Pot Still Remains Among Top Cash Crops

Lawrence Brooke was outraged. His company, General Hydroponics of Corte Madera, Calif., was recently slapped with a subpoena by the U.S. Drug Enforcement Administration, which hoped that the firm’s business records might lead to indoor marijuana growers.

Brooke insists that his customers are legitimate. But to the DEA, which subpoenaed 60 such companies under Operation Green Merchant, the effort is another way of getting at some very canny growers of what Charles A. Stowell, the DEA’s state marijuana coordinator, calls “California’s biggest cash crop.”

July was planting season, and despite rigorous enforcement efforts, planting occurred. Partly due to eradication efforts, marijuana prices in California have soared. And despite some success in the campaign against weed, marijuana appears to remain, in dollar value, one of the state’s biggest crops--very likely surpassing oranges.

William James said that to study a phenomenon most effectively, look not to the chronic form but to the acute. Since few forms of regulation are more acute than that of marijuana--which is illegal to grow, sell or possess--this major California industry offers a case study in what happens when regulation and markets collide.

One thing regulation hasn’t done is eliminate supply. Measuring the crop is no mean feat, but during 1990, law enforcement authorities at all levels throughout California seized 199,105 marijuana plants. Carolyn McIntyre of the Campaign Against Marijuana Planting, a state coordinating agency, figures on a pound of dope per plant and a wholesale price of $3,300 a pound.

That means that authorities seized $657 million in marijuana last year--or as much lettuce as California produced in 1989.

Leaving aside imports, how much of the California crop did the authorities miss? Opinions vary. Douglas Anglin, director of the UCLA Drug Abuse Research Group, says, “I doubt if they even got half.” Counting what was seized, that implies a total crop of at least $1.3 billion, which would beat everything California produces except dairy products and grapes.

Jon Gettman, publisher of Marijuana Digest, a quarterly, estimates with suspicious precision that in 1989 the government got 22% of the California crop. Using a price of $1,660 per plant, he estimated the 1989 California harvest at $2.5 billion and a national harvest exceeding $50 billion.

Mark A. R. Kleiman scoffs. A Harvard University economist specializing in illicit markets, he says that there are perhaps 13 million marijuana users in the United States and that they couldn’t possibly buy or smoke all that dope. Kleiman estimates the U.S. pot market at $10 billion.

“I believe that half a billion dollars goes to California growers,” says Kleiman, whose book, “Marijuana: Costs of Abuse, Costs of Control,” was published in 1989.

Like California, the character of the marijuana industry has changed considerably the past 20 years, thanks partly to the form regulation has taken.

There is universal agreement that the eradication effort has raised the price of marijuana, but it also appears to have helped raise the quality--since the growers’ biggest cost is the risk of getting caught, and penalties vary with volume, not price or potency.

As a result, California growers are motivated to raise the most potent product they can, which brings higher profits and improves the risk-return ratio.

Yuppies who remember the $50 ounce may be shocked to learn that sinsemilla, the top-grade product grown in California and preferred by consumers, now retails for several hundred dollars an ounce.

Kleiman says marijuana demand is pretty inelastic--meaning it’s not sensitive to price--but the price rise isn’t as steep as it seems. Experts say marijuana today is three to six times as potent as it was 20 years ago. It’s also seedless, so there’s less waste per retail ounce. The result, authorities admit, is a cost “per unit of high” that, counting inflation, may not be much greater than in the past.

Says Kleiman: “It’s about the same as beer.”

There is evidence that authorities do manage to grab a good percentage of the outdoor crop in Humboldt, Mendocino and Trinity counties, a remote northern area so rich in marijuana gardens that it’s sometimes called the Emerald Triangle. Experts such as McIntyre say that’s forced growers to disperse and move indoors.

The result: Growers are more sophisticated and better financed. Seizures of indoor gardens rose 108% in California from 1989 to 1990, to 263. In November, for example, authorities raided two big marijuana farms in the Antelope Valley, seizing 8,500 plants and equipment that had enabled indoor growers to raise several high-value crops annually without soil.

A Humboldt County resident familiar with the Emerald Triangle industry says growing in that area has “dramatically decreased” because of law enforcement efforts. Many growers relocated.

Ronald Sinoway, a Humboldt County lawyer who defends accused marijuana growers, knows this. “A week doesn’t go by when I don’t get a call from somebody anywhere from Southern California to Seattle asking for a lawyer referral,” he says.