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California’s new weed economy

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?

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.”

Read more at the Pacific Standard
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