San Diego Cannabis Growers Grappling With A Changing Marijuana Market And More Local News
San Diego News Matters / May 13, 2019
As more growers enter the cannabis cultivation business in California business are getting ready for a changing market. The San Diego Hunger Coalition warns the Trump Administration's proposed budget cuts to Cal Fresh, known nationally as SNAP, would be devastating. And the San Diego City Council is set to hold a meeting this evening for public comments on their spending plan.
Speaker 1: 00:00 Good morning. It's May 30th I'm Deb Welsh and you're listening to San Diego News matters now that marijuana is legal in California. The economic realities of growing cannabis or changing KPBS reporter Matt Hoffman explains how growers in San Diego are trying to meet the demands of a new market.
Speaker 2: 00:18 Well, that's a good one. I mean, obviously there are a lot of questions. What strain is it? You know, what's the flavor going to be and so forth? Lincoln fish is CEO of Outco labs in east county, which grows hundreds of cannabis plants at a time. OUTCO isn't your typical cannabis business. It grows manufacturers and sales, cannabis products at its own. Dispensary's Outco also wholesales cannabis to retailers across southern California. We sell the 60 dispensary's plus. We'll be at over 200 by the end of the year. OUTCO has its own line of products, including concentrates and vapes. Items that fish says are growing in demand. As you get new entrants to the market, they typically go to concentrates that go to vapes or other concentrated products or they go to edibles. That's, that's the direction that they're going to go. You're not going to people who didn't smoke before and suddenly got to take up smoking because cannabis became legal, you know, and we're seeing that we're seeing the flower as a percentage of the total sales.
Speaker 2: 01:08 We're seeing that drop. So what you're going to see is a lot of plants that are grown to maximize how they might come out in an extraction. For example, growing cannabis indoors allows for a higher quality product, but it's expensive. You're basically creating a natural environment in a highly controlled way. There's lighting, air circulation, filtering, water pest and labor considerations, fish beliefs. As more growers come in, the cannabis growing process will change. I think we're going to see a lot of price compression to grow indoors. And you'll hear different numbers from different people, but let's call it between five and $600 a pound. Is your cost to grow, to grow in a, uh, sophisticated light deprivation, light supplementation, greenhouse, where are you using the power of the sun is more like $250 a pound. Right? Um, I think that's the future of the industry.
Speaker 3: 01:54 [inaudible]
Speaker 2: 01:59 houses are how Mike Mulatto plants to grow cannabis where we will have hard walls, clear roof, uh, light deprivation. So we'll be able to block out the light completely. Alana's family owns and operates a flower farm in ocean side. Two years ago, Malano left his position as CEO to pursue growing cannabis. I just saw it as an opportunity that I don't think we'll see. Again, it's just a brand new industry and it intrigued me. It interested me. There's way more gross margin and cannabis. Then there isn't covered flour and one of them has been in the agriculture business for most of his life and says cannabis is just another crop. I have a, a background of running large scale ag operations, right? Cultivation of cannabis is just an ag operation, right? The fact that we're growing the taboo plant of cannabis is irrelevant. You just, it's, it's environmental controls, pest control, pest management, process management, labor managers,
Speaker 3: 02:56 man. It's taken
Speaker 2: 02:58 two years but just received the permit from the city of ocean site to start growing cannabis. It's been a challenge to work through the political process of all this. Now he faces a state licensing process. Belato says it's a huge investment to start a cannabis growing operation. I think it's really difficult for a smaller, uh, group that just wants to jump in now or just an individual's like, hey, I want to grow cannabis. I'm like, okay, well do you have seven or 8 million laying around to get it done? Or do you have a year or two to do the political process? It's when you start asking the questions around what it actually takes a good luck [inaudible] got to keep the air circulating. The air circulating helps really keep the plants healthy out. Coast fish agrees. He says the cannabis industry isn't the cash cow. It's made out to be far more difficult to make money in cannabis than most people realize.
Speaker 2: 03:45 And ultimately it's going to be just like any other business in terms of, in terms of you have to, you know, you have to do things efficiently. You have to watch your margins. You have to, you know, create a, a real business infrastructure. Then there's the whole issue of competing with the black market. Illegal grows aren't under any regulation in are avoiding taxes that legal operators face. I'm happy to pay those taxes. I'm all for it, but it's gotta be, it's got to coincide with making it more difficult for the other guy. The problem with that whole black market pieces, they're using stuff all over the place or they're making products that they don't care about. Things like how much lead is in a vape cartridge or you know what, what the pesticides when they want it, they just don't care. Fish says he hasn't seen a lot of enforcement from the state on cannabis. Just recently, California found it received lower tax revenue than originally projected. He says to see that revenue grow, illegal operators need to be shut down. Matt Hoffman Kpbs News,
Speaker 1: 04:42 a new report shows San Diego County's poorest residents get 91% of their meals from federally funded programs such as CalFresh. Anti hunger advocates say cuts to these programs as proposed by the Trump administration could have major impacts. KPBS health reporters. Susan Murphy has more. The San Diego hunger coalition analyzed where San Diego is living in poverty, get their food. They found just 9% of meals come from food banks, nonprofits, and charity distributions. The rest are provided by federal programs such as CalFresh honor. He'd Brockie is the coalition's executive director. She says cuts to cal fresh. No nationally as snap would leave a huge gap for the 450,000 people in San Diego who rely on the source. A 20% cut
Speaker 2: 05:28 to snap at the federal level would require our food banks and they're 500 partners across the county to double what they do to make up that difference in the loss of meals.
Speaker 1: 05:41 Rocky says the average CalFresh benefit in San Diego County is $4 and 7 cents per day. Susan Murphy Kpbs News on Friday, the Trump administration increased tariffs on $200 billion worth of Chinese goods. KPBS as Maya troubles. He explains what that could mean for your wallet. The tariffs more than doubled from 10 to 25% further escalating the trade war with China with no sign of a deal ahead, but what does that mean for the everyday consumer?
Speaker 2: 06:12 They'll fill the impact on everything they buy.
Speaker 1: 06:14 Miro COPEC is an economist with San Diego State University and bottom line marketing. He talked about a recent study by the Federal Reserve and the University of Chicago that showed a 12% increase in the cost of washers and dryers because of tariffs.
Speaker 2: 06:28 Itch machine was it increased the cost increased $100 a piece. So if you're buying a new washer and dryer, that's 200 extra dollars that are coming out of your pocket, uh, due to the tariffs. Cool.
Speaker 1: 06:39 Big says the US trade policy is two fold to bring back jobs to the U S and rectify the American trade deficit with China. But at the end of the day, manufacturers will pass down any extra costs to the consumer to protect their profit margins. The tariffs will affect more than 5,000 Chinese imports, including electronics, furniture, clothing, hardware, and some foods. [inaudible] k PBS news. The San Diego City Council is holding a meeting this evening to discuss the mayor's budget proposal. KPBS metro reporter Andrew Board says it's meant to give more people a chance to comment on the spending plan.
Speaker 2: 07:17 They are Kevin Faulkner's proposed budget for the fiscal year that starts in July represents four point $3 billion. That's higher than the current fiscal year, largely due to more spending on the city's water recycling program, pure water. It also includes pay raises for city employees, but growth in revenue from taxes and fees hasn't been keeping up with the city's financial obligations. That's why the budget also includes cuts to things like maintenance of the city's storm water channels. The evening budget hearing at City Hall starts at 6:00 PM the mayor is scheduled to unveil a revised budget proposal tomorrow. Andrew Bowen k PBS news
Speaker 1: 07:54 as summer approaches, so does the searing heat of the desert. US Border Patrol is again warning migrants of the dangers of crossing Arizona Mexico border as temperatures heat up from Kj z from terrorists desk in Tucson. Micelle Maurisco reports this year the agency has a new challenge on the border
Speaker 2: 08:15 for more than 20 years. The Border Patrol's Tucson sector has conducted annual ad campaigns, warning people that if they cross through the desert in the summer they will die. Agents ran a simulation of what migrants can face as reporters clambered into the backward, nondescript moving truck spokesman Daniel Hernandez. At this moment I'd ask all the media they are able to, we're going to come into this truck and experience what migrants might be or my experience at the hands of the woman in the video playing in the back of the truck, screams for help and pounds on the walls of the vehicle. She's trapped in fewer migrants had been found dead in Arizona's desert and part illegal migration
Speaker 4: 08:56 had been dropping, but this year record numbers of asylum seekers were escorted to remote areas of the Mexican border and dropped off and then they were taken into custody by American federal agents. Tucson Secretary for Roy [inaudible].
Speaker 5: 09:11 Oh, the illegal aliens. The migrants that are coming from Central America and other parts of the world are uninformed and unprepared for the dangers that they're about to encounter.
Speaker 4: 09:19 Large groups such as the recent 400 who surrender to agents in western Arizona recently could go for hours before federal agents are able to reach them from Tucson. I be Chad muddy school.
Speaker 1: 09:32 There has been an increase in whale depths off the coast of California and have been caused by ship strikes. Last week, researchers gathered in San Francisco is ocean beach to ask why this year's ninth grade whale washed up on bay area shores Kq Edis. Hannah Hagman has the story most of the time it takes a week to determine a cause of death, but the whales bruising and fracturing was so severe that with an hours, investigators concluded that a ship strike killed the 41 foot. Female whales typically don't feed on their migration from Mexico to Alaska, but doctor Porrick Dykeman, chief pathologist at the Marine Mammal Center says the whales might not have found enough food to endure the journey, which could mean larger numbers of them.
Speaker 6: 10:17 The lingering and coastal areas are they coming in because they're starving? They're looking for food in a shallow bay system that historically may have been a good feeding area, but more right now it is. Diagnosis
Speaker 1: 10:30 is the local shipping traffic is making bay area waters treacherous for Wales. Four of the nine whale deaths this spring are blamed on ship strikes for the California report. I'm Hannah Hagerman. Thanks for listening to San Diego. News matters. Get more KPB as podcasts at KPV pbs.org/podcasts.