Susan Gardner

Redwood Times

Jennifer Budwig is a member of the Redwood Regional Economic Development Committee, the McLean Foundation board and the Fortuna Sunrise Rotary Club. She joined Redwood Capital Bank in mid-2006, following more than a decade with Umpqua Bank and four years at US Bank and graduated with honors in 2011 from the Pacific Coast Banking School.

Budwig was the guest speaker at last week's Garberville Rotary Club meeting at the Healy Senior Center in Redway. Her presentation examined the potential economic impact if marijuana were legalized, generating a major increase in supply and greatly reduced prices. The probability of legalization appears to be rising, she noted, and if it leads to mass production, profits to local producers might plummet.

Budwig's research confirms that marijuana has increasingly filled the economic gap in Humboldt County left by the steep decline in the timber and fishing industries. The scope and scale of the county's underground economy are powerful enough to affect “all local businesses and individuals,” she said. Once again the county finds itself overly dependent on a single resource, continuing an historical pattern that has stunted the county's economic diversification and imperiled its environment for decades.

In her research, Budwig estimates the annual gross dollar impact of county-grown marijuana, how much of the money is spent in the county and how much it contributes to the county's economy relative to the amount exported from it.


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She also analyzed other variables believed likely to influence the short- and long-term impacts on Humboldt County if legalization transpires.

Eighteen states and Washington, D.C. have approved some use of marijuana with Colorado and Washington voters legalizing it for recreational use. Budwig's research indicates that legalization will cause competition from large-scale corporations leading to a drop in prices and less discretionary income for residents to spend in their local communities.

How will Humboldt County be financially impacted if those marijuana dollars are depleted from our economy? Budwig said that every $1 spent here circulates approximately six times before it leaves the county. This $1 is currently spent at local retail stores, grocery stores, restaurants, entertainment venues, gas stations, etc., which in turn provide jobs and income for residents.

In the 1960s there was a large migration from the Bay Area and other parts of the country of what was then called the back-to-the-landers. Many of these homesteaders, or hippies, chose to grow marijuana, which backfilled the gap left with the growing loss of the logging and fishing industries over the next few decades.

In the 1960s the THC (tetrahydrocannabinol) levels in marijuana was around 2% to 3%. Today's marijuana is now around 27% to 30%. Indoor marijuana is considered by many to be of better quality garnering a higher sales price. Plants grown in greenhouses are not considered to be indoor quality. With the huge increase in production there is currently a glut and prices have fallen. According to the Humboldt County sheriff's office, there are well over 4,000 marijuana grows in the county alone.

The Campaign Against Marijuana Planting or C.A.M.P. began in 1983 with two crews and two helicopters for four months. In recent years we saw five teams each with their own helicopter, until it ended in 2012 due to budget cuts. And even with this kind of effort, it is estimated that only about 5% of what is grown is actually confiscated.

Budwig said that 10 years ago Humboldt-grown marijuana brought around $4,500 to $5,000 a pound; five years ago it brought $3,500 to $4,000, and currently the price is anywhere from $1,500 a pound down to $800. She estimates that legalization will drop it down to about $300 to $400 a pound.

Although accurate figures are hard to come by, Budwig said it costs anywhere from $70 a pound to $400 a pound to grow depending on the site and other mitigating factors, with profits running as high as 506%.

Her research shows that there were approximately 800,000 plants grown in Humboldt County in 2010. The gross income from the indoor crops was $168,000,000 with outdoor at around $864,000,000 with a combined total of $1,032,000,000.

Unfortunately the foreign cartels which are here do not tend to spend their large profits locally. Budwig said almost all of that money leaves the area. Comparable California counties in taxable sales and personal income include Nevada, El Dorado, Kings, and Madera.

Marijuana is the most commonly used drug in the United States. But Budwig said that legalizing it by passing a proposition is not the answer because they are not assisted by laws surrounding them. You need to have current state and federal laws in place to enforce these voter-passed propositions.

As many states have found, federal laws trump state laws and those states that have passed some form of legalization have run into federal opposition. Federal agents have busted and closed down businesses such as dispensaries who may be operating legally under state mandates but are illegal under federal law.

Marijuana is considered a Class I drug just like cocaine and heroin and federal law dictates it is illegal to grow, use or sell in any form. Budwig said if the federal government reduces it to a Class II drug this will indicate they are moving towards possible legalization. She did say that there will always be a black market for marijuana due to demand by the public.

As we have seen here in Humboldt County our district attorney is no longer prosecuting growers for cultivation. However, federal arrests and convictions are still occurring with longer sentences and higher fines.

Local and state agencies have moved towards one of the more important aspects of growing marijuana - the environmental damage being done to our watersheds and timberlands. The California Department of Fish and Wildlife is now much more proactive in working with local, state and federal law enforcement agencies to stop some of this widespread destruction.

Property owners are now being cited for illegal logging practices where entire mountaintops are removed and roads and buildings are constructed without the proper permits. Fish and Wildlife personnel are very interested in illegal and unpermitted water diversions and the poisoning of wildlife from the massive use of rodenticides, fertilizers and other poisons. What the legal outcomes will be with regard to these charges is yet to be seen.

On a lighter note, Budwig said we need to capitalize on our Humboldt County name. She said, “How about Bed, Buds and Beyond?” Maybe someday in the near future we will become the Napa Valley of marijuana production.

But, one question has come to the forefront for many. “Would legalization help to reduce environmental degradation or not?” Some say it will and others say there will always be that black market part of the economy that will refuse to abide by the law and protect our forestlands and wildlife.

Redwood Times photo by Susan Gardner

Jennifer Budwig spoke about marijuana legalization at last week's Garberville Rotary Club.