Banking & Finance

Plummeting Marijuana Prices Stress Small Northern California Farmers

Plummeting Marijuana Prices Stress Small Northern California Farmers - Marijuana Packaging

Humboldt County cultivators are drowning in a flooded market. As the price of marijuana continues to drop, small farmers are having a difficult time staying afloat with fears for the sustainability of their foreseeable future. Jason Gellman, a second-generation cannabis farmer and owner of Ridgeline Farms in Southern Humboldt, has watched the marijuana business evolve since he was a kid. Although he concedes he does have an advantage because his brand is well-known throughout the region and most of the state.

Despite that, he said he’s still struggling to sell his crop. Gellman said, “Times are really, really tough for small farmers. Most of us are in the red right now and if you are lucky enough to sell your product, it seems to be the average price per pound is around $700 which is way way down.” He continued, “The county wants their money, the state wanted their money, the banks want their money, the trimmers need to be paid and all of the other fees. For a small farmer, it costs around $500 to grow a pound. It’s barely paying the bills.” In June the bulk price for marijuana from last year’s harvest plummeted from about $1,200 a pound when the 2021 light deprivation or “dep” crop began to hit the market, according to Humboldt County Growers Alliance executive director Natalynne Delapp. 

Delapp said, “The wholesale price for 2021 deps is between $650 and $750 a pound.” She continued, “The wholesale price for 2020 AAA grade flower is $400 and $500 a pound, otherwise as low as $200 to $400 per pound. Some farmers are having their 2020 harvest returned from distributors because they are unable to sell it. This is after paying.” She concludes, “This is after paying for trimming ($70 to $200 per pound), testing, and paying state harvest taxes ($154 per pound).” 

Delapp attributed the dramatic fall in price to “massive overproduction” across the state. She said, “California farmers are producing four to five times more cannabis than our legal market can consume.” Delapp added, “Simple supply and demand economics demonstrates when your supply outpaces your demand, the prices go down. The question of survivability is in question.” Right now, there are 1,775 acres of marijuana licensed by the state–435 of which are in Humboldt County – which conservatively produces more than 6 million pounds of marijuana annually, according to Delapp. 

She explained that “Not all cannabis consumed in California is purchased at legal retailers, so a very conservative estimate is that we’re producing twice what the legal market can consume, but in reality, it’s probably worse than that.” She said, “The bulk of this overproduction is attributable to large-scale farms outside the Emerald Triangle, on the Central Coast and elsewhere, where it’s common for single farms to be permitted for dozens of acres. These areas are continuing to bring hundreds of acres of new production online despite the fact there’s no market for new large-scale production.” Although small farmers like Gellman are demanding a cap on acreage, Delapp leaned toward a shift in strategy and called for short and long-term solutions to better support cultivators. 

The Humboldt County Growers Alliance is hoping to win the bid to market the county’s marijuana. Delapp said the best the county can do to build long-term resilience for the industry is to go all-in on developing her organization’s strategy. Although Humboldt County growers are struggling right now to keep their business afloat, it’s great that there’s a group that’s trying to help provide resources for cultivators.

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