The Green Economy California Reveals the Dollars and Cents Impact of Increasingly Legal Pot—and Oregon's Next.

AS CALIFORNIA'S HIGHWAY 101 cuts south from the Oregon border along the Northern California coastline, it plunges through redwoods, emerges back aside the ocean, and comes across Arcata—home to 17,000 people, Humboldt State University, and at least six hydroponics grow stores.

Every year, marijuana pumps an estimated $35.8 billion into the national economy, and has proven to be a recession-proof industry—yet the debate over the legalization of pot has largely focused on its moral and political impacts. The red-eyed elephant in the room, however, is the economic impact of the easing of marijuana laws. Illegal profits from both medicinal and black-market weed currently prop up small towns throughout Northern California, and possibly Southern Oregon. Legalization—which could come to California as soon as November—would trigger economic tremors felt by everyone from growers and corner dealers to hardware stores, gas stations, and local governments.

Oregon's southern counties seem set to become the nation's next "Emerald Triangle"—the slang term for California's Humboldt, Trinity, and Mendocino Counties, which are the country's biggest producers of marijuana—especially if both states pass two pending ballot measures. California's Proposition 19 would legalize weed, while Oregon's Measure 74 would bring medical marijuana dispensaries to the state.

"If California passes legalization, Oregon will be well poised to bring [legalization] in front of the voters in 2012, and deal with the economic benefits of having an industry," says Oregon State Representative Peter Buckley, whose fifth district encompasses Ashland and southern Jackson County. "I do think there's an economy on it, and I'm willing to look at legalization."

SUPPLY AND DEMAND

On a blazing hot afternoon one year ago, I stood under the shade of a madrone tree in the mountains a few hours southeast of Arcata. A UH-1 helicopter thumped steadily across the canyon, dangling a net stuffed with freshly cut pot plants.

Behind me, a pair of pot farmers passed a joint and watched with keen interest, listening through a police scanner to the helicopter pilot and the ground team as they negotiated the delivery of 1,000 pounds of cannabis to a law enforcement dump truck. That day, an interagency team of federal and local law officers cut more than 5,600 marijuana plants and seized 95 pounds of processed weed, 30 pounds of hash, and two guns from half a dozen properties. Fourteen people were arrested.

My hosts were lucky, and skilled in their profession: Their gardens, tucked in crevices blanketed by camouflage nets, escaped unscathed. It was a heady summer, and they hoped to pull as much as 500 pounds from their gardens, which would make them well over $1 million. But their yield was much less: Like many Emerald Triangle pot farmers last year, they struggled to sell their weed, even after slashing prices, as an unprecedented harvest led to a glut of ganja.

This supply/demand crunch was felt throughout Arcata, where the weed economy is woven into daily life. With the local timber and fishing industries largely expired, the economies of many of the small communities in Northern California inhale and exhale with the rhythms of the pot harvest.

Just across the border, Southern Oregon is our state's Wild West of weed. Sparsely populated with plenty of privacy-loving folks, and blessed with long, hot summers, Josephine and Jackson Counties are quickly gaining reputations for massive marijuana farming. Jackson County, whose biggest towns are Medford and Ashland, is home to only 200,000 residents, but 4,302 of them are medical marijuana patients. In Multnomah County, one out of 112 people have medical marijuana cards—in Jackson County, it's one out of 47. National marijuana advocacy group NORML chose Portland as the city to hold its annual conference, which is going on this weekend.

Photo by Leland Baxter-Neal

WEED COUNTRY

During a trip through Arcata with my pot farmer acquaintances, I picked up a copy of the Trader—a typical classifieds magazine filled with ads for trucks, boats, and RVs that you can find in every town in America. The cover of Arcata's issue, however, featured a variety of "trimming machines," drying racks, and an "automatic trichome separator"—a hash-producing contraption called the Bubbleator.

Outside of a grocery store in Arcata, a young woman in a Harry Potter T-shirt and cape called out to me, snipping the air with a pair of scissors and asking if I needed any "help." This fantastic applicant, who had mistaken me for a pot grower, was one of many who flock to the Emerald Triangle in the fall looking for work trimming pot—a job that pays as much as $200 per day, all of it under the table.

Inside the store, I was greeted by a prominent display featuring Fiskars trimming scissors and bottles of isopropyl alcohol, a combination of products generally used for trimming marijuana. It was fall in the Emerald Triangle, and the underground economy was visible at every turn.

Anita, a personal trainer who grew up in Humboldt, and who asked me to change her name for this story, estimated that 90 percent of her friends make their money in ways related to the marijuana industry.

"Anything you do, you get paid from $20 to $40 or more an hour, and driving, you're going to make $200 a pound," Anita said. Even her mother, a retired special-ed teacher, supplements her meager pension by "growing a tiny patch for herself."

When I asked Arcata's mayor, Alexandra Stillman, if she had an idea how much the economy of her town depends on the marijuana trade, she told me "a guesstimate that's going around" put weed's contribution to Humboldt County's economy at $300 million annually. "Let's just basically say things hardly changed a lot during the recession," she added.

Then, in a comment that crystallized just how much a part of the community marijuana has become, the mayor—who was adamant that she doesn't personally know anyone who grows—rattled off the going rate for a pound of Humboldt outdoor bud ($1,500) and noted that it was half of what it used to be.

But the economic benefits from marijuana, she said, are outweighed by the negatives, such as grow-related fires in residential homes and an increase in robberies targeting weed growers.

Mendocino County Supervisor John McCowen is similarly critical, saying the easy money of the weed trade suppresses growth in other, legitimate sectors of the economy, in part by offering larger wages for unskilled labor than any legal business can pay. To remedy that problem, McCowen favors full legalization.

California's state tax commission estimated that legalizing and taxing marijuana sales could generate $1.4 billion in tax revenue. The tax commission also predicted, however, that the "legalization of marijuana would cause its street price to decline by 50 percent."

That thought has sent chills through the Emerald Triangle, sparking a series of community meetings where the notoriously reticent growers have joined economists and local government officials to craft a plan in case the bottom drops out of their livelihood. Ideas being churned out include specializing in high-end, organic marijuana or promoting weed tourism—picture tours of weed farms much like wineries, and pick-your-own-bud farms.

OREGON'S OTHER ECONOMY

In Oregon, the marijuana industry is more low key, and local governments have been slower to consider its economic potential.

In Ashland, the closest thing to Arcata's equivalent on this side of the border, city officials have been at work crafting a new economic strategy for the community. I asked the town's mayor, John Stromberg, if marijuana was being taken into account.

"No, and to tell you the truth, the issue is really just coming to attention now," he said. "It takes a while for a community to say, 'Oh, this is actually an economic process.' And it's not clear how legal it is. To think about it as an economic process is a new idea, and it's still fluid and changing."

Republican State Representative Ron Maurer does see the potential—last year, he sponsored House Bill 3274, which would have created state-run marijuana fields, banned private medical pot growers, and instituted a $98-per-ounce tax on medical marijuana. He estimated that the measure would net the state $188 million in annual tax revenue, but the measure didn't pass.

Increasing legalization has also impacted Portland's pot economy. Though prices have held steady in Stumptown for a decade—at a little more than $250 an ounce—the casual atmosphere has bred a veritable generation of small-time dealers.

Gabe, a weed dealer who's relatively new to town, complained to me that it's actually been tougher to sell pot here than in Georgia, Utah, or Washington, DC. "The ratio of people who sell pot to people who smoke it is so high here," Gabe says. "I've never seen anything like it."

There are additional signs of a booming economy. I recently met with a contractor who installs home heating and cooling systems, and moonlights by building similar systems for indoor marijuana grows. He works at night at properties around Portland, installing systems for a standard 10-light grow at $5,000 a pop, but the plants they foster will likely bring their owners a minimum of $75,000 a year. "Most of it goes to Idaho or Montana and gets $4,000 a pound," he said. "A lot of these guys are making $400,000 a year."

Photo by Leland Baxter-Neal

THE PRICE OF PROFIT

Under the Oregon Medical Marijuana Program, no one is supposed to be making money off pot. Voters legalized medical marijuana in 1998; and as of July 1, more than 36,000 people were registered as cardholders and another 18,676 were registered as caregivers, meaning they're allowed to grow and possess medical marijuana for their patients.

Oregon's medical marijuana laws do not allow the medicine to be bought or sold; caregivers are expected to hand over the harvest to the patient at no cost. In reality, that's a joke: Under the cover of a caregiver card, growers can provide their patients with a few ounces of weed a month, then sell whatever's left on the black market.

Economics are at the center of a current rift between Oregon's medical marijuana backers. A group of Southern Oregon-based marijuana advocates are pushing voters to pass Measure 74, which would task the state with creating a system of private, nonprofit medical marijuana dispensaries that could reimburse growers for the costs of producing and dispensing medical marijuana. Proponents say the measure is needed to allow cardholders wider and more regulated access to medical marijuana—something that's critical for patients who truly need marijuana as medicine.

But the measure initially went to the ballot without the backing of the state's largest marijuana advocacy group, Oregon NORML, whose director, Madeline Martinez, told the Mercury in July that she was concerned that commercial growing operations could gain control of the supply to dispensaries, keeping prices high. NORML eventually endorsed the measure.

Among many growers, said one Portland dealer, Measure 74 looks like a gateway to more profit. With the number of dispensary licenses still a mystery, growers and entrepreneurs are launching collectives—pooling patients to stack as many cards as they can in case there's some sharp-elbowed jostling for the permits.

Stormy Ray, one of the chief petitioners for Oregon's original medical marijuana law, is another staunch opponent of Measure 74. Profit, she insists, should not be part of the equation when it comes to medicine. According to a formula she has worked out, the production cost of weed, even for an amateur grower, should only run between $40 and $60 per ounce. Oregon's street price is six times that.

Photo by Leland Baxter-Neal

HIGH TIMES AHEAD

Even as he geared up for the upcoming outdoor harvest this month, my pot-growing host in Humboldt was already planning for a future where weed is legal, and already trying to anticipate how his business might change. He recently launched a registered nonprofit that provides door-to-door medicinal weed delivery in Southern California, and business was booming.

Legalization, he told me, "would crush probably three quarters of everyone out there. The other quarter would have their shit together enough to actually do it right."