Econ 101 - Pot Edition
The recent rise of the Canadian dollar has been good for those of us who found ourselves traveling across the border recently, but its strength can hurt industries that depend on exports to the US for profits. The 62% rise in the loonies value over the last five years has meant products made in Canada have become far more expensive south of the border, and one $7 billion industry is starting to feel the pinch; the export of BC Bud:
At least one watcher of the underground economy says the price of B.C. marijuana has gone up in the United States, and that could mean plummeting demand from Americans in future.
Marc Emery, head of the B.C. Marijuana Party, said there are several factors behind the rising price of B.C.'s most infamous export, including tighter border security and the loonie's steady ascent over the past five years.
Pot selling for $2,200 a kilo in 2002 would have cost an American only $1,600 because of the differences in the dollar, he said.
"Now the marijuana is at $2,400 Cdn and now it costs $2,400 US to buy it," Emery said. "So for the Americans, Canadian marijuana has gone up by almost 50 per cent," he said.
Like in all industries, with Canadian marijuana going up in price, it makes domestic production of marijuana in the US much more attractive, as it can compete far better now dollar for dollar. Manufacturing has a lag time, as is isn't easy to move factories, but growing crops is easy, and production is up.
At the height of the harvest season, it appears Nevada County farmers can make a lot more money from marijuana than anything else.
And the amount of pot seized is spiking this year, driven in part by stepped-up enforcement.
Illegally-grown marijuana seized in Nevada County through August this year appears, conservatively, to be worth between $123 million and $205 million, based on federal estimates of crop value and local figures on plants confiscated. That figure is based on state and national law enforcement wholesale costs per pound, assuming a yield of 1 pound per plant.
That dwarfs the value of legal crops grown here in 2006 - the latest figures available - when farmers, loggers and livestock producers produced goods valued at $16.2 million. Those figures appeared in the annual crop report submitted by Nevada County Agriculture Commissioner Jeffrey Pylman in August.
The 41,000 marijuana plants seized here this year far exceed the 4,863 found during 2006, which would have brought roughly $14.6 million on the low end and $24.3 million at the high. That compares more closely with the county's $16.2 million value for legal crops in 2006, but does not count legal pot crops and illegal plants not seized.
Quality of course, may still be an issue, but the trend is clear. Pot smokers in the US are going to start looking more and more to their own plants to get high, and places like BC are going to suffer the economic impact of decreased demand.
At least they'll have plenty of product to ease the pain.
