Pot Economics

Breaking news: Prop 19 passes/fails (circle one) and life goes on as usual!

By Mikal Jakubal

I’ve been working on a post-election story for a while now, but haven’t been able to get my thoughts together on it due to work, filming and the OMG-winter-is-here-and-I’m-not-ready hecticness that comes with country living. Since the Times-Standard story came out today and many people have been asking me how I feel about Prop 19, the election overall and the next steps for the film, I thought I’d do a quick update.

For those who don’t know already, I was very pro-Prop 19 and voted unequivocally “yes.” Was it the dream legalization initiative? Of course not, but I’ve been following the issue closely enough—including some of the behind-the-scenes organizing at the local and state levels—to know that it was workable and that most of the negative aspects could easily be mitigated with active, grass-roots organizing. I’ll explain that soon in a longer post.

In my opinion, the biggest election threats to the pot industry and the legalization movement—medical or otherwise—were the Humboldt District Attorney’s race and the State Attorney General’s race. Progressive, pot-tolerant Gallegos is secure as Humboldt County D.A., but as of this morning, Republican Steve Cooley is still edging-out Kamala Harris in a very close State A.G. race. Cooley has said he’ll shut down dispensaries and will probably try to do a whole lot more if elected A.G. I can only hope that all the pro-weed people who put so much energy into opposing Prop 19 also realized the greater importance of the A.G. race and convinced friends to vote Democrat on that one.

I’ve always been pro-legalization. The whole thing seems like such a ridiculous waste of time and energy for everyone and society as a whole. It was never an issue I cared that much about until the first time I smoked weed at about age 32, during my first year here in SoHum. I remember the evening well. It was at a potluck “up the hill” as we say. My first thought, after I stopped coughing, was, “now I understand ‘getting the munchies!'” The second was, “so this is what all the fuss is about?” I had expected something much stronger. The thought that billions of dollars had been spent and countless lives ruined over something so harmless cemented an already deep-seated skepticism about any moral ground the government or society would ever lay claim to.

As for the documentary, I’m still shooting, but now have the end in sight. I was up filming the election night mayhem at KMUD until after 2 a.m. On the drive home, with Prop 19 a clear failure at the polls, I realized that my film was done. Though the production work is far from finished, the story now has a logical conclusion. I’ll be shooting wrap up material and a bit of settling-in-for-winter-on-the-homesteaad footage and then probably follow up in the spring with the new planting season.

I’ll keep shooting sporadically over the next two years since a 2012 ballot initiative is virtually guaranteed and local organizing efforts will continue. There is also the possibility that the State and County governments will pass some sort of new regulations in the interim and I’ll want to keep up on that for the historical record—or the sequel.

Along with the wrap-up shooting, the next step in the film involves getting funding for post-production. I do not plan to edit ONE GOOD YEAR myself. I’ll need to raise a serious budget to be able to hire a top-notch professional editor.

I’m constantly asked when the film will be out. The answer depends on my ability to raise said budget. With a full professional budget, the film could be done by late summer 2011. If I have to raise money $20 at a time, it might take years. My tentative goal is to have it completed by late September 2011, in time for the Sundance Film Festival submission deadline. If accepted into Sundance (which is VERY competitive), it would premier there in January of 2012.

There is also the possibility that I may choose a self-distribution model and release it the minute it is done, not waiting for festival or broadcast deadlines years from now. No matter what, it is important that it be out in the world in time for the 2012 election season organizing efforts, as it will dramatically change the perception and the story of who “pot growers” are, what the values and farming lifestyle of rural pot-dependent communities are really all about and why Prop 19 was such an emotional issue for those who feared their way of life was being threatened. (More on this will also be in near-future posts. Hint: it ain’t about the money.)

Everyone—growers, legislators, economists,the DEA, RAND Corporation—has predictions about the pot economy and what will happen next, with or without Prop 19. Most of this is wild speculation, with the best of it being informed wild speculation. There is one thing and one thing only that can be predicted with any certainty: next spring, farmers in cannabis-dependent rural counties in California will plant seeds and, in October, harvest high-quality weed that will be sold to willing and happy buyers. You can put money on it—for at least a couple more years.

One Good Year on KCRW’s “To The Point” radio show

Yours truly was a featured guest on KCRW’s To The Point talk show on Monday. KCRW is a major NPR affiliate out of Santa Monica that serves much of Southern California, while To The Point is syndicated nationally to other NPR stations.

I come in at about minute-twenty-nine in the program and am on and off for the next ten minutes or so till the program’s end. Listening to what I have to say here gives a good overview of the key issues facing this community at large, as well as the questions the main characters in the documentary are grappling with. So far, two of the four are staunch supporters of Prop 19, one who was wavering decided to vote yes with her mail-in ballot and I haven’t heard if the fourth has decided yet.

Below is the description from the KCRW site.

Proposition 19 on next week’s California ballot would legalize marijuana for people over 21 and allow for commercial production. Local governments, now strapped for revenue, could regulate and tax a new industry and lower their costs for law enforcement and jails. Both sides are making extravagant claims, but nobody really knows what the financial, social or medical impacts might be. The latest polls show it trailing, and the Obama Administration promises a challenge, but Prop 19 could still have a nationwide impact.

Guests:

Upcoming News 10 story on Humboldt and Prop 19 features One Good Year.

Sacramento, California ABC News 10 will be airing a half-hour special entitled “Proposition Pot” this Sunday. There were here last month interviewing various Southern Humboldt locals. They’ve got a short segment on ONE GOOD YEAR, which includes an interview with me. There is a preview story up on their website at the link above, with a short video excerpt from the longer piece.

It was amusing having them try and set up to shoot in my tiny office, but we made room. Then we went and visited a  pot patch where I filmed them filming a (face masked) grower who had agreed to talk to them.

They interviewed other locals, including blogger Kym Kemp and Tea House Collective member Liz Davidson, both of whom represented SoHum intelligently and well. It’s nice to see journalists getting beyond the superficial and sensational stories usually done about our home town. Maybe after so many years of cliche, Humboldt County has reached Peak Hype and we’ll be seeing more sophisticated reporters taking the time to find real stories.

Some Medical Marijuana Dispensaries Against Prop 19

Some Medical Marijuana Dispensaries Against Prop 19

Contrary to what some of the dispensary owners say in the article below, Prop 19 does not touch the current CA medical marijuana model. Period. And, it’s not confusing. What I don’t get about these people is that they could be so short-sighted as to their own economic interests.

Legalization of recreational use of weed will knock the bottom out of the inflated price that the dispensaries are currently getting, but it will also mean that the people in the best position to massively profit off of recreational use are those very same dispensaries, since they already have operating storefronts. Now the entire state is their customer base.

That’s why the Oakland dispensary owners are behind 19. All I can say about the anti-Prop 19 dispensaries is that they must be terrible, short-sighted business people.

Contrary to what the detractors say, legalization of recreational weed will dramatically benefit patients since they can get pot more easily and cheaply than at the dispensaries and will no longer have to go through the formality of a doctor’s recommendation—further saving them money.

Among other reasons, this is why I chose this year to make this documentary. The story just keeps getting more and more interesting by the day.

—Mikal Jakubal
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Medical pot industry split on Prop. 19

From the Sacramento Bee

By Peter Hecht
phecht@sacbee.com
Published: Wednesday, Aug. 25, 2010 – 12:00 am | Page 1A

PAUL KITAGAKI JR. / pkitagaki@sacbee.com

Lanette Davies, owner of the Canna Care medical pot dispensary in Sacramento, seen with employee Joe Hough, has dispatched a truck to drive around the city with a sign urging a “no” vote on Proposition 19. Davies says the initiative threatens the freedom of medical pot patients.

The Canna Care medical marijuana dispensary has a truck driving around Sacramento with a sign telling people to vote “no” on the state ballot initiative that would legalize pot for recreational use.

George Mull, a lawyer for several Northern California pot shops, is fighting Proposition 19 on claims it threatens protections put in place for medical pot users with the 1996 passage of California’s medical marijuana law.

And a Humboldt County dispensary operator complains that the new pot measure simply isn’t needed. “They say they’re legalizing marijuana,” said Stephen Gasparas, who runs the iCenter pot dispensary in Arcata. “It’s already legal. All they’re doing is taxing it.”

California’s landmark initiative to legalize marijuana use for adults over 21 and permit local governments to tax retail pot sales is backed – and bankrolled – by leaders in California’s medical cannabis movement.

And yet some of its more stubborn opposition comes from a vocal segment of the same community who worry their dispensary operations may be negatively affected.

“I’m against this because I feel patients have been sold a bill of goods that is going to take their freedom away,” said Lanette Davies, who runs Canna Care.

Another opponent, Don Johnson, who operates the Unity Non-Profit Collective in Sacramento, said he worries about contradictions between California’s medical marijuana law and Proposition 19.

For example, Johnson’s marijuana store can legally serve an 18-year-old who has a physician’s recommendation. He wonders how that squares with Proposition 19, which restricts recreational pot use to people over 21.

“It seems to me there will be a double rule on the books,” Johnson said. “It’s mass confusion.”

Proposition 19 supporters say they are puzzled over the opposition and argue the initiative will protect tens of thousands of Californians from arrest and generate a windfall in taxes.

In Sacramento, for example, voters will consider a companion measure to Proposition 19 that would levy a 2 to 4 percent gross receipts tax on existing medical pot dispensaries and a 5 to 10 percent tax on new retail pot outlets.

“Proposition 19 will have zero, zilch, nada impact on the current legal rights granted to patients, caregivers, doctors, collectives and cooperatives under California’s existing medical cannabis laws,” said Dan Newman, a spokesman for the Yes on 19 campaign.

But Mull, a Sacramento attorney, said he believes the initiative will undercut ongoing legal fights in numerous cities on behalf of pot shops.

Some 140 California cities ban marijuana dispensaries. Pot shops argue they have a right to operate under the state’s 1996 medical marijuana law and follow-up legislation from the state. Mull says Proposition 19 provisions that authorize cities to tax, regulate – and also ban – retail pot shops could empower cities to target medical pot outlets.

“They (cities) basically are expressly given a right they are claiming – that local governments can control things within their borders, notwithstanding Proposition 215,” Mull claimed. “All of the things that I have been arguing for in court, I lose.”

The nation’s leading medical marijuana advocacy group, Americans for Safe Access, is taking no position on Proposition 19. But Don Duncan, the organization’s California director, said the group does not think the initiative would undercut the rights of medical users.

Proposition 19 has been funded largely by Oakland marijuana entrepreneur Richard Lee, operator of the city’s Coffee Shop Blue Sky dispensary and a marijuana trade school, Oaksterdam University.

It also has gotten financial support from a major Bay Area dispensary, Berkeley Patient’s Group Inc., and political backing from Steve DeAngelo, executive director of Harborside Health Center, an Oakland outlet billed as the largest dispensary in the world. DeAngelo, who initially thought this was the wrong year to put the measure on the ballot, now strongly advocates its passage.

“If it wins, you’re going to see a major shift in the political dynamic for cannabis,” DeAngelo said. “And I think politicians who thought there was a downside to supporting cannabis will receive a wake-up call.”

Harborside, a nonprofit network that handles $26 million in marijuana transactions annually, may be well-equipped to convert into a retail operation that serves both medical and recreational users.

“I don’t think there is any reason we wouldn’t be able to serve any qualified person who wants to purchase cannabis providing the city of Oakland licenses us to do so,” DeAngelo said.

Still, Yamileth Bolanos, a cancer survivor who runs the Purelife Alternative Wellness Center in Los Angeles, has mixed feelings.

Bolanos plans to vote “yes” on 19. But she worries legalizing recreational pot could create shortages of high quality marijuana for medical needs and stir a frenzy in cities trying to figure out the new law.

“They can’t even get medical marijuana right,” Bolanos said. “How are they going to open up these places for recreational use? Is it just going to be bedlam?”

What Do You Think Is Gonna Happen?

By Mikal Jakubal

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I ran into an old grower friend today, someone who has been a homesteader for decades, and asked him what he thought was going to happen with legalization and the economy and culture here. “I hope it all leaves me alone for one more year,” was his unhesitating reply. Then, more thoughtfully he said, “I’m looking forward to the clearing-out. See who is here for the lifestyle and way of life. It’ll get rid of the weak-hearts. The extravagance and greed gets to me.”

I asked him how he thought the vote would go in November. “I think most people that have a vested interest will vote against it. They’re worried about their income.”

These are common sentiments you’ll hear talking to people here. Mostly, no one really knows what is going to happen, with or without the passage of Proposition 19 in the November election.

What do YOU think is going to happen? Post your comments here.

The Elephant In The Grow Room

The following article was originally published in the Arcata Eye and reprinted on the Humboldt Medical Marijuana Advisory Panel’s website.

By Charley Custer

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Many Humboldters enjoy making up facts about marijuana, and I won’t spoil the fun with certainties on the subject. But we don’t have to guess how big the elephant is in our grow rooms. Researchers at HSU’s Schatz Energy Research Center have highlighted a growing divergence in Humboldt’s per capita energy use, which began rising from steady state averages after the passage of Proposition 215 in 1995.

In the 15 years since marijuana’s decriminalization ball got rolling, Humboldt’s per capita grid-tied electrical consumption has increased by 30 per cent, while state use held steady. The researchers suggest that this annual energy load—90 million kilowatt-hours in 2007— goes to grow lights for growing money, I mean marijuana.

How much money? You can read the next two paragraphs, or skip them and trust me: one thousand-watt grow light running on average 12 hours a day all year would draw 4,320 kilowatts of juice. Allowing for 18-hour periods within grow cycles, and down times, we can round this down to 4000 kilowatts. Divide 90 million kilowatts by 4000 and we have 22,500, which is the number of typical grow lights that would draw all that juice.

There are usually four to five grow cycles per year per light. Each cycle grows about a pound per light. If the average is a bit over four cycles per year, we can conclude that about 100,000 pounds of marijuana are produced under grid-powered grow lights in Humboldt County each year. At an average price of, say, $3000 a pound, those 50 tons of pot are worth $300 million dollars a year.

By contrast, the largest Humboldt county employment sector recognized by the U.S. Census Bureau is Health Care and Social Assistance, with a 2007 payroll of $222 million for 6875 employees. Next was retail trade, whose payroll of $172 million went to 7724 people. Forestry paid out $35 million to 465 people.

See where I’m going here? Subtracting $100 million for costs, urban grow scenes by themselves are the second largest employment sector in Humboldt County. They’re how so many of our kids stay in the county after leaving school. But wait, there’s more!

We can guesstimate that there’s as much diesel dope coming out of the countryside as comes from grow rooms and houses in town. And at least that much more sun bud grows outdoors in the hills. With the Schatz figure as a confirmed baseline, there’s no disputing that marijuana cultivation in Humboldt County is a billion-dollar business. It dwarfs all other employment sectors, even without the customary 2.5 multiplier used to emphasize the importance of our declining traditional industries.

So let’s hurry up and put pot out of business, right?

There’s some familiar defeatist thinking that the big boys of Oakland and Winston-Salem will extirpate our economic base, so we might as well stop thinking about it. The more I learn about what’s called legal marijuana, the less I believe we’ll be diddled out of our pound of kush—if we work together to create a future for our foundational industry. But that’s a lot to ask for an industry that’s weakened neighborhoods, damaged watersheds and annoyed and threatened citizens across the county—though our previous economic bulwarks all did the same. The question that’s flummoxed policymakers until now is, how do we control their eggs, without killing our golden geese?

The answer is, we can’t. We have to cooperate with golden geese, corralling without controlling them. That’s the thing about geese, which is easier to accept when the geese are legal. What do we do about our latest, fattest and shadiest golden goose, whose tens of thousands of jobs and dependents now may be threatened?

Some jobs will undoubtedly be lost in the coming changes, but without spending so much as a Headwaters grant we can conserve and strengthen many jobs, securing property owners and taxpayers while systematically mitigating their impacts for the first time—if we can bring ourselves to create intelligent policy on this issue.

Decentralized Mom-and-Pop growing was proposed by a Dutch study as the best method for reducing crime associated with marijuana. We’ve already got that covered. A business model is being invested in right now in SoHum that pools small growers into a cooperative that decentralizes both criminal temptations and impacts of growing, while continuously improving sustainability as part of its branding for Bay Area consumers with similar values. Grades of pot in this scheme are based on their growers’ achievements of the brand’s Salmon Safe Sensimilla.

Can we encourage sustainable sunshine grows, forbearance from summer water draws, standards for road and runoff improvements, and evolution of cultivation practices toward an ideal of self-sufficiency? To complement individual efforts, rural reformers must gain a critical mass of urban support before officials will get behind such programs.

It’s worth noting that legal collectives do something Humboldters outside the cannabis culture have long complained isn’t done—they report and pay income taxes. Medical growing, thanks to the indoor industries, already supports hundreds of above-board jobs in dispensaries and supply stores. We can encourage further small business growth and economic stability with cooperative planning.

Is it possible for us to get past our ancestral fixed positions on pot, and plan together a stable and prosperous future? I don’t know, but I hope we start to find out this weekend, at the Humboldt Medical Marijuana Advisory Panel’s forum entitled “Humboldt Cannabis—A Future of Opportunity” on Saturday from 2 to 6 at the Bayside Grange. It’s time for fresh thinking and nimble action on a countywide scale—because we’ll die of the bright ideas of others if we don’t start re-thinking ourselves.

Charley Custer is Secretary of the Humboldt Medical Marijuana Advisory Panel http://hummap.org and a Redway writer

Recreational Marijuana Ordinance Proposed For Humboldt County

The Humboldt Medical Marijuana Advisory Panel (HuMMAP) has posted a draft ordinance written by CA NORML‘s Ellen Komp. It would set recreational marijuana policy for the County should Proposition 19 pass in November. On a quick read, the proposal seems sane, clear and workable. It establishes a set of licenses and fees for various aspects of the cannabis industry in Humboldt County.

For example, a home grower license would cost $2500 and allow you to grow and sell weed right from your home. You could potentially have a roadside farm stand, as many rural people already do, selling flowers, corn, eggs and bud. Something tells me that the honor system used by many farm stands might not work so well with that one.

For $500 one would be able to get a cultivation license and for an extra $50 permit, the licensed cultivator could sell at certified farmers markets—but no more than 50 lbs/year. Even if the price dropped to $500/lb, that $500 fee seems like a pretty good deal!

This all makes me wonder about alternative ways to finance post-production of this documentary if Prop 19 passes. Maybe I could get growers to donate weed to the project and then get some kind of a license to offer it as a premium with pre-purchase of a DVD? That doesn’t seem permissible in the current proposal, but maybe I should propose an artist funding amendment of some sort. Hmmm… (I’m kidding here. Well, mostly.)

Financial Times Deutschland mentions documentary

By Mikal Jakubal

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I was one of numerous people interviewed for this story on the pot economy. Originally, the print version is all that went online, but now the full version is up. If you don’t read German, you might get a kick out of GoogleTranslate’s attempt at an English version. I’m quoted on the second page and the film gets a mention.

Financial Times Deutschland Story On Humboldt Weed

“Every adult should then grow cannabis on a limited area, about 30 grams of the drug and have to consume.”

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A journalist from Financial Times Deutschland was up here last month researching a story about the pot economy and the effects of legalization. Since she was interviewing one of my film subjects, I filmed part of the interview. She later interviewed me as well and mentioned the documentary in her story, but that all got cut by her editor. Too bad, because it would have been some good international exposure for the film. She says she plans to be back here for follow-up visits.

The link above is to the original German version. For a good laugh, check out the Google Translate version.  (My apologies to Helene, if you’re reading this, for further publicizing the silly translation. I’m sure your original German piece is very well written.)

Kym Kemp, who writes the Redheaded Blackbelt SoHum blog, comments on the article and makes a good point about possible legalization in November:

But besides hilarity that ensues with mistranslation, the piece reinforces some points that locals need to consider.  One being that if marijuana is legalized, California would have “the most tolerant marijuana laws in the world – not even in the Netherlands, [is] cannabis cultivation … officially permitted.” We would be the only place in the western world where marijuana growing is permitted albeit on a very very small scale.

(To clarify, Kym is referring to recreational pot, since medical growing has been permitted since Prop 215 passed in 1996.)

Indeed, despite all of its flaws, Tax Cannabis 2010/Prop 19 (as it is officially called now) will be groundbreaking if it passes. What this will mean for the Humboldt and California economies remains to be seen. Hmm, sounds like a good subject for a documentary…

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