Pot prices plummet in state, putting growers in a bind
May 16, 2010, 2:18 pm

For nearly 30 years, the biggest threat to Northern California pot growers has been raids by local and federal drug agents. But along with those considerable risks came propped-up marijuana prices that insured rich profits.

Now, the pot industry faces a new economic reality: falling prices.

With a more tolerant legal environment and a rush of new growers, wholesale prices for marijuana cultivated in outdoor pot gardens have plummeted this year to under $2,000 per pound, from a peak of $5,000 to $6,000 a decade ago, according to interviews with more than 20 marijuana growers, brokers and law enforcement officials.

In some areas, prices have dropped to levels not seen since the Reagan administration launched a massive anti-drug operation known as the Campaign Against Marijuana Planting.

“The most successful government price support program in history is finally failing,” said Charley Custer, a writer and community organizer who arrived in Humboldt County just months before CAMP was launched in 1983. “The price of pot is plummeting.”

In Humboldt, Mendocino and Trinity counties - California’s unofficial pot capitals - growers are still sitting on large amounts of processed marijuana that was harvested last fall. Dealers who normally arrive during winter months to buy local supplies aren’t showing up much these days.

“When some people do move it (marijuana) they don’t get nearly the price they were hoping for,” Custer said.

That goes for both legal growers who cultivate limited quantities of pot under California’s medical marijuana laws and illegal operators who often grow larger amounts. Mendocino Sheriff Tom Allman said the lowest price he’s ever seen for a pound of pot was this year in the town of Boonville - $800.

“That’s rock-bottom low,” he said.

Some growers can’t get rid of their marijuana at any price, Allman said. He recalled another recent case involving an illegal grower who was caught with 800 pounds of processed marijuana in his home.

“We asked him: ‘What are you going to do with 800 pounds of processed (marijuana)?’ And he said, ‘I don’t know.’ ”

As recently as last December, things were still pretty upbeat among Northern California growers. At Area 101, an events and healing center near Laytonville, revelers celebrated the Emerald Cup, a public competition for the season’s best pot buds.

But Area 101 owner Tim Blake said the mood darkened as the spring planting season opened with many storerooms still full of last year’s product.

“There’s a tremendous amount of concern, border-lining on fear,” said Blake.

Blake is a former underground grower and cancer survivor who now cultivates medical marijuana. He said the drop in pot prices is in part the result of more small-scale growers rushing in as law enforcement shifts its focus to large-scale growing operations with suspected links to Mexican drug gangs.

But Blake said another factor is the quality of outdoor-grown pot as it competes against marijuana being cultivated in private homes and warehouses around the state.

Indoor-grown marijuana — much of it cultivated in big urban areas - is increasingly favored by dispensaries and consumers for its looks, consistency and potency. It costs more to produce than pot grown under the sun, but commands a much higher price - as much as double. That’s one reason retail prices haven’t hit the skids.

“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,” Blake said.

“Most of the people that have a quality product and are willing to sell it at a decent price, are doing okay. So 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,” he said.

Some growers are surviving the market shift by cultivating new varieties that command higher prices or by illegally exporting to other states where profit margins are nearly double.

But others don’t have the skills or resources to adapt.

“There are several generations of people up here who are good at one thing--growing pot.  Now no one seems to want their product, and they don’t have anything else to do,” said Anna Hamilton, an activist and radio personality who helped organize a series of public forums on the future of the marijuana industry in Northern California. 

In recent weeks, Hamilton stoked controversy when she spoke out against an initiative on the fall ballot to legalize the personal use of marijuana, saying it will push prices even lower and devastate the local economy.

There is a lot of anxiety,” she said. “People look at the possibility of legalization this fall and they see prices are already falling. The market is collapsing on itself.”

The slump isn’t just affecting growers. Pot money supports businesses, schools and local clinics in the region and contributions are falling this year, according to Marianne Knorzer, program director at KMUD, a community radio station in Garberville.

“I do feel a sense of what we’ve created in the past is changing now.  It’s putting a hurt to this culture’s self-sufficient ways,” Knorzer said.

A radio version of this story aired on NPR's All Things Considered. For more on KQED's coverage of the changing economics of pot, my full reports for the California Report are here and here.

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