CA: Pot Economy – ‘Ours To Lose’


Sean Stamm left Cal Poly San Luis Obispo as a newly minted mechanical engineer not too many years ago, but today he’s growing marijuana on a family homestead atop a mountain in Honeydew.

Stamm, 28, is following in his father’s footsteps, but he is representative of a newer generation of growers in Humboldt County who have made the industry a vital economic cornerstone of the region and are striving to protect it from future competition.

Stamm has spent a lot of time contemplating the effect on the county if voters legalize marijuana in November, a question that has become a source of anxiety for a region saturated in marijuana money.

“We’re trying to link forces,” he said. “If we can be united we’ll stand a better chance to capture market share from big outside players.”

The upcoming vote will be decided by the distant populated regions of the state, but it’s Humboldt County – together with the two other relatively remote and rural corners of the Emerald Triangle, Mendocino and Trinity counties – that are bracing for a sea change in the marijuana market.

Legalization could bring tough new competition from the agricultural juggernauts in the state’s Central Valley, who grow over half of the nation’s fruits, vegetables and nuts. Further south, desert communities are trying to set up special zoning for indoor marijuana farms. Even if Humboldt continues to hold its market share, a drop in prices from legalization could still cause problems.

The region is right to be worried, said Humboldt State University economist Erick Eschker, who runs the university’s Institute for Interdisciplinary Marijuana Research.

Academic studies have estimated the county’s marijuana growers collect about $1 billion in gross revenues, about half of it staying in the area. Eschker estimates the industry accounts for anywhere from 10 percent to 25 percent of the area’s economic output.

“That’s a lot,” he said. “It’s one of the major industries in the county certainly.”

And the money circulates to related industries, like farm suppliers, and unrelated businesses, like restaurants, Eschker said, something economists call the “multiplier effect.”

While he said it’s certainly possible the industry could contract, Eschker said he was largely unsure, as there is no analogous situation to compare it to.

“The doomsday scenario is production leaves the area. You would see large economic loss, even population leaving the area,” Eschker said.

“Conversely, it’s kind of ours to lose. If we’re smart in embracing it, you could tell the story that marijuana production in Humboldt County could increase as long as other areas of California don’t want marijuana produced in their backyards,” Eschker said.

This has spurred the county into racing far out ahead of the rest of the state in drawing up a legal system to welcome commercial cultivation.

In July the county handed out its first two commercial cultivation licenses, among the first awarded in California. The state’s own regulatory system isn’t set to launch until 2018.

In a small office in Eureka, John Ford runs Humboldt County’s only marijuana cultivating insurance business, which he calls Ford20 Insurance. Thanks to the county’s fast tracked approach, Ford said his business – which he acknowledged is suspended in the same legal limbo between local acceptance and federal illegality as the growers he’s insuring – has exploded.

“I can’t see all the growers, prospectors, and investors who are spending all the hundreds of thousands of dollars to set up here picking up and leaving in five to ten years,” Ford said, brushing aside the idea that large scale agriculture could move production inland.

Since Washington state legalized recreational pot use in 2012, University of Washington Law professor Sam Mendez has studied the resulting economic shifts and formed a research group called the Cannabis Law and Policy Project. Based on his observations in Washington, he said considerable amounts of production leaving Humboldt County was a “legitimate concern.”

“I do think you can expect Humboldt to see a lot more competition. It’s the same as, for example, how free trade made it much more profitable for businesses to go to Mexico. I think there’s a similar element here except within the state of California,” Mendez said.

Mendez also emphasized marijuana prices, which he said have been in free fall in Washington since retail stores opened in 2014. This could spell trouble for small farmers who have been propped up by artificially high prices, he noted.

“At Uncle Ike’s Pot Shop, one of the top selling stores in Seattle, you can get an ounce for $99. That’s cheap; a year ago the price was probably twice that,” Mendez said, attributing the drop to increased supply and the shedding of black market premiums.

While Mendez said in theory “big marijuana” could bankrupt small farmers in both Humboldt and Washington, he said that won’t happen as long as the federal ban prevents banks from participating.

“The vast majority of the banking industry still won’t touch it. So large corporations or big business, whether in the pharmaceutical or tobacco industry, aren’t getting into it because there isn’t the banking support,” Mendez said.


Despite being equipped with fertile soil and farmers with deep pockets, would Central Valley counties, which are among the most politically conservative in the state, embrace marijuana?

“Lets put it this way – the outright bans on commercial cultivation you see in Fresno County, those were highly supported by the agriculture industry. That gives you your answer right there,” Director of the Fresno County Farm Bureau Ryan Jacobsen said.

Neighboring Fresno, Tulare, and Kern counties have the three highest agricultural outputs in the country. But Jacobsen said many of the rural regions in the valley haven’t taken kindly to marijuana and have no intention of easing restrictions.

“We’ve seen large scale opposition to these grows in rural areas. Much of it goes back to just several years ago when we saw a meteoric rise in marijuana growing. We were very against that and then came the bans,” Jacobsen said, also pointing to the three counties’ landslide vote against the 2010 legalization attempt as proof of the valley’s entrenched conservative culture.

Some cities have attempted to jump ahead of the curve looking to become legal versions of Humboldt – such as Desert Hot Springs, situated roughly 100 miles east of Los Angeles in the arid Coachella Valley. The city was the first in Southern California to legalize large-scale medical marijuana cultivation, envisioning a warehouse district for indoor growing. However, a lack of preexisting agricultural and energy infrastructure has become a major hurdle to the plan.

“You’re seeing a lot of places and investors trying to get ahead of the curve. But there are always risks to being ahead of the curve. It might work out, but it might not,” Mendez said, speaking about rampant speculation by pot investors.


Stamm is among the very first growers in Humboldt County to come out in the open in an industry that long hid in the shadows.

“For so long it was like a statement to live that alternative life. I feel like there’s definitely some nostalgia about that, it’s hard to let go of that way of life and a lot of people are fearful about doing things differently,” Stamm said while looking out his kitchen window over a section of his 20,000 square foot farm.

“We now have to be a part of this bureaucracy,” Stamm said, noting the $26,000 in permit fees he’s paid to the county in addition to the $40,000 he paid to environmental and engineering consultants and surveyors in order to come into county and state compliance.

He said much of the adoration Humboldt County has for its marijuana business comes from the fact that many young farmers, such as himself, grew up in neighboring families who all grew pot for a living.

“It was a beautiful lifestyle as a kid. I wasn’t even aware that anything was different. As a kid my dad told me we grew tomatoes,” Stamm said, motioning around his idyllic mountain homestead and in the direction of the nearby Mattole River.

As he grew into his early teens he described seeing federal agents dangling out of helicopters holding assault rifles over his family’s home and their rows of plants.

“That opened my eyes – I remember thinking for the first time, ‘This is something I can’t talk about,’ ” Stamm said.

Now, with the state on the verge of legalization, Stamm has assumed responsibility of the farm after his father passed away. He described his strategy for navigating his business, which he calls Southern Humboldt Royal Cannabis, onto what he hopes remains stable ground within a changing industry.

Stamm’s business is made up of a collective of 50 members, most of whom are smaller growers with less capital and less knowledge of the murky legal arena of growing commercial marijuana.

Stamm said this model, which is growing in popularity around the county, allows himself to take care of a member’s compliance expenses and paperwork while allowing them to still run as a small autonomous operation.

While Stamm said he still thinks it’s inevitable that some amount of the business will leave, he sees the blood sweat and tears that the county has put into its craft being enough to carry them forward into a new era.

“It starts with the soil; we grow using living soil, always putting life into the fertilizer like local salmon and organic crab,” Stamm said, pointing to a shed he built himself and a series of dusty barrels beside several green houses. “I make it all here.”

News Moderator: Katelyn Baker
Full Article: Pot Economy – ‘Ours To Lose’
Author: Marc Vartabedian
Contact: Times Standard
Photo Credit: Marc Vartabedian
Website: Times Standard