Black Market Economics:
Humboldt County, California
23 Mar 2010 in Regulatory Economics
Mexico is getting a lot of attention for how the illegal drug business has distorted its politics, economy and society. A Dallas Morning News story reports that there have been 4,500 murders in Ciudad Juarez since January 2008.
Black markets affect parts of the United States, too, and not just major urban areas. There is the case of bucolic Humboldt County California, a verdant rain forest hard up on the State's northwest coast.
The so-called Emerald Triangle, comprised of Mendocino, Humboldt, and Trinity Counties are major producers of marijuana. NBC's Trish Regan says marijuana production is a billion dollar business in Mendocino.
The economics of this drug are simple and attractive. It costs an estimated $400 to grow a pound of pot. One pound sells for $2,500 to a middle man. It then yields $6,000 on the street. With low start-up and overhead costs, marijuana is the most profitable drug of all, according to local law enforcement officials. With that kind of profit margin, marijuana is increasingly filling the gap left by other failing industries like lumber and fishing.
The Associated Press reports that this black market economy is at risk -- not from enforcement, but from legalization:
Community members are gathering Tuesday night to consider the consequences. They worry about the ripple effect that a drop in marijuana prices could have on the county as a whole if legalization undermines the black market.
"We have to recognize that if we have something that is this big a piece of our economy that is subsidized by being illegal, that this is an unsustainable situation," Humboldt County Supervisor Mark Lovelace.
...
Meeting organizer Anna Hamilton of Shelter Cove said she believes legalization could be "devastating" to the region and that Humboldt County should plan ahead by capitalizing on its name recognition as a marijuana destination.
"We have to embrace marijuana tourism, marijuana products and services — and marijuana has to become a part of the Humboldt County brand," said Hamilton, who describes herself as "intimately involved" with the marijuana industry.
Supporters of a ballot measure to legalize marijuana in limited quantities are still waiting for official word that they've submitted enough signatures to qualify for the November statewide ballot.
