California Marijuana Cultivators Striving to Go Legal Squeezed Between Falling Prices and Rising Costs

A new article in the United Kingdom’s Independent looks at what’s happening to California’s cannabis cultivators as they are squeezed between falling prices because more marijuana is being grown and the cost of trying to move towards legalization.

According to a study released by the California Department of Food and Agriculture in June, scientists estimate that “cannabis production in California in 2016 was approximately 13.5 million pounds, consisting of 650,000 pounds of medical cannabis [and]1.85 million pounds of cultivation for in-state nonmedical use…” which leaves 11 million pounds of marijuana buds to be sold out of state.

The article in the Independent notes that while some cultivators are trying to move to a legal market, they are still selling pounds on the black market to help them cope with the rising costs of legalization.

The author quotes Charley Custer of the Humboldt Mendocino Marijuana Advocacy Project. He states, “There’s always been vastly more pot grown here than sold here, and the vast majority is shipped out to the rest of the country and that will continue.”

In addition, regulations such as Track and Trace will make it difficult for growers to sell to both legal and illegal markets at the same time.

Also, because, among other reasons, regulation costs can be so high, the article points out that many growers won’t succeed in becoming legal. The abundance of marijuana on the black market might not follow through to the legal market. Hezekiah Allen, executive director of the California Growers Association, notes in the article, “Here’s the irony: there will be a huge oversupply of product and a shortage of regulated product.”

Meanwhile, the growers are in-between a rock and a hard place. The article points out,

Growers hoping to keep their businesses alive must make a rational decision, [says Terry Garrett, who serves on a cannabis advisory board for Sonoma County], that balances the cost of getting state approval against the risk of selling to the black market and getting caught. And they’re vying for coveted space in a finite market, with a new track-and-trace requirement clamping down on the flow of weed outside the system.

“It’s the equivalent of blocking the exits and setting the building on fire with everyone inside,” Garrett says.

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76 comments

  • It’s not the cost of permitting that is the burden, it is the taxation. Right now as a cultivator you cannot write off your business expenses for state or federal income taxes. The state assy is trying to remedy this, but with the $9.25 per ounce excise tax a growers tax rate is way over 50%, maybe as much as 60%. I understand that growers should pay their fair share of taxes, but this legalization law assumes all growers are filthy rich and is nothing more than an exploitive money grab by the state. The retail consumer is also going to be charged a 15% excise tax at the register as well as sales tax so the retail price could go up 30% or so. I think it might be time to start selling eighths out of your car again!

    • Ok will do thanks, or better yet Craigslist, look at all the adds on there it’s frigging ridiculous, I don’t understand how they get away with it, most are in the towns of eureka and Arcata, right next to the cops. It’s still illegal to sell your 215 stuff for a profit, they have cash and weed and are basically giving cops directions to their houses, seems like a pigs wet dream.

      • They are poor people normally seling far less than a pound at a time.

        • Not really check it out, most say multiple lbs or hundreds or even thousands of clones. Discounts for bulk so they are sitting on plenty, right in town, easy pickings.

        • So true. Craigslist seems like it would be a better market place for local mom and pop shop ops…if it wasn’t trashed by “trimmy Jimmy” from rio Del, and his forever flaggin crew of Schwag hustlin “bud and suger trim” swingin, bait and switchin masters. Keep flaggin the little guys, karma is a bitch!

    • That’s “sickly” funny!

      • What I see, is that at about a grand a pound, it makes cannabis twice the economic size of almonds….the largest export crop listed on the state’s website. And the absolute economic monster of the North coast. That’s very important when we think of the state and regional impacts to the economy when it goes away.

    • When taxes and regulations become onerous, the black market thrives.
      While I’m not a fan of any black market, it serves the need for what people want, good or bad.

      • It’s too bad. All of those damn rules and regulations are going to shut the growdozer industry down. Just like it did with the fishing and Timber industry.

        It looks like the Liberals are getting a taste of their own medicine.

        • The forestry and fishery were not shut down by liberals, they were raped by conservatives to the point that they were nearly unrecoverable. The forest would take a thousand years to return. Thankful people with reason (liberals) were able to mitigate the greed and evil.

          Also nearly every grower I have ever known is conservative.

          • hmm. You must have not grown up around here. Log the best leave the rest is the old school motto. And I believe the extreme use of the water in our creeks and rivers has a huge affect on the amount is fish spawning in our rivers. Has nothing to do with conservative or liberal. Has to do with respecting the land we were born and raised on.

            • Yea check that again, 100 years of shitty logging practices have destroyed the rivers along with damns. A very small %is the result of grows. It may be noticable but pales in comparison to the sediment and unstable logging.

          • the elites who own the timber industries are neither lib or conservative. That is old family money going way back and they are a global threat to our land not a dem or republican or conservative or liberal. They have your brain locked in the ‘us or them’ box right where they want you. How much native lands have reservation’s sold out behind their peoples backs over the years. You show your ignorance.

          • Err.. wealth.
            The *wealthier* the more the tendency towards conservative views.. poor folks share.
            Wanna guess how rich stay rich?

    • Most of the transplant greenrushers are filthy rich.

  • Taxation and regulation, not legalization! Yo cali yuppy who voted this convoluted pile of horse crap in, your paying 75$ an 1/8th! U can only buy it from a legal “dealer”who’s bending you over daylong and laughing all the way to the bank. But hey… you can travel from the smoke shop to your house legally and u can smoke it in your bedroom legally! Win win right? Ill stay n outlaw,thanx. No one saw this coming….? And please don’t tell me that there will be no more crime involved over this drug trade. You ALL (growers n smokers)fell right into Big Brothers trap, now pay $$$ the price!

  • I feel really bad for these poor industrial scale black market drug producers (they are not farmers!) now facing the realities of legitimate business after decades of raking in obscene profits both tax a regulation free.

    Maybe they’ll have to dig up a few pickle barrels full of cash or sell one of the their vacation properties in Costa Rica to get by if they’re struggling so hard.

    Guess what? You can always grow a food crop if you don’t like the high taxes involved with growing MJ. Oh, that’s right … you have no interest in growing food because you’re a philanthropic medicine man shaman that’s only in the game to provide medicine to suffering cancer patients. At least that’s been your claim since it became legal for medical use…

    What’s next?

    • Those are not the people who are really hurt by this situation. Those with small farms and modest income are now not in a position to afford going legal. The types you are talking about can afford the cost of going legal.

      • Oh well … there’s always the “real job” option for those that have been leisurely earning a living off of just growing a few plants. Unfortunately for them, there needs to be some work ethic and motivation involved to get the bills paid here in the real world.

        The silver lining is that the children whose parents have taught them that producing and selling illegal drugs is a valid career option will now get to see it all fall apart and be discouraged from following in their loser parents footsteps. Hopefully they’ll still have a chance to learn the true value of hard work, earning an honest living, and being a productive and contributing member of society before it’s too late.

        • Your ignorance is showing. There is nothing leisurely about farming. Even on a small farm. You cant make a modest living off “a few pants”. It’s not a choice between mega grows of a few plants. We’ll see how many “honest” jobs are here when our economy collapses.

          • Your bias is showing.
            Farming my ass. The drug dealers masquerading as farmers aren’t fooling anybody.
            If you’re a real farmer then let’s see you earn a living growing just about anything but weed and you’ll have my utmost respect.
            No chance in hell? That’s what I thought.
            There are lots of honest jobs around for people whose lives don’t revolve around drugs and that take the time to go to college or learn a skill. Again, motivation and a strong work ethic are required. I’ve worked for myself my entire adult life. Cant get a job? Make one.

            • Hey I thought that was my quote! I love that.. Need a job? Create one!

              And to the above; From back kitchens to commercial demolition, beat reporter to large (vegetable) farm worker, street barker, box truck driver (in Manhattan!), ad salesman, beach bar tender, gym trainer, and big box store stocker.. nothing requires as much of me as cannabis.. from clone to clip to client= me.

              Actually street junkie was and is the hardest job on Earth. From in Pakistan to Pittsburgh.. and they get no respect.

              Thank you God*.

    • Perhaps reign in your vitriol and chest-pounding long enough to realize this article is not talking about ‘industrial scale’ folks. Better yet, since you ‘care’ so much, go to a MADD meeting. A LOT more lives ruined by that -legal- drug. Just sayin.

      • You seem awfully upset about this whole situation. I’m sorry that the concept of a working a normal job is so overwhelming to you. Life isn’t easy for most people. Welcome to the club.

        As far as MADD and “more lives ruined” go, I suggest facing the reality of the topic at hand rather than changing the subject and arguing an unrelated point that nobody cares about.

    • Diesel DRW - Curb Weight 7762 lbs

      I guess you haven’t been South in a while…

      California is also planted in GRAPES! How many too many will be enough? How many wineries?

      Jesus! How many wineries were built with pot money?

      Wake up, it’s bigger than just weed…

  • Bet a bunch of folks are regretting that they supported legalization over decriminalization.

    Oh well. Can’t claim they were warned.

  • Up here in Washington state similar fools claimed that there would not be enough legal weed to meet demand, but in reality there was so much legal weed that it briefly crippled illicit grower sales. But then when all the people who didn’t smoke due to it being illegal suddenly started smoking the market balanced out for all types of growers and the prices pretty much have remained unchanged from pre-prohibition times.

    Of course California is different, so who knows? What I do know is that remote illicit mega-growers no longer need to waste enormous production costs on the challenge of growing in far off places, which is great because these illicit locations are incredibly destructive to the environment and lawless and incredibly irresponsible mega-growers need to be destroyed my market forces. Don’t know how that is going to happen but it’ll be a good day when all these water thieves and bulldozing criminals who spread toxic waste everywhere they choose to operate get their land seized and their livelihood entirely destroyed!

  • “production in California in 2016 was approximately 13.5 million pounds, consisting of 650,000 pounds of medical cannabis [and]1.85 million pounds of cultivation for in-state nonmedical use…” which leaves 11 million pounds of marijuana buds to be sold out of state.”

    Mostly illegally. It’s that 11 million pounds that ensures there is no financial bust on the horizon locally. It’s kind of like 500 people march into Walmart at the same time and start shop lifting. Sure, a few will get caught, but 497 will leave with a nice profit. Roll on!

  • Gee, nobody saw THAT coming!

  • If Gunther`s numbers are correct, that`s 5500 tons that is hauled out of state. How is this moved? I don`t want to know names, places, specifics, obviously. However, that is an enormous amount. Is this all hauled 10 lbs; 50 lbs at a time in the trunks of cars? Semi trucks packed full? Is the mafia — Italian, Mexican, or whoever– doing this and they have a secure transportation system? Cops on the take big time? Is it mailed US mail 8 oz at a time? All of the above? 5500 tons is the load capacity of a large freight train; by bulk; several large trains. This is a huge transport and logistics problem and clever folks who`ve worked this out.

  • 13.5 million pounds @ $1000/lb wholesale is $13.5 billion. Retail puts that number towards $50 billion. (@ $50/ eighth ounce it is $86.4 billion) That’s as big as any of California’s other industries: other agriculture, entertainment, technology. It’s no wonder that the bureacracies want a large slice of that pie.

  • If it`s hauled 60 lbs per car load, this works out to 21 cars per hour (24/7). Does this seem reasonable?

    How many of these people get caught?

  • If 1% of the marijuana haulers get caught; that is 5 per day, which is over 1800 per year. Does this sound reasonable? I would think the cops would catch more than 1%. Any comments?

    • my buddy owns the brewery in Sand Point. you will find that there are a lot of tweakers there. the entire northwest is plagued with meth, but it sounds like you have it all figured out.

  • Looks like these dirt bags are actually gonna have to get a real job now! Haha. The pot game is going down hill fast.

    • Ah no its not. Re read. Black market is gonna thrive. Legal weed can only be sold in cali. The rest of America is still smoking!!!🤠

  • The weed game is poised to be taken over by big business types who are backed by millionaires, having business symposiums, stock offerings…etc. The pound price is shit and won’t get better. This would have happened whether legalization happened or not, because of simple supply and demand; there are too many growers. The game is up, unless you are Steve Angelo or the Marley Corporation.

  • Never dismiss the power of human creativity. We may be a lot of things but there are lots of ways to do things.

  • Diesel DRW - Curb Weight 7762 lbs

    What an amazing story! 5 MILLION pounds from the North Coast? Nice going guys!

    HOW could it matter WHAT the government does or WHO gets caught? Obviously your answer to this challenge, or ANY challenge at all, is to GROW MORE WEIGHT!!

    So no more whining about the price! If you get half as much, grow twice as much! THAT will solve everything!!

    The USA will soon be BURIED in bud, 3 feet thick! Is THAT what you really want?

  • Grow it like big corn felds that’s what’s going to happen then they will be useing tractors like they use for baleing hey that’s how they are doing it back east hemp for cloths,roap, all kinds of stuff but I think thars a different kind of hemp anyway it will find it’s way Thu as time goes by one thing I know weed is allways going to be weed

  • Kicking You Outta the Hills

    The states goal is to move all the cannabis farms outta the hills and away from salmon streams and onto Agriculture zones. They don’t want anymore cannabis in Nor Cal, they want to centralize production in the San Juaquin and Sacramento Valleys and let big ag and big wineries in AG Zoning take over… that is why “no cannabis on rangeland, timber production zones, rural residential etc…. they are only allowing survivable size gardens on large parcels which cost lots of money. They have the plan and through use of zoning ordinances they plan to lower the price so much that if u don’t have at least an acre of cannabis, and lots of startup money for ag land purchase, permits, taxes, etc., you will not survive. The price will hit an all time low of 3-500 this year and it will be the end if off grid cannabis farms in the hills as we know it, already parcels in rangeland and tpz are being sold for half as much as 2 years ago, they have devalued the land values of all the houses in the hills, only a gland is valuable right now as the other parcels will not be permitted and are therefore less valuable. Don’t forget who runs California, it is big ag companies and their lands are now more valuable than ever.

    • but Estelle is a big fan of alt-energy so it will be all OK. “These ARE the droids youv’e been looking for”!

    • Totally right about them wanting to drive people out of the hills. The other point is (in Mendo, at least), that they are realizing that they can make a lot more money fining people tens of thousands of dollars for not being legal, than they can from collecting registration fees, because legal grows require man hours for paperwork and inspections by the county. The regulations are so onerous that it’s nearly impossible to go legal. Out of 450 who applied in Mendo, less than a dozen have actually made it through the process. You look up in the hills around Ukiah and north, and see these grape grows where they have clearcut a huge area, yet a pot grower is not allowed to cut a single tree. Where’s all that water coming from? It’s so obviously a culture war.
      It was a nice run. Hope folks found some useful things to do with their money. Stay out of debt and figure out what you want to do next. Pot is over.

      • It is over. Community colleges are a great resource for learning new skills. I am worried about the mental health effects of losing this industry. I know everyone hates growers but all associated industries will be destroyed too. It ain’t gonna be pretty.

  • EXSCUUUUUSE ME! But is no one thinking really? You knee jerk fantasizers! The dispensers are charging (or going to) 4,454 dollars a lb. Cfy if you want to but I smell 32-38 for the boutique back door just like before.
    Since non of you really read the law obviously, in the fine print Gavin actually names his slush funds for padding with the “incidental” half and quarter cent over pay you leagal beagals will be giving it to …. He is so laughing to the bank which will accept his “tax”money. No problem. While we sit here big ducks no place to put it? Some body better open a strong box seriously… What a bunch panic stricken whiney people.

  • And you guys wanted legal
    FUCK DAT il stay black market !!!!

  • I told you so…I tried to warn you but you would not isten. Congratulations! Enjoy!!

    • Yes you did and here we are. I’ve gotta laugh. Everyone I know is sitting on hundreds of pounds. Maybe there was a method to the madness of law enforcement letting everyone blow it up to this point. The gluttons have grown themselves right out of business and fucked over the little guy just trying to make some extra cash. Thanks gluttons, for ruining the market. Hope you have to end up composting that shit, would serve you right .

  • oh come on, are we all suggesting that the ‘blue’ ….. “demmmed down shepple controllers’ …..’progressive’ …….. new age neo-trans ‘love trumps hate ‘ posers would take advantage of power nad tax the life blodd out of us while they steal our land???? Impossible. Thet are our freinds. Just look at those liberal smiles…. (-: !!!!!!!

  • Falling prices.. only in the disorganized overgrown over-regulated mess the County Commissioners and mega-producers made…

  • Meeting all the improvement requirements has some forgoing profits to plow right back into infrastructure improvement .

  • Timothy McVeigh's ghost

    Meh
    There will always be a market for the top end and the bottom.

    2011 screaming eagle cab $2500
    Franzia box wine $7.50

    People will buy adjust your prices based upon what you have what they demand

    • Why do you guys keep using wine as a industry comparison ?? wine holds it’s value because not everyone can grow grapes and it take at least 5 years to get a grape vineyard to produce good grapes and make wine. anyone can plant a canabis seed or use clones and have usable product in as little as 8-9 weeks!! So there’s no comparison. good grapes are mainly growen in a few areas in this country, you can grow weed anywhere. And if you can grow decent outdoor in a short time you will be able to produce good indoor I’ve seen plenty do it, in the state of Nevada I’ve seen people who know NOTHING!! about weed come in and in a short time are producing good product and making money. Sooooo after that little said if you think people will keep coming to Cali to get better so called “top shelf weed” for much longer your dreaming.

      • Right on. Weed is probably the easiest plant on earth to grow. Given soil, water and sunshine, it practically grows itself. Try making wine. These people think they are effing Luther Burbank.

  • Welcome to being any legal business in our current capitalist economy

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