Humboldt Corn (Taken October 2012)

Like corn in Iowa or potatoes in Idaho, the price of certain key crops indicate the economic health of a region.  For better or worse, the crop that fuels the financial engine of the Emerald Triangle is marijuana. Economists and bankers have estimated that Humboldt County alone produces from $400 million to over $2.5 billion dollars in sticky green buds. This week, voters in two states, Washington and Colorado, approved two different models of legalization.  What happens in those states could affect the price of cannabis in this area and the region’s financial future.

Dominic Corva, a political geographer from Sarah Lawrence College who is currently studying cannabis issues in Humboldt County but maintains a residence in Washington state, says legalization in these two states will have an “effect on the national conversation…just like we saw after California medical marijuana passed, we saw more states passing [equivalent laws.] ” Like with Prohibition, he says, states will pass legislation continuing to loosen cannabis laws on their own.  The effect will “snowball.”

Most people agree that with easement of marijuana laws, wholesale prices will drop.  For Humboldt and Mendocino counties which rely heavily on income from cannabis growers this could be disastrous.

Corva suggests that “increased production in Colorado and Washington may be problematic for California producers but probably not.” Nonetheless, “this could have the long term effect of expanded outdoor production—over production.  Outlook for wholesale cannabis prices is bad.”  One of the reasons that marijuana prices here might drop, Corva says, is it is “Less risky to move marijuana from Boulder to NY than from Garberville out of California….This could drop prices.” However, he says, “There doesn’t seem much room for them to drop much more seriously.”

Emerald Growers Association Chairwoman, Kristin Nevedal, says that her group does not expect to see any negative fallout from the legalization success in those two states. “I don’t know if the black market is going to flood and drop prices,” she says though she doesn’t think it likely. But prices for medical marijuana, she believes, which are between $1400 and $2,500 for “depo” (marijuana brought to harvest early in the season by partially depriving it of sunlight) won’t be affected because Washington and Colorado can’t legally export their cannabis. Dispensaries in California can’t buy from growers in those two states and the marijuana produced there can not cross state lines legally.

Though, of course, the black market producers export cannabis across state lines already.

Nonetheless, Nevedal says that medical marijuana growers are “contract farmers” who won’t be affected in any case. “The price of production is what affects the price.  The bottom can’t fall out because a farmer has to pay for production.” Besides, she says, much of California doesn’t have to worry about competition from Colorado or Washington because neither one of those two states has sungrown cannabis available in quantities. Sungrown cannabis is becoming more popular as consumers who buy organic, environmentally friendly foods look for similar qualities in the buds they purchase.

Corva offers a similar viewpoint. “The outdoor organic capital is still in your neck of the woods.”

In fact, according Nevedal, her group which represents the interests of medical marijuana growers in several Northern California counties hopes that the success in Washington and Colorado will help them with their goals in California. In the next couple of months, she believes, there will be “a little more political bravery” because of the changing laws in these two states.

Nevedal is “super optimistic at this point” about the future of medical cannabis in California. She says, “Close to 80% of the polled population supports medical marijuana.  Close to 60% flat out want to legalize [marijuana without medical restrictions.]”

West Coast High Times Editor David Bienenstock says, “I think clearly that California led the way with medical marijuana.”  And, he believes that “the citizens of California aren’t going to be satisfied until we make this very rational decision….We will have 2 years to look at the progress of Washington and Colorado.”  He even thinks that California might not wait two years. Bienenstock says, “California went heavily Democratic in this last election…” so the state may not have to wait for an election.  Perhaps lawmakers, he says, will seize the opportunity to create legislation themselves.

Bienenstock hopes that “public officials in Humboldt County are preparing for a post legalization world.” This is both a “Crisis and opportunity” for growers in the area. And he believes, “This is a change we have to make for so many reasons.”

Colorado and Washington weren’t the only states changing their marijuana laws. Massachusetts approved medical marijuana making it the 17th state to do so.

Not all cannabis laws were loosened though.  Montana approved a law tightening restrictions on its medical law. Oregon’s proposal to legalize marijuana didn’t pass.  And Arkansas’ medical marijuana proposal went down, too. And, of course, closer to home, Measure I in Arcata will impose a 45% tax on those with electricity bills higher than 600% of baseline usage. This could affect around 7% of homes in the city. [Article coming up on this measure soon.]

Nonetheless, state and city law changes are only reflect a small amount of what is happening.  There is still the federal government to contend with. Certainly this last year has seen a huge crackdown in California with the federal government shutting down over 600 dispensaries.

Nevedal though believes there will be no federal crackdown in those two states like there has been in California because the federal government “had every opportunity” to come out against the laws proposed and they didn’t. Nevedal speculates that the federal government has “heard the request” of the voters and will at least halt prosecution of medical marijuana.  “We’ll see a freeze and review policy,” she believes, “especially towards medical policy.” This will, she believes, “support us getting a regulatory system in place [for medical marijuana.]”

Corva, however, says that among people he knows, “”We expect a federal reaction that will prevent all or part of the law from going into effect…However, within Washington State it is hard to find juries willing to convict.”

It is true that in a sign that views at the top might be changing, US Attorney General Eric Holder who came out a month before California’s Prop. 19 promising to “vigourously enforce” marijuana laws, quietly ignored Colorado and Washington’s proposed laws before the election.

Nonetheless, immediately after this latest election, a spokesperson from the Department of Justice said, “The department’s enforcement of the Controlled Substances Act remains unchanged. In enacting the Controlled Substances Act, Congress determined that marijuana is a Schedule I controlled substance. We are reviewing the ballot initiatives and have no additional comment at this time.” California’s experience this last year under an onslaught of federal forces may indicate that the government is unwilling to ignore challenges to its drug policy.

Ironically, the federal government’s crackdown may well be the best price support Humboldt County has.  In the face of increasing production here and a dropping of legal barriers in other states, prices should have been dropping precipitously.  Nonetheless, prices have remained seasonally stable even very slightly increased from last year at this time.  The crackdown surely is a factor in prices failing to fall.

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