Cities Bet the Bank on Marijuana
Winning the Bet is Questionable
A recent article in the LA Times quoted a number of industry reps speculating that marijuana production in California has already exceeded demand.
“We are producing too much,” and state-licensed growers “are going to have to scale back. We are on a painful downsizing curve.” - Hezekiah Allen, executive director of the California Growers’ Assn.
According to the article, even Lori Ajax, Director of California’s Bureau of Cannabis Regulation “agreed with Allen that some cannabis cultivators may have to scale back.”
If this is true and California is producing way more marijuana than Californians can consume, then it would seem that all these downtrodden cities that are rushing in to cash-in on the supposed marijuana boom are going to be in for a big letdown.
Recent articles in local newspapers have cities like Adelanto, Coachella, King City and others betting the bank that marijuana will turn their depressed economies around.
Two days after enthusiastically adopting a rosy budget that was buoyed by early projections for commercial cannabis, city officials embraced a more-is-more approach and greatly expanded the industry’s potential footprint here.
During a special meeting, the City Council approved a re-zoning resolution permitting commercial marijuana activities on nearly 2,000 acres in Adelanto’s west side and on another 300 acres in the more central part of the city.
The moves were the culmination of several months of talks between city officials and stakeholders, including the Adelanto Growers Association, and also contained sweeping clean-up measures for zones not related to commercial pot.
“I know the mayor has a tendency to ask for a whole lot as fast as possible,” Mayor Rich Kerr told the Planning Commission on July 3, before the body recommended the Council pass the resolution, “and you know what, you guys give me a whole lot as fast as possible and I really appreciate that.”
Kerr added that there were 12 to 15 entrepreneurs ready and interested in developing on the land.
Mayor Steven Hernandez said tourism, medical cannabis and infrastructure will propel the city of Coachella into the future. “We are the land of eternal sunshine, our horizon now encompasses the tourism market, the cannabis industry and new synergy in our downtown.”
Development projects include a new public library, which will be four times bigger than the city’s existing facility, a new county office for social services, which will bring in 200 new jobs, a new hotel and a new marijuana cultivation space that will produce $2.3 million of taxable revenue a year.
King City is expecting an “infusion of cash – to the tune of $100 million – from investors who are looking to cash in on the so-called Green Rush. If it works, King City is positioned to become the cannabis capital of Monterey County, and the thriving center of South County.
If the cannabis boom goes as expected, according to (City Manager Steve) Adams’ calculations, it will generate some $2.8 million a year in taxes, increasing the city’s budget by more than 35 percent. For jobs that will include everyone from farm workers to chemists, the salary range is anticipated to be $35,000-$100,000 annually.”
As for the number of jobs, Adams does some quick math in his head. It could easily generate 750 jobs, he says.
…estimated that cannabis cultivation businesses could add $3 million annually to the city’s coffers through fees and taxes. In voting to allow cultivators, the council approved a non-binding resolution stating the revenue can only be spent for public safety, street/road repairs, economic development and the creation of a Cannabis Oversight Committee.
It’s not just small economically depressed cities that are jumping on the marijuana bandwagon, major metropolises from Long Beach to Oakland are getting involved big time in raising significant tax revenues from marijuana businesses.
If the statements that California is already producing more marijuana then Californian’s will consume, then these cities are in for a rude awakening as are all the “developers” who are pouring millions of dollars into building marijuana cultivation facilities.
Then again maybe their optimism and rosy projections may not be that far off base. No one really knows.
One thing I haven't seen is any analysis with figures validating predictions of marijuana overproduction. Where are the statistics showing how much marijuana is consumed in the state at the present time and the projected growth in consumption now that is it legal and easier to obtain? Where are the numbers showing how much marijuana is needed to be produced and the acreage needed to be grown to meet the current and projected demand?
With all these cities counting on marijuana income to balance their books and pay for vital city services, there needs to be some hard facts and figures on consumer demand and production estimates. It is amazing and frankly beyond comprehension that all these government entities are going forward with so little information on what demand and the ability to meet that demand will be.
Has reefer madness become reefer fantasy?
Due to marijuana’s beneficial properties of significantly reducing alcohol consumption and the use of prescription pharmaceuticals, I believe and sincerely hope that marijuana use will literally skyrocket demand to heights that will make all these prophecies of revenue to restore and revitalize these cities struggling economies come true.
IN THE MEANTIME - What is the upshot of all this, what will happen to this potentially very significant surplus of quality California cannabis and my take on what is sure to become a flash point for local governments, individuals, police and a cast of characters savory and unsavory is a another story that will be found in my next newsletter.
discuss ending bans to
facilitate demand & production
The question of whether demand and production is too much, just right or not enough, needs to be known, but one thing is for sure – if municipalities continue to ban cultivation and distribution, then the question of demand vs. production becomes almost academic.
As part of our efforts to provide for safe, reliable, local and affordable access to marijuana on the local level, the August meetings of MAPP will be further exploring the issue of how to stop cities and counties from banning and start them down the road to licensing and regulating the cultivation, manufacture and distribution of marijuana as permitted under the laws approved by the state’s voters.
Attend the MAPP meeting near you and join in on the discussion of demand vs. production and how to ensure robust ingestion by convincing local elected officials to stop banning and start permitting.
Wednesday, August 2 at 7:30 p.m. – Moreno Valley/Western IE MAPP meeting – Guest speaker: Terrance McBride, IE marijuana entrepreneur and CEO of Phadeville. Greenview Medical Clinic, 22275 Alessandro Blvd, Moreno Valley, CA 92553
Saturday, August 5 at 12 noon - Palm Springs/Coachella Valley meeting – Crystal Fantasy, 268 N. Palm Canyon Dr., downtown Palm Springs 92262.
Saturday, August 5 at 3 p.m. - Joshua Tree/Morongo Valley meeting – Beatnik Lounge, 61597 Twenty-Nine Palms Hwy., Joshua Tree 92252.
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