SALEM — Danny Grimm shares many of the concerns familiar to pot growers throughout the Pacific Northwest and Northern California. Start with federal regulatory overreach, because the recent, undefined rumblings out of the Trump administration about “greater enforcement” are enough to give anyone pause.
Throw in questions about water quality and nutrient inputs, plus a complicated infrastructure of pumps, water lines and electrical controls that Grimm and his employees must maintain. And don’t forget pests. Like many producers he’d rather not use chemical insecticides, and so far he’s protecting his crop with battalions of predator mites, ladybugs and beneficial nematodes.
“Once you’re having problems, if you don’t know how to fix it, bugs will eat you alive,” Grimm said.
The biggest issue is market uncertainty. Farmers are always looking for the next big thing, and a lot of people are jumping in to meet the demand. But what looks like a gold rush now could go south if oversupply drops the price.
Grimm said scaling up production will be the biggest challenge for small producers.
“It goes like any other industry,” he said. “There will be people who fail and people who make it — people who are able to scale up and keep the quality.”
Grimm, 31, grows cannabis. He’s the owner of Uplifted Farm, and his crop land is a dilapidated warehouse in an industrial area off Salem’s Portland Road. He’s scrapped, made do and scrambled to succeed. By at least one measure, he’s an excellent grower. This past summer, the first time the Oregon State Fair accepted cannabis plants for judging, he won blue ribbons for his Granddaddy Purple, an indica variety, and his Super Sour Diesel, a more psychoactive sativa variety.
This spring, Grimm will move Uplifted Farm into a massive old concrete building that used to be a slaughterhouse. He and his partner, Nathan Martinez, will have 30,000 square feet of growing space in what Grimm estimates is a $5 million renovation.
“I’m all in,” Grimm said.
Don’t tell him he’s not a farmer, or that cannabis is not an agricultural crop.
“Absolutely,” he said. “It’s no different.”
The guidelines, growing and cropping techniques involved in raising marijuana could be applied to grapes, tomatoes or anything else, he said.
Individual producers may not favor pot farming, but the Oregon Department of Agriculture has given its official approval. After voters legalized adult recreational production, possession and use in 2014, then-department Director Katy Coba famously declared, “Welcome to the family.” Since then, the department has taken growers in hand to help them through the regulatory network.
“It may not look the same as what we’re used to, but it’s definitely agriculture,” said Sunny Jones, a pesticide expert who was picked as the department’s cannabis policy coordinator. “That’s definitely been ODA’s take on the situation; it’s one more crop in the many crops that Oregon grows.”
Jones said pot growers demonstrate a work ethic and problem-solving ability that traditional agriculturists would admire.
“When many of us think of farmers, we think of someone creative, someone who can keep the equipment running with baling wire and duct tape,” she said. “That is abundant in the cannabis industry.”
Most valuable crop?
What’s also abundant is the money and economic spin-off that accompanies legalization. Cannabis activists have long maintained pot is Oregon’s most valuable crop. While there aren’t official farm gate numbers available to back that up, a former Oregon State University professor estimated in 2015 that the state’s pot crop was worth $948 million annually, or more than the combined value of hazelnuts, pears, wine grapes, Christmas trees and blueberries.
The 17 percent tax on recreational pot sales is an open spigot. The Oregon Department of Revenue received $5.3 million in tax payments in January 2017, and said it has received $65.4 million in cannabis tax collections since January 2016. After the department’s administrative costs are met, 40 percent of the tax revenue goes to the Common School Fund, 20 percent to mental health, alcohol and drug services, and 15 percent to the Oregon State Police. Cities, counties and other services split the remainder.
Advocacy groups say pot legalization creates jobs. New Frontier Data, a Washington, D.C., analytics firm that specializes in cannabis issues, estimated the sector would create more than 280,000 jobs by 2020. Adult cannabis use is now legal in eight states and in D.C., areas with a combined population of 69 million, the group said.
Producers thinking about growing cannabis, however, should realize major questions have not yet been answered.
Most critically, it is still illegal under federal law. On the books, marijuana is listed as a Schedule 1 controlled substance. Cannabis activists say the ranking is ludicrous because it puts pot in the same category as heroin and LSD, while methamphetamine and cocaine are Schedule 2 drugs, a notch below.
Current state-level legalization is based on a shoulder-shrug interpretation of the August 2013 “Cole Memorandum,” named for James Cole, an assistant U.S. attorney general who wrote it.
In the memo, the Obama administration essentially said it wouldn’t interfere, so long as states legalizing cannabis had “strong and effective regulatory and enforcement systems” in place. The administration didn’t want pot available to minors, crossing into states that hadn’t legalized it and funding the operations of cartels and gangs.
Growers, processors and retailers in Washington, Oregon, California and elsewhere took that as a sign to get busy.
“Why did everyone just start blowing through this risk factor like they couldn’t care less?” a lawyer-blogger with Portland’s Emerge Law Group wrote. One reason was “the fact that so many people are involved in the industry now that there’s a feeling of safety in sheer numbers. ‘What are they going to do? Arrest everyone?’”
Probably not, the blogger concluded, but Trump and conservative Attorney General Jeff Sessions could deliver a “big chill” if they decided to change course.
On Feb. 24, Trump press secretary Sean Spicer said the Justice Department would pursue “greater enforcement” of laws regarding recreational-use marijuana. The offhand remark confused the situation.
“Trump seems insistent on throwing the marijuana market back into the hands of criminals, wiping out tax-paying jobs and eliminating billions of dollars in taxes,” said Ethan Nadelmann, executive director of the Drug Policy Alliance. The group is a Washington, D.C.-based lobbying group that favors marijuana and other drug policies “grounded in science, compassion, health and human rights.”
New Approach Oregon, the Portland group that backed and works to implement Oregon’s 2014 legalization of adult recreational cannabis use, called Spicer’s remarks “concerning.”
But New Approach Director Anthony Johnson said Trump and Sessions hadn’t been heard from.
“Greater enforcement by the Justice Department, if it does occur, could mean that the federal government may just monitor state-regulated businesses more closely,” Johnson said in a prepared statement. “Potentially, federal charges could be brought if cannabis businesses violate state law and regulations, such as selling marijuana to minors under the age of 21.”
The availability of capital and banking services also are major questions for cannabis producers, processors and retailers, because federally regulated banks aren’t supposed to handle money from illegal businesses.
Garrett Rudolph, editor of Marijuana Venture magazine, said banks’ relationship to the cannabis industry is “basically a giant gray area.”
The federal Financial Crimes Enforcement Network, or FinCen, issued a 2014 guideline that allowed banks to work with state-legal cannabis businesses that were following the Cole Memorandum rules. But FinCen “put the onus of due diligence on the banks,” Rudolph said by email, and many financial institutions are unwilling to take that risk.
Nonetheless, the economic buzz of cannabis legalization escalates.
At the annual Cannabis Collaborative Conference in Portland in February, vendors of all types displayed the technology, products and services that have sprung up in step with legalization.
At one booth, a company called Root Sciences, with an office in Belfair, Wash., showed German-made distillation equipment that produces 99 percent pure cannabinoid oil concentrates for use in medical products or recreational edibles. One model sells for $159,000, which includes shipping, installation and training.
Down another aisle at the convention, 69-year-old electrical contractor Gregory Fuller showed his mobile growing unit. Fuller, of Federal Way, Wash., retrofitted a shipping container with LED grow lights and insulation. The unit’s electrical requirement is small enough that it can operate on 200-amp residential service. Plug and play, as it were.
“This is agriculture,” Fuller said. “I can grow 2,000 pounds of lettuce in here a year.”
But it’s pot growers he’s marketing to, and the units sell for $110,000. Fuller laughs as he tells of dealing with old counter-culture types who peel off $100 bills, but provide little detail about who they are, what they want and what they’re doing.
“You have to have the patience of Job to work with these guys,” he said.
At another booth, veteran grower Joe Pietri promoted his “Grow Like Joe” methods and his book, “The 15-Ounce Pound,” in which he predicts “Big Pharma” will patent cannabis and use the IRS and DEA to control other growers.
He said pot growers need to match the efficiency of commercial nurseries.
“If you can’t grow cannabis like they do chrysanthemums, they will wipe you out,” Pietri told a couple people who stopped at his booth. “You won’t survive in this industry.”
Representatives of a Colorado “Hemp Temps” company said they offer growers trained and temporary bud tenders, trimmers and harvesters. The company expects to open an Oregon branch this spring.
Jenny Argie, from Brooklyn, New York, demonstrated products she offers through her company, Baked At Home. Argie is a cancer survivor, and used cannabis as an alternative to pharmaceuticals to manage pain and nausea. She sells legal cookie, cake and brownie mixes that allow buyers to add their own cannabis oil at home. That gives users control over their dosage, Argie said.
Argie joked that she’s become the Betty Crocker of cannabis baking.
“The interest and enthusiasm is so big,” she said.
Argie also sells lotions infused with CBD, or cannabidiol, which along with THC is one of the primary elements of pot. CBD doesn’t get users high, however, and is primarily used for pain relief.
Danny Grimm, the Salem grower who is expanding his business, was at the Portland conference with the blue ribbons he won at the Oregon State Fair.
“It’s a pretty big deal,” he said.