Archives July 2010
The time of reckoning for marijuana growers in Eureka, California is right around the corner.
The Eureka City Council is about a week away from approving an ordinance that would effectively put an end to for-profit residential pot production. According to the Times-Standard, the council voted unanimously to introduce the ordinance for the city of Eureka, and they will convene again on August 3, 2010 to vote the ordinance into law.
Here's a quick summary of the new residential regulations outlined in the ordinance:
- Medical marijuana users may only grow for themselves in their residences
- Grow space limited to 50 square feet and 1200 watts
- Pot gardens must have a permit from the city for any special electrical wiring
- All CO2 use is banned
- Property owners will be forced to allow the city to inspect properties
This is a HUGE DEAL for Eureka, and it is very likely that the ordinance will pass early next month. This will pretty much shut down all black-market marijuana gardens within the city limits, and could become a huge problem for property owners who rent to growers, whether they are aware of gardens on their properties or not.
Once the city determines that a property might be housing an indoor pot farm, they will notify the property owner by certified mail. If the owner does not respond within seven days, the city seeks an inspection warrant to enter the home and check for compliance with the new law. After that initial seven days, the city will also hit the property owner with fines of $50 per day until it is inspected.
We're all for regulating marijuana production and eliminating the black market criminals who do little to support the community, but it seems a bit aggressive to be fining property owners on a daily basis over the inspections. What's more, it is unclear what kind of information the City of Eureka must obtain before it decides to perform an inspection on a property. We foresee unfortunate situations arising where nosy neighbors abuse this system to harass residents in their neighborhoods, forcing them to open their doors to city inspectors based on little more than hearsay or personal opinions.
Regardless, things are changing in a big way the Humboldt County Seat, and we expect to see many growers moving out of city limits as soon as possible.
And we can't help but wonder if this is ultimately good for the city? If growers can't turn a profit in the city of Eureka, will this lead to decreased demand for home rentals? Will it eventually lead to lowered property values because growers will no longer be looking to purchase homes or rent properties inside the city?
Let's face it, nobody is moving to Eureka, California for the great schools or the high paying jobs. They're moving here to grow pot or to service the pot growing industry. Or maybe to retire. That's it. Everyone knows our economy is based almost entirely on illegal marijuana production, whether we like it or not. If property values decline in Eureka, there will be less money for schools, less money for city services, and less money to pay for political positions like those held by our city councilmen.
Is this really what we want? Maybe there is a better way...
Not that it's very surprising, but marijuana's inevitable thrust into the national spotlight has nabbed the attention of Bloomberg Businessweek, who recently published a short article about various states' and localities' plans to begin taxing the controversial herb.
Their comment regarding Humboldt County, however, is both misguided and uninformed. Businessweek says "If the initiative passes, marijuana advocates and researchers describe a scenario in which drug tourism floods the state, resulting in tasting rooms and specialized bed and breakfasts in the Northern California counties of Mendocino and Humboldt, where the plant is cultivated."
Ok sure, there's been a lot of talk about "marijuana tourism", but seriously? It's not going to happen. Specifically, it's not going to happen in Humboldt County.
Why not? Think about it. Sure, Humboldt is great, it's beautiful and the doja is fantastic, but we are no longer the go-to headquarters for fine marijuana in the United States. The name might still carry some weight, but it is simply no longer the case that you can't get Humboldt-quality pot outside of the Redwood Curtain. Growers all over California have figured out how to grow world-class bud, and you can damn sure find a lot of it in the San Francisco Bay Area.
Now, if you are on vacation and you want to go to California to smoke some legal weed, you would probably fly into SFO or OAK. But then, why spend another 5-6 hours (and/or $200-300) to go all the way to Arcata? You're already in a world-class city, surrounded by amazing tourist attractions and unlimited supplies of high quality pot.
Indeed, it won't be Humboldt or Mendocino Counties that reap the rewards of a rush of pot tourists. It will be Oakland and the surrounding area. To back up this claim, just have a look at this Google Trends report, which pits the terms "humboldt marijuana" and "oakland marijuana" against each other. You can see from the data that Oakland is getting a lot more pot-related press these days, and that is certainly bound to continue. By the time people are actually booking flights and planning trips for their pot vacations to California, it will be all about Oakland, and very few will actually make the drive (or pay for the plane ticket) up to Arcata where it all started.
Anyway, maybe we need to let go of this fantasy where we envision pot tourism making up for the damage that legalized marijuana could do to our local economy. Indeed, if pot growers want to continue making the kind of money they do now, they probably ought to vote against Prop 19. How are you going to vote, and why?
Yes, Humboldt County really is the Marijuana Capital of the World. Where else would you read about a 30 year old woman busted with 45 pounds of pot, plus cash and live plants, when she was pulled over for speeding by a Sheriff's deputy?
We're all pretty used to reading about this kind of stuff here, because it seems to happen on a weekly basis, but let's take a moment to think about the implications of this arrest.
Tiffany Charbonneau, when pulled over, first told the cop that the smell of pot was from the young marijuana plants she was transporting in her vehicle. She showed the cop her 215 card, but it was expired, so she was detained and searched. Within the vehicle, the deputy found 45 pounds of herb, "a significant amount of cash", the live plants, and "a pay-out sheet detailing the sale of marijuana." Damn Tiffany, it ain't legal yet!
Forty-five pounds. Even with marijuana prices at all-time lows due to the supply glut created by thousands of pot growers rushing into the scene (many of whom moved to California recently for the ongoing Marijuana Gold Rush), decent nugs can still bring about $3200 per pound in-state. So this lady is rolling around with $144k worth of pot, plus a bunch of cash, some live pot plants, and she even has records detailing sales of her weed? No question about it, that's just stupid. Seriously, even if this weren't the black market, if she were a legitimate businessperson running normal day-to-day operations, since when does anyone drive around with six figures worth of goods, without any protection or even an attempt to mask the odor?
But this story, like so many similar tales of late, helps illustrate how unlike any other market the marijuana scene in California has become. For every Tiffany Charbonneau, there are presumably hundreds of other big-time black-market transports on the road at any given time.
And what does it all mean? For starters, it means there is an unimaginable amount of cash being made on the marijuana black market in Humboldt County. And that means significant losses in tax revenue for our community and our state. But will legalizing marijuana resolve that issue? We have doubts. Even if prices decline, which they most assuredly will, the black-market producers may still be able to compete with white-market prices, particularly because they won't pay the required taxes, and it stands to reason that we won't ever be able to eliminate the underground market and extract tax revenue from it.
This is all totally new and unprecedented in the US. We have a product that can be manufactured on a small scale, inside peoples' homes, with a quality that rivals even the most professionally grown stuff. Getting rid of the black market, and tapping into that tax revenue source, is probably going to take more than just passing a new law. It's going to be quite interesting to see what happens after California voters finally pass some sort of marijuana legalization.
According to a recent Reuters poll, 48% of California voters support Proposition 19 to legalize marijuana state-wide. Here at Humboldt County News, we are actually quite surprised by this. We really thought that it would take a few years before voters pass this kind of measure. Of course, the survey only polled 600 voters, so it is by no means an accurate representation of the entire state, but it still raises concerns for the marijuana industry in California.
Associated Press reported today that marijuana prices would nose dive to ridiculous lows if the substance becomes fully legalized in the state. They claim that pot could end up selling for $38 per ounce before state-mandated taxes.
And that, of course, is absolutely ridiculous. There are few growers who can produce marijuana for less than $75 per ounce, and the vast majority of growers are probably spending $100-$180 on each ounce of bud they produce. Granted, that is for top quality weed, not the mass-produced crap that we can only assume the major tobacco companies and other large corporations will eventually manufacture on a large scale once pot really is legalized in California.
But this whole thing leads into another, very interesting area of California's marijuana culture. We have been keeping quiet around here for the past year, taking a cue from the (sometimes aggressive and threatening) readers who have commented on many of our posts. But to hell with you idiots, we gotta report on what's really going on here in Humboldt County.
Pot growers here in Humboldt, at least those with some business sense, are suddenly finding themselves having very capitalistic, even republican-esque, thoughts about Prop 19. There is no question that all-out legalization will change the economic landscape of the marijuana market. No doubt, many well-funded and large-scale growers already have plans for how to expand their businesses once legalization finally happens. And it's all about money, right? But look at Humboldt County, where, like many other parts of California, small-time growers are making serious money. We've already covered the numbers behind pot growing in other posts, so we won't get into that here. We'll just remind you that growing pot, if you actually have a clue what you're doing, can bring in profit margins of 300%, easily. That means for every $10,000 it costs to grow, the best growers are making $30k profit, and for many of them, that happens six times per year, and most don't bother paying income taxes.
Anyway, lots of growers are planning to vote against Prop 19 because it threatens their livelihood. If everyone suddenly has to go legit, and turning a profit becomes a matter of running a profitable business according to state laws, these little guys who are currently running lucrative black-market operations will quickly be pushed out by professionals who have the capital to open up 100,000 square-foot marijuana production facilities, bringing the prices down and making up for the margin difference with sheer quantity.
From what we have been hearing among some of the grower circles here in Humboldt, some people think it won't affect anything, while most are worried about the futures of their gardens, worried that it simply won't be worth it to grow pot in their homes anymore.
So we ask you, the readers of this blog who still subscribe to our RSS feed or stop by to see what kind of crap we're publishing, to weigh in on this topic. Do you think prices will change much? Do you think legalizing will actually put an end to tax-evading indoor growers who are the bane of Humboldt's law-abiding citizens' lives? Growers, we invite you to cuss at us and make violent threats! I mean, you're going to do it anyway, right?