Could Marijuana Price Free Fall Hurt Local Economy?

Russ Steele

The Sac Bee has an article about the free fall of marijuana prices in Mendocino and Humboldt Counties.

The region’s pot pilgrimage had accelerated in recent years as people were drawn by local cannabis traditions and dreams of cashing in on the medical marijuana market. They planted marijuana in the backwoods and in rewired houses with high-intensity grow lights.

But the saturation of pot growers set off a price tumble by 2010, as a pound of prime Emerald weed slipped from $5,000 to the $3,000 range for marijuana grown indoors and to the $2,000 range for product grown outdoors. Lately, prices are in free-fall.

“Last I heard, a pound of marijuana is $800 for outdoor grown,” said Mendocino County Sheriff Tom Allman in Ukiah. “That’s plummeting. You might do better with tomatoes.”

The marijuana meltdown could have major regional effects. In Humboldt County, a recent study by a local banker estimated marijuana accounts for more than a fourth of the county’s $1.6 billion economy.

I have heard that one-quarter to one-third of the Nevada County’s economy is impacted by the growing and sale of marijuana.  It looks like the free market is taking over, when supply exceeds demand, the price drops.

With less marijuana money to spend in Nevada County shops, we could see a local economic impact.  Implementation of the New Marijuana Ordinance should work to dry up the excess supply, driving the price back up.  The economic impact should be short-term once the ordinance is in place, especially if Humboldt and Mendocino Counties follow suit and also enact ordinances. On the other hand, if they do not growers in those counties will benefit from the decline in the supply in Nevada County.  Interesting how the unintended consequences of government action can mess up the free market.  And, maybe the local economy!

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About Russ Steele
Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.

6 Responses to Could Marijuana Price Free Fall Hurt Local Economy?

  1. D. King says:

    Russ,

    It sounds like we need a local shaman / accountant to guide us through our perilous journey to fiscal enlightenment or something.

  2. Brad Croul says:

    Sounds like we need to offer the growers some ag subsidies.

  3. Arthur M. Day. says:

    Sac Bee article showed up in the Seattle Sunday Times. Classic market rules. Overload the market, price drops.

  4. Dixon Cruickshank says:

    Mr King you just need to load the RV’s, prices are still too strong here – just say’in

    If I get this right, Nevada County did an ordinace? and the others didn’t? – haven’t followed it but yep supply and demand stills works after all these years

  5. Dixon Cruickshank says:

    On second thought nobody would think twice about a U-Haul leaving CA LOL

  6. Dixon Cruickshank says:

    Read the article and sounds like Gov has killed another industry, unfortunately it sounds like it was adding quite a bit of revenue to the local economy, that will hurt.

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