Galen Doherty’s family has lived in southern Humboldt County since the 1800s. For the last five generations, they’ve worked in different industries, riding out booms and busts: from old-growth logging and salmon fishing to Redwood land conservation and salmon habitat restoration.
“Whatever we got to do to get by, to stay here. Because we like it here,” Doherty said.
Now as owner of Whitethorn Valley Farm, he grows cannabis on a quarter-acre parcel of his family’s original homestead. And, like his family before him, he deals with ups and downs in the market — more downs lately.
Doherty said the days of wholesale cannabis going for $1000 per pound are over. Today farmers are lucky to get $400.
“At that point, you know, you're basically paying everyone except yourself,” Doherty said.
Farmers like him aren’t only dealing with low prices but burdensome regulations and taxes. In March, the Humboldt Board of Supervisors considered whether they would keep an end-of-month deadline for cannabis growers to pay their local tax bill.
Voters passed Measure S in 206, which charges cannabis farmers per area cultivated. The revenue from that tax funds county services.
Hundreds of businesses still owe money and risk losing their licenses. Farmers packed the public comment period to tell the board they needed more time.
Craig Nejedly, CEO of Talking Trees Farms, told the board there wasn’t any way he would be able to come up with over $30,000 he owed by the end of the month.
“It'd be putting my farm, my family, my employees out of business essentially,” Nejedly said. “I feel like I'm being penalized for going all in on legal cannabis.”
Changing cannabis markets
Many farmers in Humboldt view the plummeting price of cannabis as a sign of a bad market. Some economists, meanwhile, see it as inevitable.
“In our research group, we haven't been surprised by the falling prices,” said Robin Goldstein, director of the Cannabis Economics Group at UC Davis. “We don't think that they've fallen nearly as far as they can fall and probably will fall in the future.” He said marijuana is starting to resemble any other crop — like wheat.
“We're only part way there to prices becoming more and more like normal agricultural prices,” he said.
Goldstein notes the California marijuana market is actually growing. Supply is still increasing. Some of that comes from larger farms that can operate at lower costs.
The price for legal cannabis, he said, has dropped so low that it might soon compete with illegal cannabis still widely grown in the region. The regulatory hurdles and taxes troubling farmers are, ironically, why prices haven’t dropped more, Goldstein explained. These costly barriers keep more people from farming legal cannabis.
Artisanal cannabis
But Goldstein sees a way forward for small farmers in Humboldt. As the market matures, he said, consumers will move away from valuing only cannabis with the highest THC levels.
“Consumers don't walk into a wine store and choose their wine based on how much alcohol it has,” Goldstein said. “Alcohol by volume is not the measure of quality for wine.”
Luckily for Humboldt farmers, he said, some of the best cannabis in the world can be grown in the region's unique soil and climate. In wine terms, Humboldt has first-rate terroir.
“The same way that Napa Valley is able to produce and export wine at higher price points than your average wine, California cannabis can be sold at a premium just by saying it's from California,” Goldstein said. “It represents to consumers … this is great weed.”
‘A permanent extinction event’
Galen Doherty, the farmer in Humboldt, has seen a growing appreciation for his artisanal crop, which is organically grown outdoors.
“We are seeing a shift in recognition of the higher-quality flower that we produce,” Doherty said. “It feels like that is starting to gain more traction in the market.”
But he warns that if small farmers in Humboldt lose their license due to unpaid taxes, they might never get it back due to strict environmental protections in the county.
“What I see is just like a permanent extinction event,” Doherty said, “where if you turn those licenses off, they can't be turned back on without a whole lot of… lobbying and policy effort.”
As farmers wait for the market to recognize the value of their crop, Humboldt is facing its own troubles. The county’s latest budget has a $10 million deficit, in part, because of declining sales tax revenue as cannabis businesses retract and there are fewer workers to spend money locally.
Still, the Humboldt Board of Supervisors ended up extending that deadline for growers to pay taxes they owe. Farmers have until the end of the year. County supervisors say this deadline is final.
