Humboldt marijuana growers tighten belts for legalization

HUMBOLDT, Calif. (KGO) -- We got a look inside what was once a crime ridden industry threatening California's pristine North Coast that is now being transformed.

We went inside the Emerald Triangle, three Northern California counties at the epicenter of the state's cannabis growing operations for decades to find out what it is costing them to be legal.

Where the ocean meets redwoods forests in Humboldt County, you can see why pot farms have flourished hidden here. DRONEVIEW 7 was overhead to show you how this dense forest provided cover.

Now, the once illegal industry that operated in the shadows for decades, is struggling to make its way in a legal marketplace.

Regulations, high fees, and a flood of new growers all present unique challenges.

"It's just a historic time - I mean we're creating a new industry," said Alex Moore.

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Moore runs Honeydew Farms. He's licensed to grow 6 and a half acres of cannabis across this valley.

"I wouldn't say that life has gotten easier - some things have gotten easier, but you know, there's new challenges," said Moore.

He is growing the prized weed that has made Humboldt County famous around the world.

Since 1996 - growers have been operating in a grey-market...producing medical cannabis - legal in our state - but illegal under federal law.

When California voters approved the legalization of cannabis for recreational use in 2016 - Moore thought there would be a rush for pot so he ramped up production.

Moore said, "We don't even know if we are going to be able to sell the crop that were going to grow."

That's a problem facing many growers.

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"If you look at the very bare-bones the distribution, the taxes, and state licensing those farms are already underwater," said Kristin Nevedal of the International Cannabis Farmers Association.

She says going legal has actually forced the price of pot down nearly 40% since its all-time high in 2015. The cost of doing business, however, is way up.

"Whoa!," said Nevedal, "Really? I knew regulations were coming but it was this much?"

Growers now have to pay city, county and state taxes -plus licensing fees and insurances. Then there are expensive upgrades to their farms to meet environmental regulations.

Nevedal says 1 acre of cannabis can bring in as much as 1.4 million dollars for a grower.

"But after those expenses they are a 133-thousand plus in the hole," said Nevadal.

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It is the smallest pot growers who are the most vulnerable. There are 36-hundred licensed growers in California, but only 400 approved retailers statewide. Small farmers are not as likely to have the money to meet the new rules, or to pay for marketing and packaging of their goods for sale.

"I am very concerned about the availability of our smallest producers to be able to afford compliance," said Terra Carver, of the Humboldt County Growers Alliance. Her organization represents many of the area's small to medium size growers.

"The cost of compliance is astronomical and it changes from site to site, per business per business," said Carver.

For some growers the surprise high, is the new cost of doing business.

Moore said, "It's brand new for everybody, so you know, it's going to have to kind of just figure itself out a little bit and in that time period - it's going to be a little bit of a rocky road for people."

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Written and produced by Ken Miguel