A Niche for Humboldt County’s Cannabis?

Humboldt

One of the greater obstacles to legalization in California is early success. Humboldt County, in the heart of the Emerald Triangle, is often seen as the cradle of the legal cannabis industry. Cannabis is a nearly $4 billion industry there, or about a quarter of the county’s economy.

Area growers reportedly produce some of the best cannabis in the country. Many, however, anticipate that prices will plummet with legalization and have become deeply invested in its continuing illegality. Is there a place for Humboldt County’s cannabis in the new legal economy? Will investing in a Humboldt County grow site soon have the cache of owning a vineyard?

The analogy to Napa Valley is not perfect, but it points to the importance of two ways of maintaining prices at a level high enough to keep growers from producing for the black market: legal protection for agriculture and industry self-regulation.

 

Land-use Ordinances

Local control is often seen as a source of chaos in California’s cannabis industry, and chaos invites federal enforcement action. It is not entirely clear where California Cannabis Voice Humboldt fits into this puzzle. CCHV describes itself as a local grassroots organization currently working on creating a cannabis land-use ordinance for parcels larger than five acres.

The ordinance, which would amend the Humboldt County Code, covers issues such as water rights, habitat protection and licensing. It is now in its sixth draft and is premised on the assumption that California will legalize recreational marijuana in 2016. The ultimate goal is to position growers to take advantage of full legalization if and when it happens. The more immediate benefit may be that it is bringing stakeholders together.

 

Appellation Zones

In its statement of guiding principles, CCHV also calls for the creation of appellation zones like those of the wine industry. Within the wine industry, appellations set quality measures for things like minimum alcohol content, press yields, aging, grape varieties and vineyard location. The quality control standards of some appellations, like Champagne, support a premium price.

Napa Valley became the home of the first Agricultural Preserve in the U.S. in 1968, and the Napa Valley appellation has been important in building California’s wine industry. Humboldt County growers look for the same benefits from the creation of appellation zones for marijuana, a concern that could dovetail nicely with consumers’ interest in quality control.

 

Taxation of Agricultural Land

In 1965, with passage of the Williamson Act, California created a mechanism for individual counties to protect agricultural land through controls on local property taxation. Humboldt County’s growers are not threatened by suburban sprawl in quite the same way as vintners of the mid-1960s, but lower agricultural tax rates could be yet another factor in bringing the grow sites out of the shadows.

 

Industry Self-regulation

Like the wine industry, the cannabis industry has long called for self-regulation through professional organizations like the Cannabis Trade Council. Various groups have called for voluntary standards with respect to the labelling of genetic strains, consistent potency and avoidance of underage marketing. Voluntary self-regulation, it is thought, will stave off external governmental regulation. Much like a Good Housekeeping Seal, industry certifications may make a product more valuable to the consumer, thus supporting a price higher than that charged on the black market.

Humboldt County voters opposed the Regulate Marijuana Like Wine Act of 2012 in about the same proportion as voters statewide. In 2016, the result may be different because growers appear to be organizing themselves in some of the same ways that California’s wine industry has. Much, however, depends on being able to keep the price high enough to make producing for the legal market attractive.

Anne Wallace is a New York lawyer who writes extensively on legal and business issues. She also teaches law and business writing at the college and professional level. Anne graduated from Fordham Law School and Wellesley College.

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