January 13th, 2011 5:33 pm | by JAMES PITKIN News | Posted In: CLEAN UP, CLEAN UP, Business

Weed, the People: Opening the Market Creates a 'Major Marijuana Recession'

This week's cover story about the business of marijuana included a source who has five years' experience growing weed for the black market.

The man we called Dan Beaumont recently stopped growing, harvesting his last crop out of his Northeast Portland home in October. As noted in the story, Beaumont is starting a family and says he is set to graduate from Portland State University this spring.

But there's one other factor Beaumont cites in his decision to exit the weed business. And it's one that has repercussions far beyond Beaumont's situation.

Sources from Oregon and California tell WW the price buyers are willing to pay for a pound of weed has plummeted in recent years. As marijuana moves further into the realm of legitimate business, experts say more growers have entered the trade and flooded the market with weed.

"An incredible glut of marijuana is moving throughout the country," says Charley Custer, secretary of the Humboldt Medical Marijuana Advisory Panel in Northern California and a grower for 25 years.

"We're creating a national phenomenon of overproduction as medical marijuana spreads to more and more states, and the technologies of growing it in your closet become better known," Custer adds. "Every year there's an incredible glut now, and that will continue until the bubble bursts."

Five years ago when Beaumont began growing outdoors in Northern California, he says a pound of high-quality indoor grass could bring up to $4,000. Today that price is as low as $2,000 and dropping. Prices for outdoor grass, he says, have plummeted to as low as $700 a pound.

"There's a huge surplus, no doubt about it," says Paul Stanford, a longtime marijuana activist and grower in Portland. "That has driven the price way down."

Experts say marijuana is by far the No. 1 cash crop in Oregon and California. In Washington, weed is second only to apples. The hundreds, if not thousands, of West Coast growers who have made their living for years on the black market for pot now face an unprecedented economic crunch.

"There is a major marijuana recession going on in Portland and all across the country," Beaumont says. "We're talking about people who literally can't get rid of it. Unbelievable."

Beaumont estimates there's one illegal grow operation for every city block in Portland. Now those growers are going broke.

"People who were at the top of their game making $40,000 a month now literally can't pay their rent," Beaumont says. "They're getting evicted."

Beaumont has kept a pound of Afghani Dream buds sitting in his basement since his October harvest. He boasts extensive connections in the weed world, but he says he simply hasn't been able to move his product on the Oregon market for anything close to a decent price.

Beaumont says two factors have driven more people to grow weed.

First, relaxed pot laws—including the spread of medical marijuana, the opening of dispensaries and the prospect of future legalization—has convinced more people that weed is a viable economic opportunity.

Second, the awful employment market has driven workers out of their old jobs and left them with fewer options. The promise of pulling in thousands of dollars a month growing pot in the basement becomes a strong temptation.

The result has been the precipitous drop in prices, especially during the late fall and winter months after the outdoor crop is harvested.

In November, Beaumont says he and other Portland growers watched in awe when an Idaho dealer came to town looking for 10 pounds. So many desperate growers were vying for his trade that the dealer was able to name his price—$2,500 a pound for top-quality indoor weed, the lowest sale Beaumont had ever witnessed in person.

Outdoor pot is often of the same quality as the stuff grown indoors, but it doesn't look as nice and so sells for even less.

"You can go to California right now and buy a pound of [outdoor] weed for $1,000, no problem," Beaumont says. "We're talking about a 50 percent loss in value."

Custer and Beaumont both say the unregulated nature of the marijuana market makes it particularly susceptible to chaotic swings.

"It's so very unpredictable, because the legal status of production is so up in the air in so many places," Custer says.

(Photo: Beaumont holds some of his unsold pound of Afghani Dream. By Leah Nash.)
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