Archives January 2012
If you live in Humboldt County, or any other California region where bulk marijuana sales account for a substantial portion of your community's revenue, then you have probably heard growers talking about how low the price of a pound of pot has fallen over the past couple of years.
Humboldt growers are currently facing buyers who refuse to pay more than $2500 for a pound of high quality indoor marijuana, and as low as $1200 for good outdoor buds. This is a massive market shift from just two years ago when growers could easily find buyers willing to pay between $3200 and $3800 for chronic indoor weed and as much as $2800 for good outdoor buds.
There are a couple of things we find interesting about this trend.
First, per-gram prices at MMJ dispensaries have not changed much, with most outlets still asking (and receiving) $50 or more for an eighth and $300 for an ounce on indoor strains, and roughly half that for outdoor (depending on where you shop). At $300 per ounce, those sellers are bringing in $4800 per pound -- almost a 100% markup. The same is true on the street, where the cost of an eighth of weed is still about $50 pretty much everywhere you go.
Second, demand is undoubtedly up nationwide, and prices most certainly have not fallen on the streets of, say, New York City or Atlanta, GA, where many buyers routinely pay $425 or more for an ounce of sticky California-grown pot.
So it's fair to say that prices have only really changed for marijuana producers, while end-users are paying the same amount as they always have. Which of course means that the market is just as strong, and the profits just as great, but the growers aren't seeing nearly as much of that revenue as they have in the past. Instead, middle-men and bottom-of-the-chain dealers are scooping up greater profits than ever before.
Of course, supply is up huge these days, too, as more Californians than ever are becoming marijuana farmers, and states like Colorado are quickly rising as major producers of quality pot, which ultimately takes export business away from California.
Kym Kemp (who we think is awesome), recently stated that prices are actually up this year compared with last year, but we believe that, in the big picture, she is incorrect, and that her report reveals more about the isolated and pocketed nature of the marijuana industry in California, where there are so many tiny little markets and circles of growers and buyers that it is difficult, if not impossible, to step back far enough to see the overall trends affecting widespread producers and consumers.
Regardless, you may be wondering what we at Humboldt County News think of all this. Sure, that makes us sound cocky and self-important, but the statement is based on the volume of hateful comments and threatening emails we routinely receive in response to this blog. Well, here goes.
Because we do know honest, good-hearted (and even income tax-paying!) marijuana growers who are being negatively affected by this trend in bulk pricing, we feel a bit bad for those guys and their families. But that sentiment is outweighed by the satisfaction we get from knowing that the brute force of the market is actually creating serious competition among growers. Why is that satisfying? Because it means there is less room for greed, less room for all the douchebags and assholes who spent the last decade or so reaping insane profits, driving up housing costs for the rest of us and essentially reducing the quality of life for normal taxpaying citizens.
As bulk prices fall and supplies increase, buyers will no longer settle for sub-par product. And that means those growers with real gardening skills, who are in the game to produce a high quality product for patients and operate a legitimate and sustainable business, will have little trouble selling their goods, while those who aren't actually good gardeners and just got into the business to make some easy money will find that the benefits no longer outweigh the costs. Yes, many "good people" are getting caught in the crossfire of this competitive market, but, well, thems the breaks I guess. What we like about this consequence is that, in general, the douchebags who are causing real problems in our community are way more likely to be in the bulk production business rather than the high quality, extra-care-taken-on-a-daily-basis-in-the-garden-to-produce-the-best-pot-possible business. Competition is always good.
And finally, we are greatly anticipating Kym Kemp's upcoming audio series, The Humboldt Chronicles, which will explore some of the unseen angles of Humboldt County's marijuana industry.
Finally, a crackdown on some serious marijuana-related fraud that we have all witnessed in California, especially here in Humboldt County.
PG&E is ready to go after abusers of its CARE program, and that's a big deal. It's a big deal because CARE fraud by for-profit indoor marijuana growers is just another way grower greed has been screwing the rest of us over for many years.
First, for those who don't know, CARE is PG&E's California Alternate Rates for Energy program, and it was created to provide reduced/discounted energy rates to low-income families and individuals who actually could not otherwise afford to keep the lights and heat running in their homes. Qualifying households get a discount on energy rates of at least 20%, and in many cases that discount is as high as 70%. But PG&E doesn't provide the discounts out of its own pocket. Instead, CARE is subsidized by charging an additional 5% to all non-CARE customers.
So, take from the rich and give to the poor, sounds good, right? Not that we support that type of economic approach, but the concept isn't all bad in this case. The problem is that, while the rest of us are paying ever-increasing rates for our energy use, thousands and thousands of for-profit California pot growers are scamming us by participating in the program to lower the overhead of their illegal businesses. The fraudsters can do this because they do not report their marijuana-related income, and therefor can "prove" to PG&E that they are impoverished enough to take advantage of the discount program.
The problem is so bad, in fact, that the Eureka Times-Standard recently reported that "Arcata Police Chief Tom Chapman said that more than 70 percent of the grow houses searched by his department in the past two years have been utilizing the CARE program."
Which doesn't surprise us at all. Countless growers we have interacted with over the years freely admit to abusing the CARE program, and when questioned as to why they would fraudulently scam PG&E that way, the response generally amounts to "fuck 'em," which further illustrates the level of greed present among so many criminal indoor marijuana growers. We have even witnessed profitable pot farmers abusing other low-income programs like MediCal and CalFresh (food stamps), making thousands of dollars per month in pure black market profit and still stopping by the social services office to pick up their food stamps every two weeks, then using the benefits to buy lobster tails and fine cheeses at Wildberries. Hopefully that scenario is not common, but who knows? If a greedy grower is willing to steal from PG&E and the IRS, then why not also steal from other government programs?
Despite PG&E having little incentive to really crack down on CARE abusers (since they don't actually foot the bill for the program), we sincerely hope they give it a substantial effort. For those growers who follow the rules, pay taxes on their marijuana income, and bear the actual costs of all that expensive electricity they use, keep on truckin' and running your operation in an honorable fashion. For the rest of you, the greedy, tax-evading, douchebag growers degrading our community: Fuck you.