California’s New Weed Economy - Pacific Standard

California’s New Weed Economy

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With the prospect of legal cannabis, Humboldt County braces itself for new competition.

By Zach St. George

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Rio Anderson at his farm in southern Humboldt. Anderson is planning what he calls a “pot paradise” — an immersive tourism experience based around what he says will be a model organic cannabis farm. (Photo: Zach St. George)

At the end of the 1980s, almost all of the salmon available in American grocery stores was caught in Alaska. Fresh salmon was mostly a seasonal treat, available on the West Coast. Then came farmed salmon. Gunnar Knapp, an economics professor emeritus at the University of Alaska–Anchorage, says the fishermen he talked to at that time didn’t seem much concerned. Used to the fresh, flavorful salmon that they regularly ate, many of them assumed consumers would reject the pale, mild-tasting farmed fish. “One of the things that used to blow my mind was to hear Alaska fishermen say, ‘No one wants to eat that stuff,’” Knapp says. “Well, now it’s three quarters of the salmon that Americans eat.” By the end of the 1990s, the Alaskan salmon industry was in shambles.

Like Alaskan salmon fishermen and women, Humboldt’s cannabis farmers long had a geographical edge. The county’s forested hills made it an ideal place to grow illegally, far from the eyes of law enforcement. But with legal weed on the horizon in California, Humboldt could see many new competitors; as in Alaska, its geography could suddenly become a disadvantage. Whether you’re selling salmon or weed, it’s not good to be far removed from infrastructure and major markets. With the state voting to legalize recreational cannabis use new week, the question for Humboldt is: If it were legal to grow cannabis in a flat field next to Interstate 5, could you still make money growing it on a hillside deep in rural Humboldt?

Legalization is an upside-down world; it will bring drastic change to Humboldt, and maybe hardship. But it is also a chance to build something better.

The answer to that question has major implications not just for growers, but for the entire county. Although it’s impossible to quantify exactly how much the cannabis industry contributes to the local economy, the portion is clearly significant. In 2011, Jennifer Budwig, a senior vice president at the local Redwood Capital Bank, estimated that cannabis constituted a quarter of the total economy. Her estimate — based on Sheriff’s Office reports of how much cannabis it confiscated, and its estimates of that share of the total cannabis grown — was “pretty conservative,” she says; other estimates put the number as high as 50 percent. There are two extreme scenarios, says Erick Eschker, an economics professor at Humboldt State University: Best case, the industry could adapt and even expand, he says. “There are many examples of industries that wind up in places by historical accident” — in California, examples include the technology industry in Palo Alto and craft brewing in San Diego. But legalization could also dramatically undercut prices, affecting the entire county and eventually leading to a mass exodus. “You could have population decline, housing prices decline,” he says. “It could become a really nasty place.”

The Alaskan salmon industry provides a vision of one of those futures. In the early 2000s, a state-organized industry collective began a coordinated marketing campaign that touted its Alaskan salmon as natural, healthy, and wild-caught by independent fishermen and women, in implicit contrast to farmed salmon, which it deemed corporate, polluting, and unnatural. Already, Humboldt’s cannabis industry is taking a similar tack, led by a number of farmers’ collectives. I met Chrystal Ortiz, operations manager at one of these collectives, the Humboldt Sun Grower’s Guild, at the organization’s offices outside of Eureka. The front office is decorated with a topographical rendering of the county laser-etched in a redwood burl and a painting of George Washington surrounded by cannabis leaves. (By a strictly historical reading, the plant is probably Washington’s beloved non-psychoactive hemp, but the artist’s rendering seems somewhat stonier.) Ortiz has brown eyes and long, tidy dreadlocks. Humboldt can offer an artisanal product, she says, sustainably and organically grown outdoors by small farmers. This is in contrast not only to chemical-laden and environmentally costly indoor-grown cannabis of unknown provenance, but also to the as-yet non-existent but widely feared corporate growers that many in Humboldt expect legalization would bring.

In order for that type of marketing to work, though, the contrast has to be clear. For the Alaskan salmon industry, that meant making drastic improvements to quality. Before farmed salmon came along, Alaskan salmon was frequently tossed around and wasn’t bled quickly, both of which leed to bruising; it sometimes wasn’t iced until days after it was caught, and transportation from fishing towns to market wasn’t fast or reliable. Consumers can easily see quality, one marketer told me: “The minute you cut open a fish you can tell how well it’s been handled.”

With cannabis, differences in quality might be less obvious, one of the problems that Ortiz says her organization is working to remedy. She leads the way down a long hallway and into the collective’s packaging room. A large, swiveling magnifying glass with a built-in light sits on the table, along with a digital scale; below is a large plastic bin overflowing with clear oven bags filled with dried and cured cannabis buds. She takes one of the bags, unknots it, and sets it under the magnifier. The dried flowers are light green and flecked with little orange hairs, all sugared with resin. She pulls out a paper and holds it up — lab results, she says. Along with psychoactive chemical content, the results tally unwanted pesticides (none), microbiological contaminants (not found), and terpenes, which determine how piney-citrusy-skunky the weed will smell (many). Many people think that indoor-grown cannabis is inherently better than outdoor-grown, she says. These lab results should help dispel that misconception, she says.

The other challenge is connecting farmers to their crop. In the past, Ortiz says, cannabis dispensaries often couldn’t give many details about where their product came from, in part because farmers were wary of being named. But this also meant that responsibly grown cannabis might be sold side-by-side with cannabis grown unsustainably, or on trespass grows, or by cartels. “There was no accountability,” she says. “There was no, ‘This one is organic, this one is biodynamic, we’ve been farming here for generations.’ There was no way to tell that story.” She’s spent the last year talking to dispensaries, working to convince owners to display the collective’s cannabis under its own branding and educating bud-tenders (like bartenders) about the farmers behind the products. For the dispensaries and their customers, she says, working with the collective means knowing what they’re getting. Meanwhile, for farmers, joining the collective means a guaranteed venue for their product, she says, and removes the burden of marketing and distribution.

After she’s done with the magnifying glass, Ortiz pours the oven bag out into a smaller bag with a True Humboldt brand — the Sun Grower’s Guild’s sister organization. The bag is the size and shape of a bag of Costco trail mix. Later, Ortiz shows me more of the collective’s products and packaging. Most impressive is a metal tin, the size of a can of tuna with a pull-ring opener — it contains an eighth of an ounce of dried cannabis, she says, sealed with nitrogen for shelf stability. “It guarantees I’m keeping the farmer’s herb just exactly as they gave it to me,” she says. The can feels light in the hand, and a little miraculous, a world apart from the rolled-up Ziploc bags of the black market; strangely, of all the things I’ve seen during my time in Humboldt, it seems the most emblematic of the drastic changes taking place here.

Branding, of course, is not one-size-fits-all, and many people will want to market their own product. Even as the Alaskan salmon industry worked to improve its collective image, a number of smaller groups marketed their product directly to consumers — brands-within-a-brand. Probably the most famous of these is Copper River Salmon, an industry collective that sells what it calls “Alaska’s premier wild salmon”; every year, the first delivery of Copper River salmon by plane to Seattle, Washington is marked by a barbecue cook-off and fawning media attention.

This, essentially, is what Bob “Frenchy” LeClair wants for his Salmon Creek brand cannabis, he says. LeClair and I are at his house in the Salmon Creek watershed northwest of Garberville, sitting under an umbrella and sipping ice water. He has thick-framed glasses, a gray beard, earrings, and tattooed arms. Chickens and guinea fowl roam the yard to his left. His kids are in 4-H, he says; the birds are a teaching aid. “Watching them, you can see what dinosaurs were like,” he says. “Man, they go after a grasshopper, you feel sorry for the grasshopper.” Over his right shoulder is a greenhouse full of budding cannabis. Salmon Creek brand outdoor-grown cannabis will be for the most discerning customer, he says, who really wants details about their weed and where it came from — the plant’s genetics, the farm it came from, even the elevation and aspect of where it was grown. LeClair has partnered with a friend from back east whom he won’t name, but whom he says is something of a star in the marketing world. They’re talking to investors, looking for a building to rent out in Eureka to house the business, and especially trying to pull in more of LeClair’s neighbors in watershed. They’re also working on swag — hats, T-shirts, the like — which is important in what will soon be a crowded field, he says. He notes that the ranks of competitors will soon include multiple celebrities, including Snoop Dogg — “I’d like to see him wearing one of our hats some day,” he says. “Might happen.”

When LeClair moved to Humboldt 24 years ago, he says, the price of cannabis was $5,000 per pound, without accounting for inflation. Now, people in Humboldt are getting between $1,400 and $2,000, he says.

LeClair says he was in the black market for more than four decades, first as a dealer in his native Philadelphia, then as a grower in Humboldt. This year is his first legal harvest. It’s a relief to go legal, he says — if the Drug Task Force showed up at his gate now, he’d have a stack of paperwork to show them. But part of what motivated him was the realization that, in order to survive, he needed to get out ahead of legalization, which he, like many here, believes will bring lower prices. When he moved to Humboldt 24 years ago, he says, the price was $5,000 per pound, without accounting for inflation. Now, people in Humboldt are getting between $1,400 and $2,000, he says. As we walk between the head-high plants, which he’ll harvest days from now, I ask LeClair how low the per-pound price could go before his business would no longer be viable. “I don’t know that number,” he says. “I’d really prefer not to see it.” Proposition 64 doesn’t allow permits for industrial-scale grows in the state until 2023, giving growers like LeClair some time to build their brands before the expected corporate growers show up. But even if legalization eventually brings more competition and lower prices for cannabis overall, his hope is that a premium brand would still command a premium price. “It’s kinda like wine,” he says. “You can get two-dollar bottles of wine, but there’s still good-quality wine. I’m hoping it’s like that.”

Other growers I met concluded that, whether or not prices hold, cannabis itself should only be one part of a more comprehensive long-term plan. Rio Anderson points to the wine-based tourism of Napa and Sonoma counties as an example of what he’d like to see happen in Humboldt with cannabis. He’s hoping his farm, on a hillside south of Garberville, might be among the attractions. Anderson, tall and clean-shaven and wearing a Warriors cap, is hanging freshly cut buds in a shed. It’s a low-strength strain, he says, for people who want quality cannabis but don’t want to get too high. We leave the shed and walk up to his farm, on the hilltop, where several workers with shears are harvesting flowers from towering cannabis plants. The ground between the plants is strewn with hay, to prevent erosion, and stone fruit trees are scattered throughout; Anderson says he hopes to eventually make it a fully sustainable farm, not just for cannabis, but for fruits and vegetables too. It would be a “pot paradise,” he says, where tourists could come and have an immersive experience on a real working cannabis farm.

In Alaska, the price of salmon eventually rebounded. It was buoyed by marketing, but also, in a roundabout way, by the success of farmed salmon, which helped increase the number of American salmon eaters, and, eventually, the number of people willing to pay extra for Alaskan wild-caught salmon. At the same time, the success of Alaskan salmon as a premium product led to artisanal farmed salmon; what had originally seemed oppositional over time led to each industry improving the other. Anderson hopes that Humboldt’s cannabis industry might similarly be improved by legalization, and that it, in turn, might improve cannabis elsewhere by its example. He says he hopes that, someday, the success of regulations for cannabis cultivators could even lead to stricter environmental regulations for industrial agriculture.

A few days earlier, Anderson and I had sat on hay bales at the edge of his property and watched the sun set over the Eel River valley. His German shepherd lay at our feet, gnawing on a stick. A year or so earlier, he’d brought Lieutenant Governor Gavin Newsom, Congressman Jared Huffman, and State Assemblyman Jim Wood here for a tour. He’d pointed out to them all the cannabis farms hidden in plain view — just the edge of a greenhouse, or an opening on a hillside. He does it again for me. “There’s a farm,” he says, pointing. “There’s 26 greenhouses on that farm.” Shifting directions, he says: “There’s a farm there. There’s a greenhouse down there. Then you can see the ones on the hillside there.” There’s weed growing everywhere we look.

Anderson says his mom was among the original back-to-the-landers. Though she never grew weed, she was part of a generation in Humboldt that cared deeply about community and about the environment. After years of operating in the black market, many people in the industry have forgotten those values, he says. He hopes that, with legalization, they might again become central. “Each individual farm isn’t going to be able to compete with a Central Valley farm, but with the amount of farms that are up here, with the diversity of strains and growing techniques, I feel we can compete,” he says. “The only way I see this area surviving is the revival of that community spirit.” Legalization is an upside-down world; it will bring drastic change to Humboldt, and maybe hardship, he says. But it is also a chance to build something better.

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