Liam Moriarty: Hi, Daniel, welcome back.
Daniel Mintz: Hi, Liam. It’s good to be here again.
LM: So, tell us about what’s going on with the cannabis economy in Humboldt County, and why there is so much concern right now.
DM: Well, on the one hand, Humboldt’s former advantages in an illegal market are now handicaps; being in dark, semi-hidden places. It was good for less attention from law enforcement, but in a legal market, why grow cannabis in the hills when you can grow it on flat land in places like the Central Valley? And on top of that, drought, forest fires and smoke from forest fires affect production.
And at the same time, there is a statewide flow of production. At the end of August, there were over 7,000 state cultivation licenses with more pending, and the high volume has now affected prices. At the same time, the size of the retail market – the number of dispensaries – does not match the growth in production.
LM: What does the county have in place to try to stay competitive in this market atmosphere?
DM: The first step is to help farmers overcome falling prices. The Board of Supervisors has just approved a million dollars in what they call “emergency relief funding” and which is funded by excise tax revenues. Now the idea is not to give cash payments, but more to help fund improvements and keep costs down. Thus, the revenue margin can increase. Excise tax payment extensions are also in preparation and increased compliance assistance is planned in conjunction with planning and economic development departments.
LM: So what is the economic impact?
DM: The county polled cannabis growers and in a survey of 50 cannabis growers, the majority said they would not be able to pay their excise taxes in the next cycle. You get a feel for the scale in this clip of Scott Adair, the county economic development director at the last supervisors meeting …
Scott Adair: Our office has been inundated with requests and requests from the cannabis growing community for what I can only characterize as urgent, if not desperate, calls for help. These cries for help and relief stem from the recent low in the cannabis market, where the price per pound is now lower than the cost of growing, processing and distributing that product.
DM: The Adair office reports that the wholesale price of outdoor cannabis has fallen from $ 1,100 per pound to an all-time low of $ 400 per pound, and even lower for farms selling last year’s crop.
LM: Wow. Now what about the “Humboldt brand?” It was supposed to be the ace in the hole for this whole industry out there. Doesn’t that have the kind of value they expected to have?
DM: At this point, marketing the Humboldt brand will not be enough. A state naming program will be launched shortly. But brand value is limited, especially for outdoor cannabis in this commodity market that we see. Humboldt, of course, has a unique history and culture, but we’ll see if the cannabis brand can be as marketable as it has been with products like Napa Valley wine. And it will always be competitive. Humboldt isn’t the only place to produce artisanal cannabis.
LM: Has an estimate been made of the impact this will have on the county’s overall economy?
DM: There hasn’t been a precise estimate, but for sure the cannabis dollars are bringing in a lot, you know, in goods and services here and the county is preparing to receive a lot less tax revenue in the next few cycles.
LM: Now, Daniel, this all seems pretty dark. Is there a chance that things will get better?
DM: Yes with federal legalization. It will open up the market beyond state borders and it will help. We’re also going to open up business support, as we’re seeing with the Small Business Administration. But this legalization at the federal level takes two to three years.