Awash in weed

[snousle]

Interesting article in the Chronicle about measure B, which seeks to put tighter limits on pot cultivation in this county.

I hadn't realized that marijuana now represents 2/3 of the economy here. I was trying to explain to Bill that if pot is ever fully legalized, the price will collapse and the economy here will tank. Growing would immediately be taken over by big, efficient operations that local growers couldn't possibly compete with. Even without legalization the sheer number of growers coming up now will likely introduce stiff competition that would limit profits. This seems obvious, but nearly impossible to explain to someone lacking any background in economics.

The flip side, that the feds could roll in any day and confiscate growers' land, seems equally lost on the local population.

It's a bit of a gold rush at the moment, and the lesson I take from 1849 is that it's more lucrative to serve the miners than to be a miner yourself. Let other people assume the risk! It's created an excellent business environment, which explains our anomalously good sushi bar, among other things. I can only hope the money keeps rolling in, because stoned, mellow clients with lots of money and a bad case of the munchies can't hurt when it comes to catering!

It will be interesting to see how it all ends, because the current situation cannot be sustained forever.

Comments

[backrubbear.livejournal.com]

One of the nice things about hemp/cannabis is that it grows pretty much anywhere. It means that non-ideal farm land can still be used to grow the stuff. This gives a lot of room for the edge farmer.

Those probably won't go away any time soon. Even if big agribusiness took over, they're the ones responsible for wooden-tasting tomatoes. I think there will be a market for "the good stuff" for some time to come.

[snousle.livejournal.com]

This gives a lot of room for the edge farmer.

This gives a lot of competition for the edge farmer, which reduces prices. Do you really think that pot will stay at $200 an ounce if everyone could grow it in their backyard without risk or complication? No, the price would immediately decrease to the marginal labor cost, which is probably more like $2/ounce.

The only way small operations could possibly survive would be if putting in more effort resulted in a substantially better product. Wine is like this. But grapes are fantastically harder to grow than pot, and only a small minority of growers make the big bucks.

There is no free lunch in agriculture, and there is no reason to believe that legal marijuana would be different from any other crop. Do you see independent tobacco farmers getting wealthy? Um, no. Today's profits are rewarding the first-movers, but they are also offsetting the risks associated with growing it, ranging from property forfeiture to getting killed. These risks are the only thing that keeps the price high and the operations small.

[backrubbear.livejournal.com]

Do you really think that pot will stay at $200 an ounce if everyone could grow it in their backyard without risk or complication?

Not a bit. I expect it to sell at the price of the intoxicating weed that it actually is.

The only way small operations could possibly survive would be if putting in more effort resulted in a substantially better product.

That's exactly what I'd expect to happen, hence my comment about the tomatoes. Big agribusiness isn't very good about growing quality products. This leaves a lot of room for edge competition - obviously never at the same scale.

I think you were saying the little guys would go head to head against big agriculture. That's not the case at all. I expect a thriving farmers market out of this. It lets the little guys make money out of stuff they enjoy anyway.

[bbearseviltwin.livejournal.com]

However timing is everything, if the hemp economy tanks just as you open a business catering to them, then you are going to be less than successful. Even an established business like the sushi restaurant that you mention needs to be flexible or they may find them selves with no customers.

[snousle.livejournal.com]

Fortunately, my business is already "established" in that it has no debt and very few fixed expenses, so in the end I don't really give a damn what the economy does! But it's not a bad time to get started.

[bbearseviltwin.livejournal.com]

That indeed makes a major difference, most businesses starting out are in hock to their eyebrows plus the day to day expenses, such as salaries and other overhead require at lest a fair economy or something that is truly in demand. Even then, as the various ghost towns scattered around the country at one time or an other so, dropping population can even cancel out that

[kevynjacobs.livejournal.com]

> It's a bit of a gold rush at the moment, and the lesson I take from 1849 is that it's more lucrative to serve the miners than to be a miner yourself.

This is wise. It was those who sold pickaxes, pans, supplies, booze, food and whiskey and sex to the miners who *really* made out during the gold rush.

[furr-a-bruin.livejournal.com]

I don't know that you need much economics to explain this. The risk of growing weed is a big piece of why it's expensive; take away the risk, and the price drops because suddenly a lot more people are willing to grow some.

[broduke2000.livejournal.com]

There will always be room for small indie growers, just like there's room for small indie beer and wine breweries. Somehow they exist and flourish at $5 a six-pack.

If I walked through a supermarket and found a pack of your cigs with your face smiling out at me, I'd be compelled to buy it, just for the pix.

And who knows? If you get real popular, Philip Morris™ might just wanna buy you out for a cool million. Or is that Kool million?

Call me when you get around to placing that radio ad for Snousle Floozies™