Cashed Crop

A new release of official statistics prove what marijuana decriminalization advocates have maintained for years; that pot is the country's biggest cash crop.

… the market value of pot produced in the United States exceeds $35 billion -- far more than the crop value of such heartland staples as corn, soybeans and hay.

California is responsible for more than one-third of the cannabis harvest, with an estimated production of $13.8 billion that exceeds the value of the state's grapes, vegetables and hay combined -- and marijuana is the top cash crop in a dozen states, the report states.

The report estimates that marijuana production has increased tenfold in the past quarter-century despite an anti-drug effort by law enforcement.

Jacob Sullum had the scoop on more data about the size of the marijuana crop (and trade) and its potential value if regulated back in 2005.

Comments

[CayugaCthuga]

"Tom Riley, a spokesman for the White House Office of National Drug Control Policy, cited examples of foreign countries that have struggled with big crops used to produce cocaine and heroin. "Coca is Colombia's largest cash crop and that hasn't worked out for them, and opium poppies are Afghanistan's largest crop, and that has worked out disastrously for them," Riley said. "I don't know why we would venture down that road.""

Well, Tom, it seems like the reason those crops haven't 'worked out' is because they attract the angry attention of the United States government, not because of any fundamental economic weakness. Perhaps if we remove that, they would work out better.

[methodman]

I'm dumbfounded by the government spokesman's response, and I thought I was pretty immune to such reactions by this point.

[John]

Part of the inflated value of the crop has to do with its illegality. Since you risk going to jail to grow the stuff, the price is raised accordingly compensate for that risk. Legalize marijuana and the price would fall through the floor. The stuff is a weed that will grow damn near anywhere. Legalization would immediately produce a glut. Not that that means that it shouldn't be legalized, but the idea that Marijuana would produce the same levels of income legally as it does when it is illegal is not true. Look at it this way, what if corn were illegal and people had to risk their lives and freedom to get their cornbread fix. The price of corn would be very high and it would be a very profitable crop. Of course corn is legal and farmers produce so much of it, we need price supports to keep the farmers in business. The same would happen with marijuana.

[Evan!]

"[...] the idea that Marijuana would produce the same levels of income legally as it does when it is illegal is not true."

I'm not sure that I read that being asserted anywhere. Am I missing something? Who ever said that it would retain the same value once legalized?

"Of course corn is legal and farmers produce so much of it, we need price supports to keep the farmers in business. The same would happen with marijuana."

Corn is a very bad example, John, because it's a crop that is so integral to so many local economies that forking over subsidies is just a no-brainer for pols. But show me how many localized economies depend on marijuana? Legalization would bring us a major shift in the market, to be sure, but to assert that it would be "just like corn", a crop which enjoys an absurd amount of preference in the subsidy market, is disingenuous, John.

[steveintheknow]

I second what methodman said. Is that as good as the White House/DEA/whoever can do?

[John]

Evan!

I am saying we should have price supports for marijuana. I am just saying that the income level for legalized marijuana is not going to be the same as it is when it is illegal. The risk associated with producing the stuff is buitl into the price. Legalize it and that price goes down dramatically as the supply goes up. Like I said, it is basically a weed that will grow almost anywhere. Let real farmers and Ag companies start growing the stuff comercially and the supply would be enormous and the price through the floor. My point is that people take the $13.8 billion figure and just assume that if the stuff is legalized that there would be a new $13 billion cash crop. No, that is not how it works. Without the artificial price support of it being illegal, the value of marijuana produced would be much lower than that.

[Jennifer]

Not the dumbest drug-war comment by far. When a guy from LEAP made a speech in my area, the local Chief of Police responded to his comments in my paper, by saying something like "drug prohibition does not destroy lives. People who choose to use drugs destroy their lives."

(Granted, the local cops are laughably corrupt even by cop standards. Still, I'm sure you could get similar comments from pretty much any cop chief out there.)

[matt]

I think John is saying that if marijuana became legal then it would come to be as important to some communities as other crops are today and politicians will pander accordingly. In fact it was when the federal tobacco price support program was winding down that politicans and farmers in Kentucky began looking into legalizing commercial hemp production (the difference between hemp and marijuana being largely which subspecies you use and how it is cultivated -- commercial hemp is planted so that it grows in tall, thick stalks). Tobacco farms are generally too small to be able to produce commercial quantities of other currently legal crops. Hemp could be grown profitably on such small farms, and in fact more hemp (by commercial value) was grown in Kentucky than tobacco until 1892. (The fact that most KY hemp was bought by New England shipyards was a major factor in most KY slaveholders remaining Unionist in the Civil War.)

[Troy]

Marijuana is not entirely a fungible item. There is a big difference between Brisht Columbia skunk bud and ditchweed growing in some drainage ditch in Missouri.

[matt]

Granted, the local cops are laughably corrupt even by cop standards

======================================

I think Jennifer's inadvertently touched on the motive behind the continuing drug war. The law enforcement community is awash in corruption, and drugs are the corruption currency. Legalization would leave a lot of cops (and ambulance drivers) looking for a new hustle. The present drug supply chains (at least for out-of-state marijauna) are unthinkable without law enforcement not only turning a blind eye, but actually lending a helping hand or two.

[Jennifer]

Hell yes, Matt. And even for the non-corrupt cops, drugs are the biggest pro-cop workfare program out there. I have to type up the police blotter at work sometimes; if not for the war on drugs the cops could literally go for WEEKS at a time doing nothing but writing traffic tickets. No arrests at all.

[Warren]

Is that as good as the White House/DEA/whoever can do?

It probably is. I mean, the WOD is bereft of any redeeming features. So what could he say? The tragic thing is, it doesn't matter how lame or false what they say is, it's never challenged. The press and public accept any "drugs are bad mmmkay" statement at face value.

[Larry A]

So, massaging the article's numbers, we have 25.4 million users consuming 35.8 billion dollars in pot annually, spending about $1,400 each. Note these prices are only 80% to 40% of what the cops claim seized MJ is worth.

Somehow having 8% of the population successfully spending four figures a year each to buy just one of many proscribed substances makes the drug war look like a bigger failure than the one in Iraq.

[Rhywun]

drugs are the biggest pro-cop workfare program out there

I think Jennifer hit the nail on the head. This single fact means we'll never be rid of the WoD.

[cheech]

I have complete faith in the farmers of the midwest to produce such vast quantities of high quality pot that none of them would be able to make a profit.

Then we get to argue whether we should be buying bulk quantities at Walmart or hand-picked organic pot at the roadside shops.

[Captain Holly]

I think Jennifer hit the nail on the head. This single fact means we'll never be rid of the WoD.

I wouldn't be so pessimistic. There's not a profitable industry in America that hasn't been taxed and regulated by our politicians to some degree.

Once they figure out how much money they could be making on Marijuana Tax Stamps for legally-grown pot, they'll want to get a piece of the action. It's just a matter of time.

[Warren]

Once they figure out how much money they could be making on Marijuana Tax Stamps for legally-grown pot, they'll want to get a piece of the action. It's just a matter of time.

It's been 70 years. How much more time do you think they'll need?

[Russ 2000]

drugs are the biggest pro-cop workfare program out there

It ain't just cops. It's also pro-lawyer (prosecutor AND defender), pro-judge, and pro-rehabcounselor. It's also pro-we're-too-lazy-to-go-out-and-report-actual-news-newspapers-and-TV-stations.

[John]

"pro-rehabcounselor."

A lot of people make a nice living off of the drug war providing rehab counciling. Most people who are caught with small amounts of drugs in a first offense do not go to jail they go to rehab. The whole system is based on the idea that anyone caught with illegal drugs is an addict in need of treatment. It is really incidious.

[Kwix]

Legalize marijuana and the price would fall through the floor. The stuff is a weed that will grow damn near anywhere. Legalization would immediately produce a glut.

John, unfettered legalization may indeed produce a glut, however I doubt that regulated MJ would produce as much as you might think.

I can legally brew all of the beer and wine I want (200 gallons is more than I can drink in a year). I can give it away to anyone, I just can't sell it. I vint maybe 20 gallons of wine a year and brew nada for beer. It's not that its hard, it's just that I am lazy and it takes a fair bit of space. I'd rather pay the outrageously taxed prices for beer and wine than make it myself. This is both from a ease and a quality standpoint. Sure, I can vint a merlot, but Robert Mondavi it ain't.

Tobacco is legal to grow for personal use but you need to be a registered grower to sell it and have to pay massive taxes. I have NEVER met someone who grows thier own and I lived for 15 years in the South. Even with the massive taxes, it just isn't worth it for most people to take up gardening.

What makes you think that MJ will be any different? Crappy cannabis is easy to grow, good stuff takes time and knowledge that most people won't bother with. If you add the additional "can't sell it unless you are a registered grower" bit, then I think that the tax revenues on it will be relatively high (pun not intended). People will pay the highly taxed prices for something provided that the price isn't too terribly high so as to support an untaxed black market.

[mrbill]

Im a Kansas farmer and we have talked among ourselves for years. If the gubment would turn us loose on the Drug Cartels and let us grow the stuff ourselves we could put them completely out of business in about 2 years. We would produce so much at such a low price we would likely then need Price Supports...

Once you take the ILLEGAL part out...you essentially have a WEED, so to speak. We grow the hell out of them here in Kansas and spend thousands of dollars on GLEAN to bet rid of them. Heck, the MJ still grows alongside the old country roads wild.

Of course the gubment could tax it drastically then drive the price back up to then drive it underground again. Then start rearresting everyone for growing it illegally...think merry-go-round here folks.

heh. Just imagine the chagrin at that subsidy program.

[matt]

Once you take the ILLEGAL part out...you essentially have a WEED, so to speak. We grow the hell out of them here in Kansas and spend thousands of dollars on GLEAN to bet rid of them. Heck, the MJ still grows alongside the old country roads wild.

===========================================

True, but a friend of mine from Oklahoma tells me that the prarie weed that grows out there isn't very good. Apparently, it's too dry and is inferior to the weed that grows in damp climates.

[Jennifer]

Kwix, even with the high taxes on alcohol, I'll guarantee that the beer and wine you buy now is much better, and much cheaper, than the beer and wine you could have bought during Prohibition.

I heard a rumor that an ounce of decent (not spectacular) weed will cost about $300 an ounce in my area. I'm certain legal MJ would retail for far less, even after taxes are taken into account.

[Steve in Clearwater]

J, speaking from personal experience combined with the long years of experience provided by my many colleagues in this arena, I am confident that a pound of high quality cannabis can be cultivated, harvested and packaged for about $100 presuming one combines at least 15-20 plants to help defray expenses.

If grown indoors, it would be about twice that.

So your ounce of top grade bud would cost between $8 to 15 at the production level.

Presuming standard retail margins, it would then be $30-60 an ounce before taxes.

[allan]

We are discussing this (Steve's pricing estimates) in Oregon. We have about 15,000 registered medical users of cannabis. If each patient consumes 3 lbs (a very conservative estimate, the US gummint dishes out 300 joint cans every month to the 5 remaining federal ganja recipients, pre-rolled doobs {w/ sticks and seeds ground in} that weigh about 3/4 gram each)

15,000 X 3 X $3,000 = $135,000,000

Thats just the patients and that is at wholesale price. Our job now folks is to show the WOD pinhead supporters how much they throw down the rat-hole every year.

[Kwix]

Kwix, even with the high taxes on alcohol, I'll guarantee that the beer and wine you buy now is much better, and much cheaper, than the beer and wine you could have bought during Prohibition.

I heard a rumor that an ounce of decent (not spectacular) weed will cost about $300 an ounce in my area. I'm certain legal MJ would retail for far less, even after taxes are taken into account.

Oh, no doubt the price will drop, even with taxes. My statement was not that the price will not drop, but that there won't be a tax-free glut on the market that will usurp that supply chain. I argue that more people will be willing to purchase "legitimate" pot than will know somebody who grows it, even for "personal use" like beer is today. In otherwords, more people will look to "Marlboro Greens" than to homegrown just as more people buy "Budweiser" instead of drinking homebrew.