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.