Dylan Mattole of Mattole Valley Sungrown. | Photo by Mark McKenna, courtesy HCGA.

Don’t look now, but after years of struggle and worry and market contraction, Humboldt County’s cannabis industry is having a moment. 

Less than three months after Politico declared that legal weed is “killing America’s most famous marijuana farmers” — meaning ours — local growers tell the Outpost that demand is so high they can barely keep up.

“It’s kind of a feeding frenzy, honestly,” said Scott Davies, owner of several local cannabis companies and board chair of the Humboldt County Growers Alliance, a trade association representing roughly 300 people in the industry. 

“There’s just a buzz,” agreed HCGA Executive Director Terra Carver. “Prices are up and holding, and this late in the year it’s not usual to see that.”

The market upswing isn’t limited to the legal market, either. For better or worse, the black market — which has been rebranded as the “traditional market,” the “legacy market” or, if you must, the “illicit” or “illegal market” — is also booming. 

“The traditional market is so strong it’s driving the price point up in the regulated market,” said Chris Anderson, founder of SoHum cannabis farm Redwood Roots. 

State-licensed Humboldt County farmers are selling product faster than they can harvest it. Distributors are offering some of them pre-paid, six-digit contracts for cannabis flower that may still be growing in their gardens or not yet planted. 

Dylan Mattole, founder of Mattole Valley Sungrown, said pounds of “clean-tested, triple-A quality” weed are selling for $1,100 to $1,400. “Last year it was $800 to $1,100,” he said. “So that’s a big difference.”

Sources who asked not to be quoted on the record said pounds in the illicit market are going for about $100 to $300 more than legal pounds.

Nobody knew for sure what would happen to Humboldt County when marijuana, the region’s greatest source of wealth and a fundamental influence on its culture, transformed virtually overnight from a lucrative illegal drug to an easily grown agricultural product. 

As recently as a few months ago, the prognosis looked potentially fatal — according to national media, anyway. In May, for example, the New Yorker diagnosed Humboldt County with “not only an economic crisis but also an existential one.”

In July, the PBS Newshour interviewed small-scale growers (including Mattole) who said many of their colleagues have gone broke, or were on the verge of it, after decades in the industry — done in, they said, by over-regulation and corporate competition.

The Politico story, from June, outlined other challenges posed by legalization, including the inability of weed businesses to get bank loans, the massive costs of obtaining permits and the industrial-scale competition posed by mega-grows in Santa Barbara and elsewhere.

“In effect,” Politico reporter Natalie Fertig observed, “legal marijuana is doing what the DEA’s war on drugs never managed to accomplish. Some observers fear the era of cannabis in Humboldt — legal and otherwise — is over.”

Not so fast. While the future, as always, remains uncertain, local growers say the legal marketplace is actually working to Humboldt County’s advantage.

“What’s making that happen is hard to pinpoint,” Carver said.

Some growers we spoke with offered a few observations that might help explain it.

Davies said it’s a simple matter of supply and demand. “Statewide, we are seeing the addition of 70 to 80 new manufacturing businesses come into the marketplace, fully funded, every month,” he said. “Every month!”

These businesses purchase cannabis as the raw materials needed to produce concentrates, edibles, bath bombs, mascara — any number of products in the ever-expanding menu of weed-infused options on the market. 

“No matter what they’re doing … if you track that back far enough there has to be a farm in there somewhere,” Davies said. “And the one thing these companies cannot do is purchase from the unregulated market.” 

California’s highly regulated cannabis marketplace, which opened for recreational sales on Jan. 1, 2018, requires manufacturers and distributors to buy their weed only from fully licensed cultivators participating in the state’s track-and-trace program, called METRC (Marijuana Enforcement Tracking Reporting Compliance).

State and local rules are now far more stringent than in the past, when, in some counties, growers didn’t have to provide much at all in the way of documentation before being issued a temporary license. Some companies loaded up on licenses and never wound up using them.

State regulators stopped issuing and extending those temporary licenses at the end of last year, and the pool of licensed growers has been dwindling ever since.

“So literally hundreds and hundreds of farms that last year were compliant, [now] their temporary permits have expired, so they can’t sell into the legal market,” Mattole said.

The number of state-sanctioned cultivators has fallen by almost 50 percent since the beginning of the year, a major market contraction that benefits anyone who’s still in the legal weed-growing business.

“As sellers we’ve been on the end of having to grovel, really working it, hustling to ty to get our product sold,” Mattole said. “Well now, because of the lack of supply, the new challenge is really all about choosing where to send your product.”

Davies agreed. “It’s a seller’s market,” he said. And he, for one, is excited to have made it to this point. Davies and Mattole both said that while some growers really tried and failed to make it work, many others — here in Humboldt and elsewhere — got temporary permits as cover, with no intention of following through, doing all the hard work required to become fully licensed at the state and local levels.

“I think there were a lot of people who were playing that game of permitting for every harvest it was worth,” Davies said. “At the end it’s binary: You either have a permit or you don’t. We’re there now.”

As of Wednesday, California has issued a total of 3,590 cultivation licenses. Santa Barbara County has the largest share of those, with 870, but Humboldt County has been closing the gap. We now have 788 licenses, roughly 22 percent of the state total. Mendocino County comes in a distant third with 351 licenses. Meanwhile, more than half the counties in California have banned cannabis cultivation altogether

Anderson said Humboldt growers are benefiting not only from the supply-and-demand advantage but also from the weed being grown here.

“It’s an amazing season for farmers in terms of the product we’re seeing,” he said. “There’s just incredible product coming off these farms this year. The quality of pot is phenomenal.”

That said, Anderson is still frustrated with how difficult it can be to navigate the state and local regulatory systems. Friends and colleagues are being left behind.

“A certain percentage of farms that should be licensed today, they have their applications in to the state, they’ve dotted their i’s and crossed their t’s, yet the state is for whatever reason not [issuing] licenses to these poor folks,” he said. “They need to get to work. This is their livelihood, and three or four months might make the difference in whether they make it or not.”

Anderson said there are still plenty of kinks to be worked out in certain regulatory systems. For example, last week he tried to log in to METRC to order some of the unique identifier tags required in California’s track-and-trace program, only to find that it was temporarily shut down.

“People who didn’t understand the system got on and tried to order 100,000 tags,” he said. This excessive order forced the state to switch gears and require people to fill out forms by hand to order their ID tags. “All these little hiccups, they’re no one’s fault,” Anderson said. “But the process, the system is just way over-burdensome. It feels anti-commerce.”

Asked to comment on the licensing timeline, Rebecca Foree, a spokesperson for the California Department of Food and Agriculture, said the process “varies tremendously from applicant to applicant based, primarily, on how complete the application is.”

Davies acknowledged that the creation of a regulated marketplace has been difficult for everyone involved, including farmers, manufacturers, distributors, consumers, the county Planning and Building Department and even law enforcement.

But he said there were bound to be growing pains, especially considering that California is orders of magnitude larger than any other state that has legalized marijuana, not to mention how well-established and lucrative the illicit market was.

“If you stop to think about the enormity of the job, it’s hardly surprising that it’s frustrating to get things done,” Davies said. “Everyone, by nature of the experiment, is at the steepest part of the learning curve. … And eventually everyone figures it out and this normalizes a bit because the goalposts stop shifting from the regulatory standpoint. The whole experiment begins to gel a bit.”

Of course, anyone who waits for that to happen will “lose the early-mover advantage in an emerging industry like this,” he said.

Anderson said the dust is beginning to settle, and in some ways the difficulty of this transition has its advantages. “Finding the good partners is becoming a little more apparent,” he said. “The people who’ve made it through the process, the majority are pretty solid. The folks still standing all have their wits about them. They have a good head on their shoulders.”

Mattole agreed and said that some of the best people still standing are homegrown.

“I’m one of these people stoked on Humboldt County,” he said. “There’s a lot of talk about a corporate takeover of all parts of industry, but I’ve found local distributors and manufacturing companies highly competitive. They’re matching or beating prices [being offered by] out-of-town corporate buyers.”

Citing such local outfits as Bear Extraction House, Redwood Roots, Emerald Family Farms and True Humboldt, Mattole said, “We have some awesome companies growing and thriving because they understand the industry.”

Can this apparent weed industry renaissance continue beyond this season? More cultivators are getting licensed every day, including many in counties where the local rules are much more permissive. The L.A. Times recently reported that one Santa Barbara cannabis company has plans “to erect hoop greenhouses over 147 acres — the size of 130 football fields — to create the largest legal marijuana grow on Earth.”

Oregon, meanwhile, has suffered from much-publicized overproduction issues. With over a million pounds of excess weed in the pipeline, prices have plummeted. Colorado and Washington have also experienced problems with over-supply, which has allowed the illicit market to live on.

The growers we spoke with aren’t too worried.

“I am cautiously optimistic,” Mattole said. “Actually, don’t say that. I would say I’m optimistic. … Humboldt County has a niche that I think will continue to allow us to operate. What we have up here is a brand and a quality. That’s all based on knowledge and experience that you can’t duplicate overnight just because you’ve got $150 million.”

Anderson struck a similar chord, saying the culture in Humboldt County will rise to the occasion. “If we can collaborate as a community we’re gonna win,” he said. “We’re gonna dominate.”

Davies is big on the future, too, but he’s also enjoying the present.

“As a farmer, can we please celebrate a little bit? ‘Cause damn, this has been a rough five years,” he said. “Right now, farmers can sell everything they can produce as fast as they can bring it to market, and that’s a win. … Finally we’re seeing some value for going down this permit route. I’m hugely excited for myself. It’s fantastic for Humboldt County and the whole program. I think it points to a brighter future.”