Big Marijuana Is Here, and It’s Hurting Legal Cannabis

Every psychologist, counselor, physician, and educator encounters patients, clients, or students who use cannabis. Some use it medicinally, some use it recreationally or socially, some use it heavily, and some rely on it only occasionally when needed for relief. In all cases, cannabis use can interact with the effectiveness of therapy. To maximize therapeutic efforts, it is important to understand multiple aspects of cannabis, including its medical, emotional, neurological, cognitive, and even sociopolitical nature. Few drugs are as politically charged as cannabis. Being aware of current sociopolitical influences affecting cannabis users provides therapists one more channel for discussing whether any particular individual is using cannabis safely, or not. While previous posts have focussed on the science of cannabis and the brain, the following brings therapists up to date on pressing public health issues.

In a recent article, Lester Black[1] tells the story of how falling cannabis prices due to large cannabis agribusiness is killing small family farms in California. Many farms going out of business have been operating for generations. Despite weathering the transition from the shadows of illegality to legal businesses licensed by the state of California, they are unable to compete against the economies of scale enjoyed by Big Marijuana.

A glut of legal cannabis has led to a crash in wholesale cannabis prices by as much as 95 percent since legalization in 2016, according to over a dozen California cannabis farmers who once could get as much as $2,000 for a pound of pot. Today, Black found they’re lucky to get $400, while some are selling for as little as $100 a pound.

Even before legalization was approved by voters, economists were predicting prices would inevitably drop. The RAND Corporation think tank correctly predicted back in 2010 that the price of cannabis would drop by 80 percent after legalization. Although 57 percent of California voters approved Prop 64 to legalize cannabis, many marijuana growers feared passage would jeopardize their profits. As a result, 60 percent of cannabis-heavy southern Humboldt County opposed legalization.

Two factors combine to prevent small growers from making enough money to survive. The most obvious and aggravating cause is the maze of regulations burdening small growers. The state has had difficulty creating a new licensing bureaucracy de novo. Equally burdensome have been local taxes, fire and building codes, zoning, security, and environmental regulations. For an industry that had operated for generations without any governmental controls (beyond occasional draconian incarceration), growers have had trouble adjusting to the realities of government-regulated free enterprise. Meanwhile, inadequate prosecution of illegal growers who continue to evade regulation and taxation has left the legal industry competing on a very uneven playing field.

While the cost of growing cannabis has been increased by legalization, the sale price fell precipitously because of the early emergence of cannabis agribusiness. Prop 64 intended to provide a head start for small growers by not issuing licenses for large growers for the first five years. Clever entrepreneurs soon found a loophole. Well-capitalized companies applied for multiple small grow licenses, “stacking” dozens, and even hundreds, of licenses to create increasingly large commercial operations. One farm in Ventura County has now built a 1.7 million-square-foot greenhouse facility, totally subverting the spirit of Prop 64.

Mendocino, Humboldt, and Trinity Counties—the Emerald Triangle—have been hit the hardest. The loss of farms in Humboldt County has been staggering, with 60 percent of farms having closed since voters legalized cannabis. Mendocino County has lost 30 percent of its farms. Beau Kilmer at the RAND Corporation now estimates all the cannabis consumed in the U.S. could be produced on a few dozen industrial-sized farms. Big Marijuana has arrived.

A few strategies for rescuing small growers have been advanced. Some call for government agricultural subsidies to stabilize the market, much as is done for dairy farmers. Others say the only way small farming can survive is if the state allows farmers to sell pot directly to consumers at farmers’ markets or roadside stands. Neither strategy seems likely.

One strategy that could directly aid small growers would be to write the spirit of Prop 64 into law by prohibiting large cannabis farming. If such a law were instituted effectively, as the original law intended, in combination with more vigorous suppression of illegal growers and distributors, the economies of rural counties could be restored. Big Marijuana would aggressively resist any effort to restrict its expansion. It would argue the unconstitutionality of any law prohibiting total freedom of enterprise, while it would strongly support suppressing illegal elements of the industry.

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An additional benefit of restricting the size of Big Marijuana would be to reduce its ability to lobby politicians and the public. Rational public policy would have a better chance of holding sway when not confronted by a few, very wealthy, powerful cannabis corporate agribusinesses. The cannabis industry would begin resembling the diverse wine industry rather than the highly consolidated tobacco industry.

Just as voters exercised the right to legalize cannabis, they should also have the right to regulate the cannabis industry in ways that benefit the public good. Big Marijuana cannot be relied on to hold the public good above its own profit motive. The nature of free enterprise is to exercise power for its own interests when allowed to dominate any industry. As Lester Black has shown, the negative impacts of Big Marijuana are already being felt.

To test your general knowledge about cannabis, see Test Your Science Literacy About Cannabis.