By every estimate, more marijuana was grown in the United States this year than ever before, as legal sales of the country’s favorite heretofore illicit drug are projected to top $26 billion, according to one estimate.
That’s a lot of value. But in California—where more than 1 million pounds of cannabis entered the legal market this year, according to state figures—farmers also left more marijuana plants in the ground past their due date, sacrificing them to the weather and the earth, rather than harvest them, according to interviews with growers, distributors, and small-farm advocates.
“This year, people are just letting it rot,” confirmed Swami Chaitanya, the co-founder and icon behind Mendocino County-based heritage brand Swami Select. “Why bother?”
In what world would a farmer let a valuable cash crop go to seed rather than reap the dollar bills they’ve sown?
Surely someone somewhere would buy that precious weed, or at least smoke it!
But consider the exigencies of the American cannabis market. In certain circumstances, after costs like labor and taxes are calculated, that cash crop will literal costs money to harvest and bring to market—and that’s even if that crop can be sold. Cannabis growers are letting plants with negative value rot in our world, in other words.
To understand why and how a plant can be worse than worthless and actually represent a cost beyond a loss to the farmer, let’s briefly revisit market dynamics under marijuana legalization in the country’s oldest market.
As has been previously reported—and as stated above—more cannabis than ever before is being cultivated in the legal market. Through the third quarter of 2021, California’s legal cannabis growers were on pace to grow more than 1 million pounds this year, according to California Department of Taxation and Fee Administration figures.
But cannabis is unique in that taxes are due the second cannabis leaves a cultivator and enters the supply chain—no sales necessary. This year’s “cultivation tax” is $9.65 per ounce, or $154.40 per pound. So a harvested, cured, and dried pound will cost a farmer at least $154.40 in taxes alone.
One-hundred fifty four dollars doesn’t sound like so much when pounds are selling for $1,500 or $2,500. That sounds like quite a bit when pounds are selling for $300 to $500 or less as they were this year, prices flattened by a biblical flood of oversupply.
Add in fixed costs like supply and labor—or, for simplicity’s sake, just imagine paying someone to hand-trim a $300 pound, at the California minimum wage—and what you’re left with is a farmer staring at plants that could in all likelihood cost money to harvest.
It makes no sense to someone living in a dry state, and it makes even less sense to someone in a dry state with an empty stash jar. But these are the realities of a legal cannabis market with high taxes, high supply, relatively static demand, and—thus far—no relief from state market regulators.
“That cultivation tax is evil,” added Chaitanya, echoing a sentiment universally held by the state’s small farmers.
According to Genine Coleman, founder and executive director of the Origins Council, a research and policy advocacy organization centered around northern California’s legacy cannabis farmers, cannabis crops with net negative values are rarities but seen most often among large cultivators.
High taxes “on top of a collapsed market due to overproduction and thus no sales outlet” meant that some cultivators let crops rot rather than pay taxes on goods they would be unable to sell, she said.
As for small farmers, “I have not heard of them doing that,” she added. “They cannot operate at a loss like that. They are inclined to harvest just in case they can sell and recoup some costs.”
Marijuana legalization is a young and ongoing experiment. Five years after California legalized cannabis, hand-wringing retrospectives about how badly California got it wrong are rolling in, with more to come.
When analyzing these jeremiads and their proposed solutions, consider the possible motives of the writer. But when analyzing the simple economics compelling cultivators to let “valuable” crops rot, it’s hard to come to any other conclusion than the taxes are too damn high.
