Keep It Small, People
I’m going to summon a young Steve Martin and GET SMALL with a focus on small growers. Working from a headline is from Terpenes & Testing Magazine: “The Costs of Legit Cannabis Farming on the Small Grower”
“Cannabis farming has presented a lucrative opportunity for farmers as states continue to legalize the Plant. But legalization may also place cannabis and hemp farmers at risk, especially the small growers.
In Illinois, for example, it can cost anywhere from $5 million to $10 million for a grower to get into the cannabis farming market...
And “… stringent regulatory requirements … can cost tens or even hundreds of thousands of dollars…”
THE DEEP DIVE
Let’s look at California... from The Berkeley Blog:
"Proposition 64 explicitly aimed to build a cannabis cultivation sector of small and medium sized businesses
Although voters gave smaller farms five years before bigger farms were permitted, the State undercut this by allowing a single grower to “stack,” or obtain multiple small-farm permits, boxing out little guys
California has established community reinvestment and equity funds to help communities damaged by drug policies. [But] Prohibition continues in the counties and cities that ban cannabis cultivation or otherwise exclude farmers through exceptionally stringent regulations and enforcement regimes
It’s incumbent on the state to help producers fully transition to serving legal markets. This is not only ethically responsible, it is also effective policy that would entice farmers away from the underground economy and rebuild broken trust.
THE LOOP BACK
WHAT CAN STATES DO to help keep small growers in business?
End license-stacking. It’s anti-competitive and un-American
Encourage organic and regenerative practices through grants or other fiscal incentives … It’s wrong that consumers pay a penalty when farmers grow healthy
The State of California needs to delay the entry of Big Ag five more years. If California had to come up with an additional $100 Million this month just to catch up on their frickin’ paperwork and get people licensed, then they should give small farmers more time to get what they were promised.
AS FOR THE CONSUMER, we can continue to vote with our wallets:
According to research firm Civic Economics, for every $100 you spend in a chain store:
$57 leaves the community and goes back to corporate headquarters
Spend $100 in a local business
$68 stays in your community, helping schools, paving streets, keeping you safe
... And because the economic impact of a business includes direct, indirect and induced spending, every cannabis dollar recirculates approximately 3.5 times** (see below)
Create Local jobs
Build Long Term Wealth through business and farm ownership
Supporting small farmers helps generate income and raise property values that can build wealth for generations
Help the Environment
Big MSO’s are less likely to spend on organic practices – they have shareholders to feed
Let’s spend as much time learning about our small growers and the dispensaries that support them as we do on Napa Valley wines.
Let’s Get Small!
..." The total U.S. economic impact from marijuana sales in 2021 is expected to reach $92 billion – up more than 30% from last year – and upwards of $160 billion in 2025, according to analysis from the newly published MJBizFactbook.
To measure the industry’s economic impact, MJBizDaily analyzed similar industries and applied a standard multiplier of 3.5 on projected recreational and medical marijuana retail sales.
The numbers are a best guess because the marijuana industry’s structure is somewhat unique because it encompasses agricultural, manufacturing and retail activity.
The economic impact of the marijuana industry is not the same as supply-chain revenues that are often used to estimate the “total size” of an industry. Rather, the economic multiplier paints a picture of the impact the industry has on the broader economy.
In this case, for every $1 consumers and patients spend at retail locations, an additional $2.50 will be injected into the economy, much of it at the local level. That impact comes directly from the day-to-day needs of workers in the cannabis industry, including spending on life’s necessities such as housing, transportation, entertainment and more.
Marijuana businesses, consumers and patients also pay hundreds of millions of dollars in state and local taxes that are used to fund state and local government activities, including schools and roads. In addition, real estate receives a boost from new retail, manufacturing and agricultural businesses moving into an area or established companies expanding, increasing broader demand for commercial properties.
Cultivating and manufacturing marijuana can require large investments in equipment and technology that boost not only the local economy but also areas throughout the U.S.
The list goes on...
Using the same multiplier methodology can also offer insight into the local-dollar impact from sales of recreational and/or medical marijuana. The economic impact will vary by state based on the size, maturity and type of market. For example, as the largest market in the U.S., California’s marijuana industry is expected to pump close to $20 billion into the state’s economy in 2021.
No other state comes close to that amount.