Believe it or not, California may have too much pot! That is according to Hezekiah Allen, executive director of the California Growers’ Association. Speaking at a panel hosted by the Sacramento Press Club, Allen told attendees that he estimates growers in the Golden State are producing eight times as much cannabis as the state is expected to consume. Some experts give much higher estimates, claiming that the state is on track to produce 14 to 16 million tons annually, while buyers are unlikely to consume more than two million tons.
Also on the panel was Joseph Devlin, chief of Cannabis Policy and Enforcement for the City of Sacramento. Devlin estimated the surplus to be a little less than Allen, putting the figure at five times as much cannabis as the state is expected to consume.
The projected surplus is being attributed to an exponential increase in production at existing facilities, and to the increasing number of newcomers seeking to get in on the Green Rush since November’s election when the state approved adult recreational use.
To bleed or not to bleed?
The surplus is bound to be a serious concern to growers who may have to greatly reduce output and sell far less product. Referring to revised cannabis laws which take effect in January of 2018, Allen warned that much of the surplus could go unreported and sold on the black market. “In the past, when a product left the farm there’s a really good chance the grower had no idea where it was going. But in the future, every single license holder is going to need to know exactly where every gram of product is ending up and so conditions are going to change very quickly.”
Lori Ajax, Chief of Cannabis Policy and Enforcement for the City of Sacramento, warned that growers will have to scale back if they plan to remain in compliance. She acknowledged that while some growers may slow production, many will opt to sell on the black market in other states. “For right now, our goal is to get folks into the regulated market, as many as possible,” Ajax said. But, she added, “There are some people who will never come into the regulated market.”
Unlike other agricultural commodities, cannabis growers can’t legally export their surplus across state lines (even bordering states where marijuana is legal, such as Nevada, which is experiencing a shortage).
Oaksterdam University professor Dr. Aseem Sappal was optimistic that growers want to be compliant and will do what it takes to remain compliant. “Nobody wants to operate under the radar. They want to do this legally,” Sappel said in an interview with local CBS news. “They want to say, ‘Hey, look, what I’m doing is okay.’”
So, what to do with all that weed?
To the delight of extraction equipment manufacturers and edibles makers, Sappal has proposed extraction on a massive scale as a potential solution. “About 75 pounds of cannabis — which is a lot — can produce perhaps, what, five liters of oil,” said Sappal. “And if you look at that, then a lot of cannabis can make a little oil. So if you talk about a surplus, that’s one very good avenue.” But it’s not as simple as it sounds. Mass extraction technology can cost as much as a quarter of a million dollars or more to purchase and install, plus operating expenses. (According to an article in Cannabis Business Executive, if a grower pays $200 per pound to process bud, and reduces that to a 10 percent concentrate, the cost per gram is $4.41.)
Hezekiah Allen’s hypothetical but unlikely solution is for state and local governments to do more licensing and less banning of retailers, and make it easier for citizens and tourists to purchase and consume cannabis. Allen’s claim is that by limiting licenses and banning sales in some jurisdictions, law makers are giving growers little incentive to work toward compliance, and plenty of reason to resort to selling on the black market. Such a large black market would have serious consequences for law enforcement. It is also likely to incur severe environmental costs, as illicit growers tend to use chemical fertilizers and pesticides that compliant growers are not allowed to use.
So far we’ve heard no realistic solutions. If you would like to be part of the solution, consider scheduling your 2018 vacation in California. Pot prices in the Golden State are likely to be quite reasonable by then.