Pubdate: Sun, 11 Dec 2011 Source: Times-Standard (Eureka, CA) Copyright: 2011 Times-Standard Contact: http://www.times-standard.com/writeus Website: http://www.times-standard.com/ Details: http://www.mapinc.org/media/1051 Author: Thadeus Greenson, The Times-Standard 'SO MANY DIMENSIONS' TO POT QUESTION Marijuana Legalization Has The Power To Rock Humboldt County, But How Is Anyone's Guess If the nation's 13-year experiment with alcohol prohibition did anything, it made the average drink a lot more expensive. When Prohibition was passed in 1920, the price of beer soared more than 700 percent, the cost of brandies shot up more than 400 percent and general spirit prices rose by about 270 percent across the board. Within a year of the law being repealed in 1933, prices had dropped 30 percent, beginning what would be a steady decline, according to a policy analysis for the Cato Institute. It's the prospect of a similar price plunge that has some on the North Coast squirming at the idea of California voting to legalize marijuana after decades of state and federal prohibition. The unease makes sense, considering a recent study by Jennifer Budwig, a local banker whose thesis concluded the marijuana industry pumps at least $400 million annually into the Humboldt County economy. If that money were to disappear, it would cause a 25 percent reduction in local economic activity. And that's with Budwig using what, by all accounts, are extremely conservative estimates. It's a thought that strikes fear not only into the hearts of pot growers but also the owners of local car dealerships, restaurants and boutiques. It's money that's spent for child daycare, to buy real estate and to start local businesses. In short, it's money that likely permeates just about every nook and cranny of the Humboldt County economy. In fact, the legalization conversation -- which is gaining steam with five initiatives circulating to qualify for the November ballot -- carries so many implications for Humboldt County that the Greater Eureka Chamber of Commerce recently received a presentation on Budwig's thesis, which focuses not only on economic impact but also potential ramifications of legalization. "Anything that's out there that has the potential of adversely affecting or positively affecting our members, we have a dog in that fight," said J Warren Hockaday, the chamber's CEO. "Whether that comes to advocating a particular type or matrix of legalization over another, I don't know if we would go there. But we might." Hockaday's last comment underscores two general feelings held throughout the county -- that legalization is a slow train barreling down on Humboldt and that the manner in which it occurs is just as important as whether it occurs. And, no matter the form, legalization will likely bring unforeseen impacts, all of which will affect Humboldt County's marijuana trade and, consequently, its economy. Humboldt State University professor of economics Erick Eschker said even if you look at legalization in its simplest form, it becomes a complicated equation. Eschker said risk generally plays a huge factor in driving prices in a black market economy, so it would be a safe bet that alleviating the risk through legalization would cause a price drop. However, the economist said that doesn't necessarily mean a huge hit to the local economy. "It's price times quantity -- that's the value of what's produced," he explained. "So, with legalization, you'd have the market price falling, but you'd also have a lot more production. The question is which one of those would be greater." In the case of alcohol prohibition, it's clear production ultimately outpaced the decline in price, and the industry has a far greater national economic impact than when alcohol was illegal. But with the current state of California's relationship with the federal government over medical marijuana, it's not even safe to assume statewide legalization would reduce the risk involved in the marijuana trade. In fact, Budwig notes, legalization in California could draw a massive federal crackdown. This could serve to deter large-scale producers from getting into the industry -- a huge fear of many a Humboldt County grower -- but, depending on the crackdown's scope, might also shift the risk paradigm. When someone gets busted locally for a commercial grow operation, it's a safe bet they aren't going to jail. Generally, their plants get destroyed, their cash seized and they end up on probation. Now, with California's new prison realignment program, it's extremely unlikely these people would be sent to prison. At worst, they would spend some time in a local jail. Federal marijuana laws are a whole different ball game and can land someone behind bars for up to a year for possessing a joint. Someone busted growing more than 100 plants or more than 100 kilograms is looking at a mandatory sentence of between five and 40 years in a federal prison, according to the National Organization for the Reform of Marijuana Laws. "Any time the risk goes up that it will be confiscated and/or that you will be put in jail, that's going to make people less willing to produce, and the price will go up," Eschker said. Assuming there is no federal crackdown, there are still many unknowns, and most swirl around the manner of legalization. Would legalization limit mass production, giving a leg up to Humboldt County's comparatively small-time growers? Would it create a state regulating agency -- like the Department of Alcohol Beverage Control -- and a uniform set of ground rules? Or would the new, legal marijuana industry be regulated by each county, leaving local control but a state with 58 separate sets of rules? Local growers are split on the issue and on what path to legalization would leave Humboldt County with the greatest competitive advantage. Some say they are petrified of Big Tobacco turning California's Central Valley into one giant marijuana farm, while others say there's no way such factory farms could turn out the high-grade marijuana that made Humboldt County famous. With alcohol, the market is clearly large enough for both the mass producer and the niche manufacturer -- with craft beers and micro brews in the cooler with Budweiser, and two-buck-chuck and $100 bottles of wine on liquor store shelves. Would the marijuana market be the same? Eschker said it's hard to tell. Generally speaking, Eschker said, one of the biggest factors in making Humboldt County the marijuana producer that it's become is its remoteness. Growers can operate in the hills with general impunity -- state and federal authorities visit only occasionally, and local police don't have the resources to wage an all-out war on marijuana. In her study, Budwig quotes law enforcement sources as saying the marijuana they eradicate annually represents only 1 to 2 percent of the total that's out there. Eschker said that remoteness, while an asset in a black market, would almost instantly become a liability in a legal one. "If it's legalized, that benefit of remoteness turns into a problem because it would add costs for shipping and transporting," he said. "Also, I would suspect strongly that production would spring up in major metropolitan areas." However, if each county is left to regulate its own marijuana industry, would more conservative areas of the state rebel and institute growing moratoriums? If so, that could leave more liberal Humboldt County -- where pot growing is already widely accepted -- a huge market to supply. Another factor, Eschker said, is the Silicon Valley effect. Because of its remoteness, its reputation and other factors, Humboldt County has a collective brain trust of marijuana growers who are very good at what they do and likely benefit from being near one another through sharing ideas and new methods. Eschker said that right now, those growers are to some extent stuck here because, due to the aforementioned remoteness, it is a good place to work in an illicit trade. If marijuana was legalized and these folks could go ply their trade anywhere in the state, what would happen? Would they recognize the benefits of proximity and stay huddled together, as happened with techies in the Silicon Valley? Or would there be a brain drain, as companies in other areas of the state lured Humboldt County's best and brightest to grow elsewhere? As Humboldt County plods through the process of putting together an ordinance to govern its medical marijuana industry, many have urged policymakers to also be forward thinking and to plan for legalization. Some have gone so far as to suggest that Humboldt County could become the Napa Valley of marijuana, with showcase family farms, renowned varieties and tasting rooms. The thinking is that people can have a glass of wine anywhere, but they flock by the thousands to Napa Valley's wineries to sip chardonnay while overlooking the vineyards in which it was produced. Why wouldn't people do the same with marijuana? Humboldt County Convention and Visitors Bureau Executive Director Tony Smithers said he's simply not buying it, pointing to a recent presentation by "marketing guru" Andrew Davis, who offered a detailed analysis of how many people do Google searches for redwood trees versus marijuana. Smithers said redwood tree searches lapped those for marijuana. "It wasn't even close," Smithers said. "It was his way of saying, 'You guys have to know what side your bread is buttered on." Smithers said Humboldt County's current image as a tourist destination also depends on a "family-friendly" feel. Marketing to marijuana users would jeopardize that, he said. "I think any potential benefit of marijuana tourism would be canceled out by the negative image," he said. Lost in all this talk of dollars and cents is the fact that marijuana legalization is, at its core, a social question. "There are just so many dimensions to this issue," Hockaday said. Is prohibition simply creating a criminal class where there would not be one? Would legalization turn more children on to marijuana and, in turn, other drugs? Is marijuana different from alcohol? Would legalization increase or decrease the ancillary crime associated with the marijuana industry? Are government's limited resources better spent on enforcement and prosecution or on treatment? Hockaday said he doesn't have all the answers. Knowing how voters ultimately answer the questions may impact the chamber's members; he said he's going to keep a close watch. "There are an awful lot of factors you need to consider," he said. "Certainly, we'll be watching this pretty carefully." - --- MAP posted-by: Jo-D