California Grows Way More Than It Consumes
Tax Dreams Will Go Up In Smoke, but $$$ Dreams Can Still Come True
Last month I wrote a newsletter about the circulating meme that California produces far more marijuana than it consumes. I expressed a guarded response as none of the reports presented any analysis or statistics backing this up.
If true, this could have significant negative consequences for the ganja entrepreneurs who are investing tens of millions of dollars in building cultivation facilities in the cities that are expecting cannabis manna from heaven to alleviate their fiscal problems and provide the financial resources to improve schools, health care, community programs and a truckload of infrastructure improvements.
I stated I would do the research to ascertain what is going on. Well the research is done and not only is the meme of overproduction true, it appears to be even worse than originally foretold.
In a report prepared for the California Department of Food and Agriculture entitled Economic Impact Analysis of Medical Cannabis Cultivation Program Regulations, investigators unequivocally concluded that production for both medical and recreational marijuana is far out-stripping consumption.
“. . . this analysis estimates total statewide production equals 13.5 million pounds. This is likely conservative estimate, but it the first comprehensive, data-based estimate of total production in the state.”
Assuming casual users purchase one-eighth of an ounce (3.5 grams) per month and regular users purchase three-quarters of an ounce (21 grams) per month, total annual cannabis consumption in California is between 2.2 and 2.6 million pounds.
JUST HOW BAD IS THIS?
Even if we cut the estimate of production in half and double the amount of consumption,
California will still be producing almost two million more pounds than it consumes.
California cities that are allowing marijuana cultivation are literally salivating at the thought of the tax money that will be generated but if these statistics are right, this is a bubble that is going to burst with disastrous consequences.
Part of the problem is that marijuana proponents have generated high expectations of the revenue that will be produced with marijuana legalization and for some irrational reason these expectations seem to be centering on cultivation.
Yes there is significant tax revenues to be made but it is not with cultivation – like almost any other product, it is the manufacture and distribution where most money is made. For example in 2014, $9.4 billion worth of milk was produced by dairy farmers while the manufacture and distribution of the dairy products made from this milk totaled approximately $21 billion.
More apropos in comparison is the wine industry. The value of all cultivated grapes, whether for table or wine, is about $5 billion annually. In 2015, California’s wine industry generated $57.2 billion in revenue. Needless to say California and local government make far more money taxing the finished product than they do the grapes that make up the finished product.
Just like any other agricultural product, most of the money will not be made in cultivation of marijuana especially as the cost of cultivation will plummet. When California farmers enter the market big time after 2023 when Prop. 64 allows unlimited cultivation size, the cost for the raw product will plunge even further.
I know there are many small growers out there that claim you can’t grow marijuana on a big scale like you can grow tomatoes, grapes or coffee. Maybe you can’t, but I wouldn’t bet on it. Our farmers are very resourceful and if there is money to be made cultivating cannabis on a large scale, they will figure out how to produce a quality product that they can sell and make money on.
Yes there will be room for boutique marijuana cultivators, but people are not flocking to boutique grape growers – they are flocking to boutique wineries. For those of you who truly want to get into the cannabis business and make money at it, you should look at manufacturing and distributing. Create delectable edibles, craft killer concentrates, produce quality pre-rolls, manufacture tinctures, balms, lotions and all those other cannabis products that people want. Let the farmers grow it for you to manufacture and distribute.
According to statistics compiled by the California Department of Food and Agriculture, California produces almost half of all the fruits, nuts and vegetables grown in the country, as well as a whopping share of the livestock and dairy our nation consumes. No doubt when marijuana is legal throughout the U.S and can be transported as easily across states lines as walnuts (California produces 99% of all walnuts sold in the U.S.), California’s marijuana crop will be exported across the country and around the world.
That level of legalization is probably a decade away. Until then, there is one other way to ensure that the marijuana cultivated in California will be consumed and it is a way that is sure to drive those opposed to marijuana up-the-wall. Like the milk, wine, cereal, and other industries that manufacture products from agriculture commodities, the cannabis industry needs to form trade associations that market their products to the public.
The Dairy Council of California touts how healthy milk is even though we outgrew our need for milk at around 4 years of age and all the science points to milk not being all that good for adults. The Wine Institute of California makes a big deal out of a glass of red wine being heart healthy which is really nonsense – you want to do something good for your heart –forgo the wine and take a 30 minute walk four or five times a week.
With its scientifically proven ability to lessen stress, mitigate depression, decrease the likelihood of developing cancer, safely diminish pain and reduce alcohol consumption, the cannabis industry should be able to put the milk and wine industries to shame with programs and publicity extolling the virtues of cannabis consumption.
If cities, counties and the state want to make significant tax revenues it will come from manufacturers and distributors and not from farmers. I have no idea what cities and counties are thinking and I especially have no idea what all these cultivating ganja entrepreneurs are thinking, but I can’t help but wonder what they have been drinking.
Don’t Miss Fun & Exciting Fundraiser for Wanda
Featuring Entertainment by NW Famed Singer/Songwriter Victoria Newbill
Raffles, auction, dinner and more!!
The fundraiser on Wednesday, October 4 to help our long-time dedicated IE activist Wanda Smith is going to be a real blow-out with exciting raffles, sensational auction items and now live entertainment featuring the outrageous and talented singer Victoria Newbill.
Wanda is in poor health with cardiovascular problems and having to undergo kidney dialysis on weekly basis. She needs our help. She has written a personal letter which you can read by CLICKING HERE.
Let’s help Wanda and at the same time have a lot of fun and take home some wonderful prizes and auction items - bud products of all types, pipes, vaporizers, books, artwork, movie passes, gift certificates and so much more.
Yes the prizes and auction are special but even more special will be the live performance by singer/songwriter Victoria Newbill – just arrived in southern California from Portland Oregon where she performed her songs and music in clubs and venues throughout the Pacific Northwest.
Showcasing her indie music styles encompassing rock to country, she will be performing songs from her premiere CD The Time is Now. From quirky to sublime, songs such as Light ‘Em Up, Revolution Now and Cowboy Circle Jerk will have your toes-tapping and your sides splitting with laughter.
Join your friends and make new ones at this special fundraiser to help our friend Wanda. Asking for a $10 donation at the door which includes five raffle tickets and all the fun and camaraderie you can handle. Additional raffle tickets can be bought for $2 each or three for $5. There will be a 50-50 raffle as well plus superlative auction items.
We can always use more items for the raffle and auction – the more we get, the more money we can raise to help Wanda. Although ganja items are always appreciated, we would cherish any item you can donate. If you have any items to donate, please contact me at email@example.com or call me at 760-799-2055.
The event takes place in the private banquet room at Brandon’s Diner at 24626 Sunnymead Blvd. in Moreno Valley, CA 92553 – it’s just off the 60 freeway at Perris Blvd. exit. Most dinners are $10 or less and the food is excellent and so are the portions.
Join us for dinner at 6:30 p.m. The festivities start at 7:30 p.m. so if you can’t make it for dinner, please join us at 7:30 p.m. for the auction, raffles and our featured entertainer Victoria Newbill.
Note: The fundraiser for Wanda is being held in place of the regular monthly MAPP meeting in Moreno Valley.
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