California's Emerald Triangle: Small Towns, Big Money

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    NEWSLETTERS

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    It’s the most profitable drug in the world.

    Consider the math: $100-$400 dollars in upfront costs and a yield of anywhere from $2,100 to $6,000—per pound. Not bad—especially in California, where state law permits individuals to grow up to six mature or twelve immature plants for medicinal purposes, under the state's 1996 medical marijuana law. While some growers count on one harvest each year from an outdoor garden, others are harvesting four times a year, thanks to the hydroponic-growing technology employed indoors.

    Many growers are raking in hundreds of thousands of dollars—others even more. It’s all illegal on a federal level and it’s all tax free. With so much money at stake, the marijuana trade has grown into a remarkably sophisticated industry. Insiders estimate that the total market for marijuana is worth tens of billions of dollars and is even larger than many traditional agricultural products, like grapes or corn. CNBC.com estimates about $40 billion a year.

    Though marijuana is grown nationwide, Northern California’s infamous Emerald Triangle—the spot where three pot-growing counties of Humboldt, Mendocino and Trinity meet—is the country’s most infamous bud-producing hotspot.

    Dan Offield, a 20-year veteran of the Drug Enforcement Agency, DEA, says, "This [The Emerald Triangle] is ground zero for Marijuana. Nobody produces better marijuana than we do right here.”

    From housewives hoping to earn some extra cash, to growers with large-scale indoor and outdoor operations, to Mexican drug cartels setting up grow areas in state and national parks, to members of the real economy that service the growers (including realtors and restaurant owners), everyone seems to have a hand in the Emerald Triangle’s marijuana till.

    Indeed, a Mendocino County commissioned study estimates that two-thirds of the community’s economy is from marijuana. One Mendocino grower, who requested anonymity, says without pot the local economy "would crash. It would tank." He adds this analogy: It would be as though “Apple closed its plant in San Jose."

    Javier Pena, the DEA Special Agent who oversaw the region from 2004-2008 tells it like this, “Pot is the money maker. It’s hard to get the young kids to work at fast-food places because they’re out tending these marijuana groves. They’re cutting the plants. They’re seeding. They’re trimming the buds. They’re driving around $40,000, $50,000 vehicles—and it’s all because they’re helping these marijuana growing operations.”

    Eric Sligh, a former marijuana broker who now works as the founder and editor of "Grow Magazine" admits, “You have a lot of young people making $50,000, $100,000, $300,000. Cash. Just depends on how aggressive they are. And they’re living that fast-paced lifestyle in a rural community.”

    Indeed, a walk through any downtown in the Emerald Triangle provides evidence of that fast-paced lifestyle. For a community with seemingly no major source of commerce, there are an awful lot of BMWs and Mercedes.

    One of the main reasons for marijuana’s enormous profits (or even “ridiculous” profits, as Pena calls them) stems from one simple fact: Pot is illegal under federal law. Thus, individuals that choose to traffic in marijuana are taking a risk. They must be compensated for that risk via inflated profits.

    Should marijuana become a legal commodity, Dale Gieringer, head of the California’s chapter of the National Organization for the Reform of Marijuana Laws, Norml, predicts the actual value of marijuana could plummet.

    “It really isn’t worth more than a stem of parsley,” he says. “It’s not expensive to grow. It doesn’t cost a lot.”

    That’s one reason Gieringer recommends California lawmakers add a “per joint” tax on pot should voters decide to officially legalize, regulate and tax recreational marijuana in the upcoming November ballot initiative.

    Meanwhile, a growing number of marijuana producers in the Emerald Triangle are growing increasingly concerned about the potential move toward legalization. Understandably so, because at the end of the day illegal pot is expensive pot. If marijuana is officially legal, the supply will increase. The greater the supply, the weaker the price. Supply and demand—a normal part of life in California’s Emerald Triangle.

    This article is part of a series originally published on CNBC.com