CALIFORNIAN KUSH

Climate Change in the California Cannabis Industry by Lachie Carracher.

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Pot is now legal to purchase on the whole West Coast of North America. For the last two decades you were able to purchase Cannabis for medical applications but as of January 1st 2018 you can buy 'weed' for recreational use in the State of California. If you are above the age of 21 it's legal to buy and possess Cannabis and it's taxed by the government like alcohol.

From as early as the 1850’s marijuana’s medical properties have been well documented. It was not illegal to consume Marijuana in the USA until the 1970’s when congress passed the 'Controlled Substance Act' this was followed by strict action when in 1973 president Nixon started the Drug Enforcement Administration (DEA) and commenced 'an all-out global war on the drug menace'. This action alone has done more to support criminals and create a global public health issues than anything before or after 1973.

A stand out reason for decriminalisation of Cannabis in the US is the nation's massive incarcerated population. In February 2016 it was recorded that the United States had 85,353 inmates (46.5 percent of the federal prison population) were inside for drug offences, a direct result on Nixon’s costly war on drugs. The FBI’s 'Uniform Crime Report' stated that in 2014, 600,000 arrests were made for Marijuana possession in the States, which made up 39.7 % of all drug related offences.

Nice one Nixon, but its is now 2018 and Bob Dylan said it best; “Times, they are a changin'”.

California has long been the cannabis pioneer of the States it was both the first to criminalize in 1913 and the first to legalize medical use in 1996. In the late 1960’s early 1970’s pioneers of Marijuana counterculture moved to the woods of Northern California and started the “turn on, tune in, drop out” movement. These original hippies who migrated to the Emerald Triangle (the term used for the cannabis producing regions of Mendocino, Humboldt and Trinity counties) set there lives up on the fringes of society operating very different lives away from 'The Man'. While producing Cannabis during this time was highly illegal the profits where well and truly there with pounds reaching $5,500 USD for by today's stand poor quality product.

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INTRODUCTION TO GROWERS

Relaxed cultivation permits following discrimination in California has resulted in the last two decades being described as the 'Green Rush'.

Growers, new and old packed up shop from every corner of the US (and sometimes the World) and moved to Northern California in hopes of making some big money.

The Emerald triangle saw a huge influx of growers that thought they would try their hand at gardening. Fresh farmers that did not even know the right side of the hill to plant their garden, organised crime rings from Mexico and Russia also started large scale operations - some failed, plenty flourished. 1996 saw the first major change to the scene from the non conforming hippies, 'Mom and Pop' operations with the whole family working from the age they could pick up a shovel and pair of scissors to larger workforces and bolder operations. The quiet alternative towns of the Northern California woods started to hear the rumble of new money. 'Grow Dozers'; huge lifted trucks with their trays filled with fertiliser, sound systems blaring lined up at the gas stations, filling up jerry can after jerry can to run generators on the remote freshly cleared hill tops. What was the quiet fringes of society changed as the money rolled in.

As the years went by cultivation permits changed, depending on what county you were from patients were permitted to grow up to 99 plants. With predominantly a black market for growers many did not adhere to the 99 plant restrictions but doing so drew attention to the scale of operations. Helicopters started circling the remote gardens counting plants and flying away. Big brother was watching the industry grow exponentially.

The redwood forests started to look very different from the air as cultivation restrictions became more relaxed. Instead of growing a small illegal crop out of direct view of helicopter growers started to clear terraces, full sun, feeding them every nutrient they may need. Yields sky rocketed, crops started to average 2 pounds a plant and some stand out girls would have even 10 pounds on one plant! The 99 plant restriction was put in place when average yields were low, less the 1 pound per plant could be expected without direct sun and nutrients. With modern methods that is no longer the case. Now you can do the math, 99 plants with an average of 2 pounds a plant, late 90’s early 2000’s saw prices of $3000 USD per pound. In the short 6 month life cycle fortunate farmers were getting paid!

In the last fifteen years more and more growers moved to Northern California, having a garden was a quick easy way to make big money but every boom must have a bust.

Overproduction, constantly changing regulations and have seen a dramatic changes to the market with the obvious outcome of increased competition, price drop.

Current estimations declare that California has 68,120 marijuana producers, with an industry projected to be worth 16 BILLION dollars by 2020. California is said to be currently producing 5 times the flower than it consumes with some sources suggesting that number could be as high as 12 times the states consumption. The price for pot has dropped to $600 - $700 a pound. With production costs per pound often around $500 USD

The people that feel the real effects of this are the small farmers that have been focusing on growing high quality product for in many cases generations.

In an over saturated marketed producers have had to step up, producing 100 % organic, sun-grown cannabis that resembles indoor skunk born in a laboratory in order to sell your season work.

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THE OLD WAY

Choppers would fly over know valleys and cut down entire crops and arrest all on site.  Producers would not keep accounts, they would put what money they made from their grow back into their property, upgrading infrastructure, dwellings, the cash influx that followed harvest would pay season workers and maintain the property. Growers then lived off what ever cash was left living simple lives in the hills and get ready for next season. Growers would favour out of town workers that would stay on their property and had no contacts to “spread the word” about the operation. Swathes of 'hippies' or 'trim-a-grants' would start arriving in town around harvest and work day and night for in some cases, months. Only a few years ago harvest workers could be expected to be paid 300 USD per pound of trimmed cannabis and they could be expected to be fed three times a day by Mom and Pop operations. With the plummeting price of Cannabis on the market these days have come to an end for the seasonal 'Trimmers'.

This was a risky business, with a black market it was not uncommon for whole operations to be robbed, masked armed bandits would arrive on a property and take a years worth of work. The growers could do nothing, you are not going to tell the police that all your weed was stolen. Another risky factor of the old days was where to store your money, you most certainly would not deposit it in a bank, big brother would know everything. Traditionally cash would be buried on the property but in high fire prone country sad stories of not only entire crops and house’s being levelled by wildfire but also the life savings of families burnt out from pickle jars buried too shallow to avoid the flames.

Farms are moving away from foreign labour and pickle jars of buried money, taxes need to be paid, paperwork filled out and bank accounts opened. While the government collect taxes labour costs have had to drop with producers often favouring local labour that is paid by the hour or as low as 100 USD per pound of product trimmed. The margins are just not there in the in industry anymore, for any one following the traditional grow methods and models.

The only way to achieve high market price for small batch grows was to sell to brokers that had buyers from out of State. Product would be transported to States where growing was still banned and can achieve far high market prices. This is risky buisness and very much illegal. While growing 99 plants per permit may be legal, selling and transporting out of State is a violation of federal law. No one want to be a falen.

Becoming legal should be an easy step in the right direction for producers; no more underground operating, no more meeting buyers from out of town, hoping to sell your years work at a reasonable price.

You can sell direct to dispensaries, right?

First off you have a government tax of as high as 15 percent - that is just the State tax by the time the bud reaches a consumer they can be expected to have paid 34.5%

A dispensary or chain want a years supply of a consistent product, a single strain, they want regular fresh flower that can grow a loyal customer base. This is very difficult for a single small sun grown producer to deliver. This shift in business for a artisan cannabis market has been very difficult for many farmers that struggle to find legal buyers.

Not so many year ago, growers had 'gorilla grows' growing under canopies of other trees so that their crops could not bee seen by helicopters. Product would easily sell and fetch top dollar, even with crude quality and harvesting techniques. Produces have been forced to adapt to the market very quickly in order to survive.

Being able to sell your product is only one peice of the puzzle as a now legal producer. Water permits issued by Department of Fish & Wildlife have proven a major additional hurdle for farmers. California struggles to deal with water use policy as it pushes through the worst years of drought since records began. More regulations for what has historically been a underground industry. That however is a different issue.

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THE PUSH TO COMPETE

Now growers must produce very high yields, of consistent high grade flowers at the lowest possible price, they must complete stringent laboratory testing for; terpenes, THC and cannabinoid content while staying 100 percent organic. Furthermore on top of this they need to market their product as superior and sell to larger companies that can distribute their flowers in order to start the grow processes again. A business / marketing degree would be asset to the modern grower. What a massive change to the Californian cultivation in a short period of time. Farmers are now being pushed to produce larger quantities of high grade product for less inputs. Following agriculture models across the board this is the only way they can survive as prices of product plummet.  With that being said those licensed producers are being also being told with a glut and overproduction in the market combined with water scarcity issues they will need to produce less. It is an interesting time where producers that are doing the right thing are paying the price for those that are still producing without permits. Now more than ever without permits farmers are scared, they believe that if there is a time for the long arm of the law to find them it is today. With the taxes on recreational cannabis we see a rise in the resources of the law departments and the desire to stamp out those that are not even trying to adhere to the new reform.

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NEW MODEL

A new model is needed for the viability of the small scale craft producers. There is a huge market for such flower, look at the growth of the craft beer market over the classic domestic beers in the past few year. This is where new company models such as “Flowkana” enter the arena. Flowkana sources exclusively sun grown organic flower, fresh. They have curing facilities in house as well as marketing, branding and and distribution teams in the office. Sourcing from forty plus, small scale producers of the highest quality to ensure they can deliver product that is consistent to confirmed buyers. With an in house marketing and sales team they can theoretically confirm sales before the flowers are even harvested. This offers security to the farmer rarely heard of in the agricultural world. Meanwhile the public can choose a “brand” of  organic, sustainability grown high quality cannabis from there local dispensary year round, something the market has not seen before. On Flowkana’s website they state “We pride ourselves on being the first sustainable, sun-grown cannabis brand to represent two of California's most special micro-climates and their small farmer ecosystems. We partner with, and give scale to, premier artisan farmers in Mendocino County and Southern Humboldt who focus on small batch, boutique strains.” New start up models are growing from the venture capital centre of the world, California. Flowkana’s model is not new, it follows similar proven businesses in the flower and food industries. There is many new startup making their mark on the industry. Reporting all cannabis material from seed to consumable is becoming the industry standard to parrell the shift into the recreational. With the change in industry we are seeing reporting app’s, high tech combustion technologies and of course a huge growth in methods to consume with new forms edibles, refinements and even suppositories hitting the shelves across the state.  Delivery services that resemble the “Uber” of weed delivery have seen the highest success, with California born “Eaze” said to have had $51 million dollars of investment behind the start up and is now putting dispensaries out of business.

Not only is weed legal but you do not even have to go to the hassle of leaving your house to get it now. 

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CONCLUSION

Flowkana is not alone now in the industry as other companies see the benefit of supporting the craft market but their investment and ability to scale up is. While times are hard for producers and other workers following traditional industry methods, the Cannabis market is hot right now, with huge investments being poured into the industry. Companies like Flowkana have secured investors from all of the country and with this investment they are able to rethink the game. The are  able to approach the industry from a food distribution perspective rather than a black market one. With this investment they have changed the playing field by purchasing a 80-acre, 85,000-industrial-square-foot property in Mendocino country which was home to the historic Fetzer winery in which is currently being transformed into a curing, processing, manufacturing, storage, distribution, leisure and education institute for cannabis.

Small farmers that been lucky enough to focus on quality production and have secured partnerships with the likes of Flowkana will stand a chance in today's climate of the cannabis industry in California. While post prohibition it did take a couple of years for the black market of alcohol to die, the Cannabis market is likely to see a similar trend. I have no pity for international crime rings that set up in the Emerald triangle I do feel sorry for the multi generation producers that moved to the area in the late 60’s. That refuse to confirm to society or keep accounts, they wanted to avoid 'the man' in today's climate i do not believe that this is possible. Growers without quality flower or solid partnerships will have to follow the next 'cash crop' or 'green rush' where ever it may be.

Word & Images - Lachie Carracher

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