plants. The plants were 4 to 6 feet high, so it is not unreasonable to assume they would average a half-pound each, or over 13,000 lbs. If we again assume that this is particularly crappy pot which sold for $1,000 per pound, then that one plantation would have produced over $13,000,000 worth of pot.

Photo of Hoopa pot plantation provided by the Humboldt Co. Sheriff’s Dept.

Recently, Humboldt County Sheriff Mike Downey showed me a roughly 10-square-mile map of Redwood Valley, an area in the eastern part of the county.  On it were plotted 93 gardens that the Sheriff’s Department had located, though not raided, in 2011. Downey estimated that around 70 of those gardens were large-sized — a classification he defined as more than a couple hundred. 

To make the math easy, let’s say that 50 of those gardens had 500 plants for a total of 25,000 plants in this 10-square-mile area. Now, Humboldt County has more than 3,500 square miles. Let’s make the ludicrously conservative assumption that only 1/100 of those square miles have the same level of production as Redwood Valley — 35 square miles. 35 x 25,000 equals 875,000 plants grown outside in Humboldt every year. (Remember, this is a conservative estimate.) 

Let’s say those plants average one pound each. (The average weight will probably be much more, but let’s be conservative.) This is 875,000 pounds of pot grown outside in Humboldt every year. Let’s say that most of these plants get an average price of $1,200 per pound. (Yes, I know — that is a conservative estimate also.) $1200 x 875,000 equals over $1,000,000,000 — over $1 billion dollars grown outside in Humboldt alone.  This does not take into account indoor, of course.  And, of course, it is an extremely conservative estimate of how much is grown outside here.

Let’s say Mendocino grows an equal amount (though estimates I’ve heard put them at growing more.)  That would mean that according to the authors’ estimates, Humboldt and Mendocino grow at least half of the marijuana purchased in the United States….

Now, of course, the flaw in this equation is that we are relying on numbers from law enforcement, which has a vested interest in large numbers.  They could be inflating the numbers (though I don’t think they are, as the information correlates with what I see on the ground.) So, let’s just cut the number in half. Now Humboldt and Mendocino are producing at least 1/4 the purchased marijuana in the entire nation…

Now, I’m a big booster of marijuana from the Emerald Triangle, but there is no way that these two small counties grow a quarter of the marijuana bought in this country. (Remember, we haven’t even included Trinity, Shasta, Sonoma and Lake counties, not to mention Colorado, Oregon and Washington.)  The reality is that the numbers the authors have put forward must be wrong. The amount of marijuana purchased in the United States must be much, much higher than they have proposed.  How much higher?  I don’t have the expertise to know, but my guess is that cannabis is still the cash king.

Related tags: cash crop

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