John F. Kennedy, in reference to a slogan from the New England Council, famously noted that a rising tide lifts all boats. The concept holds that free markets, specialization and subsequent economic prosperity benefit all. While in current times we know this is not exactly true, as economic booms increasingly favor the wealthy, a strong economy makes life better on average. Greater access to credit, increasing 401(k) balances, strong property values, more job opportunities and wage growth are all associated with an expanding economy.
Conversely, a falling tide sinks all ships.
In modern times, our economic lives are increasingly interconnected. As goods and services flow across the world or localities, our lives connect with those of others. With the rise of “free markets” and globalized trade, these connections are ever more present. A problem or disruption in one area can have a ripple effect across the world. Like it or not, this is the paradigm we live in.
Our nation, county and own communities are no longer siloed as in the past. We depend on and benefit from the success of other individuals and industries. It is for this reason, that problems in the California cannabis space have people concerned across the state. Here at home, more and more people are talking about crashing cannabis prices and the ripple effects that will have on the local economy.
The true economic impact of the cannabis industry in Humboldt is poorly understood in some circles. While it is impossible to pinpoint the exact magnitude of the contribution, we know it’s significant. In fact, during the recent Master of Marijuana Certification I received through Cannabis Training University, it was estimated that cannabis-related activity accounts for fully two-thirds of the economy in some regions of Northern California, including Humboldt. I believe $2 billion a year is a conservative figure.
What those outside the industry fail to realize is that with price compression for pounds, the vast majority of cannabis farm revenues are spent in the local economy, not on lavish lifestyles or remittances abroad. Even if operators are from out of the area, they still pay inflated property tax and land payments. Many rent or buy a townhouse and they purchase food, diesel, propane, ATVs, hardware, lumber and agricultural supplies locally, just as resident farmers do. Farms employ contractors, plumbers, road crews, engineers, consultants, logging outfits, financial service providers and local labor with knowledge of farming in our region.
While opponents of cannabis argue that the industry should be allowed to fail, that would make for a very nasty economic scenario, especially here in Humboldt where the industry makes up such a large portion of GDP. Boutiques, car dealerships, restaurants, golf clubs, night-life establishments, travel agents, real estate professionals, lenders, insurance brokers and others would come to realize how dependent they have been on cannabis industry revenues.
As Warren Buffet famously noted, you only know who’s been swimming naked when the tide goes out. In other words, during good times it’s easier to make money and easy to lose sight of the fact that economic prosperity can be fleeting. Unfortunately for Humboldt County, many of us will learn this if the local cannabis industry fades away. All boats will sink with the falling tide and life here would be very different. The fundraising efforts for the Sequoia Park Improvement Project, the Senior Center in Fortuna and other high-profile funding efforts around the county will grind to a halt. Non-profits more broadly will feel the pinch, executive directors will be out of work, and sadly, those depending on charitable efforts will suffer.
While a Polytechnical Humboldt State and retirees moving north will undoubtedly contribute to the economy moving forward, that will simply not replicate a couple of billion dollars of lost economic output and all of us will pay the price.
Many locals feel well off or financially independent today in the face of record asset values. Remember that investor sentiment is always the very best just before a major downturn. A meaningful stock market rout coupled with recession-led real estate declines are in the cards at some point. Add to that an enormous slowdown in consumption locally as farms go under, times won’t feel so sweet for any of us.
Along these lines, I had two rather unsettling conversations this past week. The first was with a retailer who claimed to be down significantly in November and December. Sales were depressed last year with Covid and this year’s numbers were far worse. This conversation reinforced what I’ve been seeing over the past few weeks. Restaurants are seemingly less crowded, the mall is largely a ghost town and families like ours are starting to tighten their belts in the face of economic uncertainty, opting to hold off on home renovations and other major purchases.
The second conversation was with a local real estate agent who specializes in ranch properties. Unlike recent years where mountain properties were being bid up, multiple listings are now coming online regularly and I’ve seen some truly jaw-dropping reductions in list prices.
Regardless of personal views or political affiliation, it’s time to rally behind the cannabis community. While we have all heard demonizing stories over the years, the majority of legal farmers are good, hardworking people. They love their families and their communities and are the lifeblood of the local economy.
We need to repeal state cultivation taxes outright and suspend local Measure S cultivation taxes for a couple of years. This will buy our farmers and the broader community a bit of time until market access and pricing improve. With these actions, more farms will enter the regulated marketplace and operators can compete more effectively with the illicit market. The idea of tax reform is gaining traction across the state. In fact, a petition on change.org titled Save the Emerald Triangle Legacy Cannabis Farmers already has over 6,200 signatures, clearly indicating that others agree with the economic argument proposed here.
In the face of a collapsing local industry and distressed property sales, organized crime will step in and mop up the remains.…not the best future for ourselves, our children, or our communities. We’ve already seen this play out in other areas. Oregon had a major washout several years ago where it was estimated that 80% of original cannabis permit holders went under. Those farms were purchased, in many cases, by less desirable operators we are now reading about in the press. Heavily armed criminal organizations that care little for the environment, workers, or consumers. I know workers who spent all season in Southern Oregon in 2021 and instead of being paid, had a gun stuffed in their face and were told to kick rocks after months of labor and sacrifice.
This is a very real potential outcome for Humboldt if we see a major wave of farm failure. While many assume that mountain properties will lay fallow, I think that assumption is incredibly naive. Other operators will step in and I sincerely doubt they will have any of our best interests in mind.
Jesse Duncan is a lifelong Humboldt County resident, a father of six, a retired financial advisor, and a full-time commercial cannabis grower. He is also the creator of NorCal Financial and Cannabis Consulting, a no-cost platform that helps small farmers improve their cultivation, business, and financial skills. Please check out his blog at, his Instagram at jesse_duncann, and connect with him on Linkedin.