June 7, 2007

Legalize it?

The longhairs are at it again, trying to ruin the economic base of Humboldt County. As local anti-environmentalist gadfly Stephen Lewis of Rio Dell put it recently in the Eureka Reporter, the goal of the enviros "has been consistent if never acknowledged: the destruction of corporate-based industries in Humboldt County." Take that argument to its logical conclusion: First went logging, then fishing, now the cultural elite ruling the Plaza in Arcata is gunning for HumCo's third great export -- marijuana.

How else can you explain thousands of "4/20" protesters gathering in late April to advocate for the legalization of pot? If you need further proof of the conspiracy against the Humboldt Nation, look no further than the "legalize it" crowd. Don't let these mellow protesters fool you. Pot pumps $100 million into local businesses each year, and that's a conservative estimate. But making it legal could kick out the third leg from the teetering stool that is Humboldt's natural resource-driven economy.

I wondered what would happen here if Mary Jane's sweet buds could be sold like cigarettes at every convenience store in the land. I turned to local economic expert and HSU professor Erick Eschker, the director of the Humboldt Economic Index.

"More than likely, we'd lose our comparative advantage if it were legalized," he told me. "It's very likely that big agribusiness would get into it, and [marijuana production] would all move to the Central Valley. Some people say we have good growers up here, but I think they'd move. Land attracts human capital."

Eschker said that Humboldt County's economic advantage for marijuana cultivation is its remoteness and a lack of law enforcement. (I don't want to get him in trouble with the cops, but you have to admit that when the district attorney publicly states he won't prosecute anyone with a medical marijuana card, 99 or fewer plants and less than three pounds of bud, the potent weed is basically legal here in quantities small enough not to attract the attention of the feds.)

Cannabis, a native of the tropics, thrives on lots of light and heat, resources in short supply north of the redwood curtain. The cultivation guru Jorge Cervantes, the author of Marijuana Horticulture: The Indoor/Outdoor Medical Grower's Bible, said in a phone interview that he thought that marijuana would do well commercially anywhere corn was successful -- and you know how much corn we grow in Humboldt.

As an indoor crop, pot is an ecological disaster. Cervantes estimates that a 100-square-foot garden requires 50 gallons of fertilizer-laced water per week. That's a lot of runoff. Then there's the carbon dioxide. Marijuana thrives on high CO 2 levels during the flowering phase. Cervantes said that 700 to 1,500 parts-per-million of CO 2 is ideal, compared with the 380 ppm average for outside air. One grow website helpfully observes, "CO 2 is cheaply produced by burning natural gas." You might as well move to the North Pole and start melting the ice cap with a hair dryer. It's hard to imagine legal indoor cultivation passing muster with the environmentalists in Humboldt County.

When asked how much economic damage legalization would do, Eschker said he had no idea. No one has ever done a study of the underground economy in Humboldt County. (This Town Dandy suspects no one really wants to know the answer.) One of Eschker's students outlined a methodology for calculating it, however, and Eschker would like to undertake the project. The only problem is money. "If you know anyone who can help fund some of this research, let me know," Eschker said.

Of particular concern to Eschker is the effect of the pot industry on part of the Humboldt economy that has received a lot of attention recently: housing affordability. "I'm interested in to what degree apartment rents are supported by pot growers," he said. "There are two classes of renters here, pot growers and non-pot growers." As cultivation has moved indoors, pot growers with pocketfuls of cash push up rents for everyone -- unless, Eschker said, landlords can differentiate between growers and everyone else and charge the growers more. "If it were me, and I found out someone was growing, I'd triple the rent."

To estimate the underground economy, Eschker said he would look at energy use for starters. Then there are the mandatory banking reports on cash flows in and out of the county, sales of money orders, and other financial factors. Money orders is a subject I know something about. I visit the post office most every day to pick up my mail, and I frequently have to stand in line to get packages. Every third person seems to be at the post office to buy money orders. Either there are a lot of eBayers here who don't have PayPal accounts, or there are tons of folks with cash they need to burn.

The clerks, many of whom have done time in the jungles of Vietnam and on the front lines of the post office, can be very cavalier on the subject. I've heard them tell people, "You can only launder $3,000 per day at the post office." Or when a fellow in dirty jeans pulled out a wad of cash as big as my fist and began peeling off hundred dollar bills like a bank teller, one clerk said to him, "You look like a guy who's used to counting money in the wind."

I asked a post office employee about it recently. Oh, yes, he said, "We launder a lot of C-notes here. And stacks of twenties."

The post office is cracking down on money laundering and recently sent its customer-service employees to training. Now if someone requests $3,000 or more in money orders, the customer has to show ID and fill out a form called a "Suspicious Transaction Report." Needless to say, most customers who are handed the paperwork suddenly remember something pressing they have to do and leave in a hurry.

Legalize pot and most of these transactions will go away. It's not just generator and hydroponics supply companies that would suffer if marijuana farming left the area (or if it were taken over by Mexican drug cartels -- the pot equivalent of big-box stores -- which ship most of their profits out of the area). Small-time growers pump a lot of money into the local economy, and since their product is paid for in cash, it tends to stay local. When electricians, massage therapists and waiters get paid in cash, they spend it around town, which has got to keep shopkeepers happy. It's hard to buy a computer from Dell if you want to use a stack of Ben Franklins to pay for it.

I'm not suggesting that all pot farming would leave the county if weed were legal. We might develop boutique growers and attract some tourists nostalgic for the famous Humboldt green. There would be booming pot-based local businesses along the lines of Cypress Grove cheese or Lazio tuna -- businesses to be proud of, but not the primary driving forces in our local economy.

So if you're pushing for legalization, be careful what you wish for.

-- Scott Brown
is the editor of Fine Books & Collections magazine,
and he's glad Hank Sims' absence allowed him
to put his degree in economics to good use.

dingbat dingbat dingbat

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