Let’s talk about a real estate bubble; there is a giant one forming in Northwest California right now.
The State of California, Humboldt County and now Mendocino County (with Trinity County not far behind) have all passed laws and ordinances designed try and regulate the booming Cannabis industry. On the surface this seems the responsible reasonable thing to do. In actual practice it has turned out to be just a “nod and a wink” to blow up your operation as big as you want. Why? Because for all of the talk of compliance, all these regulations seem to be cover to do as much as you want. There is virtually no enforcement at all. If law enforcement in the Emerald Triangle started bust one ridiculously big grow a day (which they don’t have the ability to do) from today till November that would amount to less than ½ of one percent of what’s out there. This is seen as mighty good odds if you’re and investor. What’s quickly developing is a copy of the old feudal system with share croppers doing the work and the landed gentry collecting the big profits. Wake up Humboldt…the future is now!
San Francisco Chronicle
TRINIDAD, Humboldt County — Pot politics are nothing new to Sunshine Johnston, who has been cultivating cannabis on her organic farm near the famous Avenue of the Giants for many years. But the emergence of land speculators in the Emerald Triangle is threatening to ruin her bucolic buzz.
Johnston, her friends, neighbors and fellow growers are perturbed by hordes of high rollers who are snapping up every old ranch, logging tract and forested parcel that go on the market.
The scramble for land in Humboldt County and, to a lesser extent, Mendocino County, is an apparent attempt by entrepreneurs to cash in on the possible legalization in November of recreational pot peddling in California.
“The way people are behaving is like multinational corporations in Third World countries,” said Johnston, 43, who runs a growers cooperative called Sunboldt Grown that sells medicinal and “artisanal” weed. “There’s a feeling of a free-for-all and of people taking advantage of the local community.”
The land grab is happening here in part because Humboldt has name cachet in the weed world and because the county was the first in California to adopt a commercial marijuana land use ordinance.
‘It’s pot on crack’
The pot industry is hardly new to the county — the Emerald Triangle has long been the world’s best-known ganja-growing region — but nobody can remember the market for property being this red hot since the once-thriving timber industry began dying out decades ago.
“It’s like a gold rush,” said Kevin Sullivan, a real estate broker who recently sold several large, historic ranches in Humboldt County to growers who he said were open about their intentions. “People are coming from all over the place, from different states, and they’re all buying to grow or to split the land up for multiple people to grow. It’s pot on crack, and it’s driving prices up.”
Jim Redd, a real estate agent who specializes in ranch sales in Humboldt and Mendocino counties, said land that under normal circumstances would sell for $1,500 an acre is now going for up to $4,000 an acre.
Gone in a week
One 65-acre plot in Redway, midway between Fort Bragg and Eureka, had 25 offers recently when it was put up for sale. It eventually went to a marijuana cultivator, neighbors said.
Redd said buyer consortia generally try to subdivide the big ranches, which can be 5,000 acres or larger, into parcels that can accommodate a dozen or more grow sites on the property.
“There are not many large ranches that go on the market, but if they do they are gone within a week,” Redd said.
Mitchel Bryant and two other investors recently bought four parcels, each 30 acres, just outside Garberville for about $1 million. Their plan is to obtain licenses from the county to grow medical marijuana.
Bryant said he bought 200 acres for about $500,000 two years ago, and that pot farm did so well that he decided to double down.
“We were basically, like, wow, the timing looks pretty good,” said Bryant, 34, who lives in Walnut Creek. “We had to look where we are allowed to do it, where we can find people to operate it, and there is obviously brand recognition with the Humboldt name.”
Bryant says he’s already been contacted by several people who want to buy his land, including an investment company in Southern California that indicated it was willing to offer a good deal more than what he paid for it. For now, he has no plans to flip the property.
The situation is alarming for those who wish to preserve some of California’s most beautiful, environmentally sensitive forests and coastal areas. Sullivan said the speculators are outbidding all comers, including land conservation groups.
The Wildlands Conservancy, which over the years has bought 150,000 acres of forest and coastal wildlands in California and created 15 nature preserves, was recently outbid by pot growers for a 6,500-acre ranch on the Eel River.
“It’s extremely unfortunate,” said David Myers, executive director of the conservancy, which was prepared to finalize a purchase agreement for $15 million when the growers swooped in with more than $20 million.
“Every landscape is, in its own right, a masterpiece, and once you start scissoring it up, you can’t bring it back,” Myers said.
The Wildlands Conservancy did manage to obtain an option to buy another property, a spectacular 128-acre stretch of coastline known as Scotty Point. The site, between the seaside town of Trinidad and Patrick’s Point State Park, is a former pot farm.
The conservancy now has a little more than a month to raise $2.3 million to complete the purchase, allowing Myers to turn Scotty Point into a nature preserve with hiking trails and Adirondack shelters for camping.
“We have to close this deal, or else it goes to pot growers. That’s the sad truth,” Myers said as he stood on a steep hillside above the rocky knife-edge point, sea lions barking amid the roar of the ocean. “We’re trying to make a last run at some of these properties before they’re split up and sold off to pot growers. I see it as the last chance to preserve some of these great spaces.”
The hot real estate market is evidently driven by a measure likely to qualify for the November statewide ballot that would legalize recreational use of marijuana. It is being helped along by a perception that the federal government, although it still considers marijuana an illegal drug, is no longer strictly enforcing laws against growing or selling the aromatic crop.
Meanwhile, Colorado, Washington, Oregon, the District of Columbia and Alaska have legalized recreational use of the drug. If California follows suit, Humboldt, Mendocino and Trinity counties — the Emerald Triangle — would undoubtedly be the primary region for cultivators.
That’s largely because the area already produces 60 percent of the weed consumed in the United States, including a significant portion of what has been sold for 20 years to California’s medical marijuana dispensaries. Marijuana infuses more than $400 million a year into the Humboldt economy alone.
The booming industry isn’t hurting real estate agents — Sullivan and Redd say they are making money — or the many local businesses, especially agricultural merchants, that cater to marijuana farmers.
It’s not just that consumers consider Humboldt to be to pot what the Napa Valley is to wine. Adding to the fabled Humboldt stamp is the county’s landmark Medical Marijuana Land Use Ordinance, which went into effect Feb. 29.
It allows up to an acre of outdoor cultivation, a half acre of mixed-light growth and 10,000 square feet of indoor growth on each parcel licensed by the county.
The ordinance, which has a deadline of Dec. 31 for cultivators to apply for a permit, gives incentives for growers to set up shop in agricultural zones. That’s where many speculators and pot growers looking to relocate are concentrating their efforts.
More than 40 applications have already been submitted to the county, but there are at least 370 known growers who are expected to apply before the year is out, said Steve Lazar, the county’s senior planner. The county has about 8,400 pot growers, according to a 2012 survey.
“There has been exponential growth in the industry, and we’ve had a lot of action in the last six months,” said Lazar, who helped draft the marijuana land use ordinance. “We like to say we are the tip of the spear.”
Likely to spread
The hemp industry is also growing in other places. The market is likely to take off in counties that draft laws regulating cultivation — 15 of California’s 58 counties are working on permitting plans, according to marijuana lobbyists.
Besides Humboldt, Trinity and Mendocino counties, pot growers are flocking to places such as Calaveras and Placer counties. It is widely believed that the Central Valley will become a major growing region if marijuana cultivation becomes fully legal — after all, though Humboldt is where the action has always been, most varieties of pot grow better on flat ground in full sun.
“Humboldt County is the poster child, but this phenomenon is really a statewide challenge,” said Hezekiah Allen, former proprietor of a Humboldt pot farm who is now executive director of the California Growers Association, which represents cannabis cultivators.
There are, in fact, quite a few problems with the trend, said Robert Sutherland, founder of the Humboldt Mendocino Marijuana Advocacy Project, which filed a lawsuit to block the Humboldt County ordinance on the grounds it encourages environmental damage.
“We’re talking to a very large degree about absentee owners trying to get in on the ground floor,” Sutherland said. “The county in their policies of nonenforcement and overly liberal allowances has waved a green flag at the world and said, ‘Come here.’ As a result, we’ve had a huge influx of people snapping up land and showing no respect for the environment, for the community or for the law.”
Environmental damage from pot farming has been a major problem for decades. Drug traffickers growing illegally, often on public land, use pesticides and fertilizers that have poisoned wildlife, including endangered spotted owls and Pacific fishers.
Growers have clear-cut trees, removed native vegetation, diverted streams, caused erosion, shot deer and littered the landscape with garbage and human waste.
The Humboldt County ordinance does require growers to meet environmental guidelines to get a permit, but it does little to address the illegal grow sites, which account for about 80 percent of what is sold on the East Coast, said Lt. John Nores of the California Department of Fish and Wildlife.
The hope is that the taxes collected by the county for marijuana cultivation can be used to fund law enforcement efforts against drug cartels, Nores said.
“What we’re trying to do now is mobilize all of the growers who are trying to do it right to help fund us, and we’re getting a lot of grower support,” Nores said. “They are going to be our biggest funders by design, in the taxes they pay to grow.”
Still, Sutherland said, not enough is being done to protect the locals who were responsible for legitimizing the pot trade in the first place.
“Humboldt County has a worldwide reputation, and it was earned by people who weren’t growing to make a lot of money. It was to produce a high-quality product,” Sutherland said. “These people are trying to cash in on our reputation by mass-producing a junk product with our label on it.”
Growing the right way
Lazar, the county senior planner, said the pot industry “has had profound impacts on the county, for good and for bad. How we transition from an unregulated industry to a regulated one will be central to our success.”
The reefer madness is especially tough for people like Johnston, who prides herself on growing cannabis in an environmentally sustainable way, without pesticides or chemicals. She longs for the day when hemp is legal across the country, the black market has been eliminated, and land speculators interested in bulk production have moved to the Central Valley.
When that time comes, she said, Humboldt will be the undisputed artisanal grass capital of the country, and restaurant goers will be selecting her sinsemilla varietals for after-dinner tokes.
“Ecological agriculture is the answer,” Johnston said as she sauntered through fields of sticky red and yellow flowering buds with names like Loopy Fruit, Blue Dream and Mendocino Diesel. “It’s about planning for the future, healing yourself and healing the land at the same time.”