(CN) – California expects to make big bucks on recreational pot when sales begin next year, but not all cannabis farmers are embracing the state’s proposed regulations with open arms.
"There's more money to stay on the black market," said Leo, a father of three who's been growing pot in Humboldt County for 18 years and asked only to be identified by his middle name. "Compliance is expensive."
Leo is not alone. Of the estimated 10,000 cannabis grow sites operating in Humboldt County last year, just over 2,300 farms and businesses applied for cannabis business permits the state requires to grow and sell marijuana legally starting in 2018.
“A number of existing cultivators who have been historically able to cultivate in the Emerald Triangle will either be forced to stop or elect to stop in the face of a regulatory environment,” said Scott Davies, owner of Winterbourne Farms, one of the 2,300 properties in the process of getting a county permit.
When California voters approved Proposition 64 to legalize recreational pot for adults, many hailed it as a progressive step forward for the world's sixth largest economy. Legalization is expected to result in fewer drug arrests and criminal justice costs, $1 billion in new tax revenue and a regulated industry that’s better for the environment and safer for consumers.
But as the state races to get new rules in place by 2018, most pot growers in Humboldt County are already avoiding regulation. These farmers cite higher costs, burdensome rules, distrust of authority, uncertainty about still-unfinalized policies, and the ability to make more money by selling cannabis on the black market.
Operating outside the law is nothing new in Humboldt County, where longtime growers like Leo say they're used to being outlaws – a label many embrace as a badge of honor.
"We sort of liked that outlaw, fringe-of-society mindset," Leo declared.
An Outlaw Community
Lined with gargantuan Redwood trees that stretch to the sky and hug the Pacific Ocean, Humboldt County makes up a third of Northern California's Emerald Triangle, the nation's largest marijuana-growing region. Some old timers have been growing here since the 1960s.
With a population of 135,000 hit hard by declines in its biggest job-producing sectors of timber, fishing and dairy, cannabis became a lifeline for this rural county's economy.
"This is what's kept this economy afloat," said Max Esdale, a Humboldt County native who grew up in a pot-producing family and now works for a cannabis technology firm. "Here in Humboldt County, we’ve managed to keep the standard of living because the cannabis industry has given people an avenue to supplement their income."
Transforming an established “outlaw community” into a law-abiding center of cannabis commerce is no easy task. The vast majority of marijuana grown in Humboldt and California goes to states where pot is illegal and dealers can earn double or more per pound.
California produces about 13.5 million pounds of weed each year and sends 11 million pounds – 81 percent – out of state, according to a January 2017 study by ERA Economics. New regulations will have little to no impact on the state's booming illegal export market, according to that study.
"We see nothing in the regulations that would incentivize illegal cultivators to exit the market," said Duncan MacEwan, who co-authored the 87-page analysis.