$24 billion is no joke
California’s agricultural bounty is fabled, from the endless olive and almond groves of the Central Valley to the world-class grapes of the Napa Valley to the winter vegetables of the Imperial Valley to the garlic fields of Gilroy and beyond. But the biggest item in California’s agricultural cornucopia is cannabis.
According to report last week from the Orange County Register, California’s marijuana crop is not only the most valuable agricultural product in the nation’s number one agricultural producer state, but it also totally blows away the competition.
Using cash farm receipt data from the state Department of Food and Agriculture for ag crops and its own estimate of in-state pot production (see discussion below), the Register pegs the value of California’s marijuana crop at more than the top five leading agricultural commodities combined.
Here’s how it breaks down, in billions of dollars:
- Marijuana: $23.3
- Milk: $6.28
- Almonds: $5.33
- Grapes: $4.95
- Cattle, calves: $3.39
- Lettuce: $2.25
That estimate of $23.3 billion for the pot crop is humongous, and it’s nearly three times what industry investors at the Arcview Group estimated the size of the state’s legal market would be in the near post-legalization era. So, how did the Register come up with it, and what could explain it?
The newspaper extrapolated from seizures of pot plants, which have averaged more than two million a year in the state for the past five years, and, citing the U.N. Office on Drugs and Crime, used the common heuristic that seizures account for only 10 percent to 20 percent of drugs produced. That led it to an estimate of 13.2 million plants grown in the state in 2015 (with 2.6 million destroyed), based on the high-end 20 percent figure.
It then assumed that each plant would produce one pound of pot at a market price of $1,765 a pound. Outdoor plans can produce much more than a pound, but indoor plants may only produce a few ounces, so the one-pound average figure is safely conservative. (continue reading)