Pubdate: Tue, 12 Apr 2016
Source: New York Times (NY)
Copyright: 2016 The New York Times Company
Author: Ian Lovett
Page: A1


ADELANTO, Calif. - After decades of thriving in legally hazy 
backyards and basements, California's most notorious crop, marijuana, 
is emerging from the underground into a decidedly capitalist era.

Under a new state law, marijuana businesses will be allowed to turn a 
profit - which has been forbidden since 1996, when California became 
the first state to legalize medical cannabis - and limits on the 
number of plants farmers can grow will be eliminated.

The opening of the marijuana industry here to corporate dollars has 
caused a mad scramble, with out-of-state investors, cannabis 
retailers and financially struggling municipalities all racing to 
grab a piece of what is effectively a new industry in California: 
legalized, large-scale marijuana farming.

And with voters widely expected to approve recreational marijuana use 
in November, California, already the world's largest legal market for 
marijuana, gleams with the promise of profits far beyond what pot 
shops and growers have seen in Washington or Colorado, the first 
states to approve recreational use.

"People are definitely salivating over the California market," said 
Troy Dayton, chief executive of the ArcView Group, a research firm in 
the Bay Area that specializes in marijuana. "It's huge, and 
Californians love cannabis so much."

In search of a tax windfall, cities across the Southern California 
desert, like Adelanto and Desert Hot Springs, have raced to be first 
to permit commercial marijuana cultivation. The price of land here 
tripled almost overnight as entrepreneurs bought up every inch of 
property where pot-growing was permitted - most of it bare desert 
dotted with only Joshua trees and tumbleweeds.

And celebrities who for years have supported the open use of 
marijuana are also seeking a piece of the action: Musicians like 
Snoop Dogg and one of Bob Marley's sons, Ky-Mani Marley, have been 
meeting with officials about licensing marijuana grown here. Continue 
reading the main story

Amid the frenzy, though, anxiety is growing in some corners of the 
state that corporate money will squeeze out not only the small-time 
growers, but also the hippie values that have been an essential part 
of marijuana's place in California culture.

Tommy Chong, of Cheech and Chong fame, has long been synonymous with 
California's outlaw stoner culture, growing his own pot and crafting 
bongs from kombucha bottles at his Los Angeles home. Now his 
representatives are negotiating with a company in Adelanto to mass 
produce his brand of legal marijuana, "Chong's Choice," here.

"If conglomerates come in, my answer is: God bless 'em - it saves me 
the hassle," Mr. Chong, 77, said in a telephone interview.

"Fashion changes, haircuts change," Mr. Chong said. "We go through 
cultural changes."

But Patrick Murphy, a cannabis farmer in Humboldt County, a lush area 
on the northwest coast long famed for growing high-quality pot, said 
he had already seen a "corporate takeover" of the marijuana industry 
in many other states.

"In California, especially in Humboldt, we have a code of conduct: 
Respect the land and respect the people," he said. "I don't want that 
culture to be replaced by guys in $5,000 suits."

Twenty-three states allow some form of legal marijuana, and up to 20 
will consider ballot measures this year to further ease restrictions.

California is now making the largest effort in the country's history 
to pull marijuana out of the black market. Medical marijuana sales in 
California hit $2.7 billion last year, accounting for nearly half of 
all legal marijuana sales in the country, according to ArcView and 
New Frontier, another cannabis research company. Approval of 
recreational marijuana use in November could double the market here 
by 2020, experts said.

The law will take full effect by 2018, when a medical marijuana czar 
will institute licensing, testing of products and tracking from "seed 
to sale." Aside from the all-cash business model - banks are 
prohibited under federal law from doing business with companies that 
grow, sell or process marijuana - the entire industry will be out in the open.

"There has been a shadow cast over this industry," said Rob Bonta, a 
state assemblyman who co-sponsored the new marijuana regulations, 
which Gov. Jerry Brown signed into law in October. "This is more and 
more being seen as a legitimate business, and now we hope businesses 
can come out of the shadows."

In Desert Hot Springs, CalCann Holdings, a medical marijuana holding 
company, is planning to build a high-tech greenhouse, along with a 
kitchen to produce edible products for its dispensaries in Orange 
County. The company expects to produce 8,000 pounds of marijuana a 
year over four or five annual harvests.

By bringing marijuana into a legal framework, said Aaron Herzberg, 
general counsel for CalCann, companies like his will be able to 
"bring modern agricultural techniques to the production of cannabis."

"We're transitioning out of the complete free-for-all, wild West," he 
added. "It will be like alcohol - you can't just set up a still and 
produce it in your garage. You have to apply for permits and pay taxes."

A group of Humboldt County farmers, including Mr. Murphy, have agreed 
to sell their cannabis under a single banner, Emerald Family Farms, 
to compete with "mega-grows" like the one CalCann is planning.

"Cannabis started as a counterculture," said Ryan McIntosh, a 
cannabis farmer. "I think there are some people who will have no 
desire to purchase from giant cannabis groups."

Still, Mr. McIntosh, 42, said he was eager for a new era when he 
could stop worrying that his children would see him arrested in a 
raid. "I don't want to hide anymore," he said.

Adelanto, a rough-edged community in the high desert northeast of Los 
Angeles, is hoping to become a very different kind of pot mecca from 
Humboldt County. Envisioning a row of high-tech grow houses where 
there is now only a flat expanse of desert, Mayor Richard Kerr said 
that the growers might need to build solar plants to support all the 
energy it would take to produce more than 100 tons of marijuana each year.

He estimated that the annual tax revenue from the influx of marijuana 
growers could top $10 million, nearly the size of the city's budget last year.

Given the state's continuing drought, farmers have already begun 
marketing themselves as environmentally friendly, despite all the 
electricity required to grow marijuana indoors.

"They all have irrigation systems, where the water goes down into the 
soil and they can recycle it," Mr. Kerr said. "We're trying to stay 
on the green side of things here."

As she sold Girl Scout cookies outside a supermarket with her 
granddaughter, Sherree Harris-Johnson, 57, said she had changed her 
mind about marijuana after she heard that pot companies would be 
required to hire half of their workers locally. Unemployment in 
Adelanto remains above 10 percent, and prisons are the primary employers.

"All I want it to do is bring some jobs," Ms. Harris-Johnson said.

Correction: April 11, 2016

A previous version of this article incorrectly identified the first 
two states to approve the recreational use of marijuana. They were 
Colorado and Washington, not Colorado and Oregon.
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MAP posted-by: Jay Bergstrom