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tv   The Profit  CNBC  April 14, 2019 5:00am-6:00am EDT

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those are my kind of odds. i'm marcus lemonis. ♪ lemonii'll take you deeppecial epiinto the mountainst," to the marijuana capital of america. you'll meet the pioneers. -this was the poorest county in the united states when we came here. lemonis: is the depression of this area the reason that cannabis came to be? yes. [ indistinct shouting ] the sheriff trying to bust the outlaws. how much organized crime is running through these hills? there's a lot of it. anywhere where they can grow and make money, they're going to come. the growers betting on the future of pot. alex: we've invested everything in this. your live savings, everything you have. this definitely could be a complete crash and burn. lemonis: it's all way up in northern california,
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in a place with a mysterious name, the emerald triangle. at its heart, the infamous humboldt county, with thousands of illegal pot farms. we are the center of marijuana production right now. -in the united states? -yes, the united states. but thanks to a new law, things are changes. proposition 64 has passed in california. lemonis: as of new year's day, any adult can buy pot here without a prescription, and the black market is starting to go legit. i'm marcus lemonis. this summer, i traveled to l.a... we're ending prohibition and we're mainstreaming pot. ...and the desert. did the vote passing increase the odds of you becoming a billionaire some day? absolutely. now i've come to where it all began and where the money is pouring in. so all the real estate you work on is for the marijuana industry? yeah. it's going to be a huge market.
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california's now the largest legal marijuana market in the world. will the feds step in and try to stop it, or is it time for me to invest? ♪ my journey began on the avenue of the giants, a magical drive through the largest stand of untouched redwood trees in the world. welcome to marijuana country -- humboldt county, california. people have been growing pot up in the hills here since the '60s. it turns out some of them are still at it. but if you want to meet these pioneers of pot, and trust me, you do, you have to work for it. think over the river and through the woods, and then some. it took me half an hour to drive just six miles of unmarked dirt roads.
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hi there. -hi. very nice to meet you. and at the end tom and karen hesslers' 40-acre farm. honestly, if i had to describe your land to somebody, i couldn't. it's like in a fairytale book. it's so beautiful and so removed. thank you. how long have you lived up here? since 1971. now i don't want to make you feel a little bit older, but that's before i was born. i know. that's what i was thinking. karen is a nurse with a green thumb. tom's an artist. originally from new york, they came up here to get away from it all, literally. so, when you left, you said i'm moving to california, and i'm going to grow marijuana. -no, no. we came to be self-sufficient and for tom to be able to do his artwork. it was mostly -- -we make all of our own food. we make all of our own electricity. lemonis: this farm is their life's work. they built the house by hand, raised two kids here,
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and helped put humboldt county on the map. tom: we were people who started this industry. there was nobody growing weed. there was nobody here, marcus. every piece of land was for sale when we started -- you could have bought the whole mountain for a hundred bucks. $36,000 for the whole valley -- you want to buy it -- everything you see? -that's not today. -no. -today it will be $36 million. -yeah. -what did you pay for your land. -[ chuckles ] you don't even want to say? -$9,000. -for all 40 acres. 40-plus acres. this was the poorest county in the united states when we came here. logging was completely gone. fishing was wiped out. this was a depressed area. and so is the depression of this area the reason that cannabis came to be? yes. nowadays there's plenty of competition. get this out of here... but tom and karen still do things way they always have. -come on bella. -and for a couple in their 70s, i got to say, it's very impressive. karen: we grow it outside. -you do? -yes.
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we only started in the greenhouse. they call the place amaranth farms. they grow 18 kinds of pot, but specialize in strains for medical use. and who planted all this? you did? we had a help with some. time to roll up my sleeves. okay, hold on. i want do a little bit of this. mine's going to grow. tom: now, don't fill it too -- that's it. little more. hey, i'm taking instruction from her. okay. karen: you have to get it out of here. you hold it on the side gently. you don't want to hurt the roots. yeah, there you go. good. -little hole. yeah. and then put it in there. [ laughs ] i saw that marcus. no, you didn't. don't tell the boss. you'll need more soil so it stays up. okay. this is team work. which one's mine, by the way? -this was yours. -okay. i think mine looks better than yours. i've just got to be honest with you. you know, i meet people all the time. i don't know what i'd do for a living. yes. but i invest in small businesses. -yeah. -okay?
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and i'm always having to deal with family businesses and their struggles, and husbands and wives working together. is the dynamic between the two of you always this good? -yeah. -i'd say pretty much. is it because of this? [ laughter ] or is it because you're legitimately always in agreement? i love her! lemonis: tom and karen's story is the story of pot in humboldt county, right down to the seeds. where did you get your first seeds from? mexico. from stuff we smoked over the years. okay. then a man went to afghanistan. a man you knew. we dropped him off at the airport. he went to afghan-- a local guy. he said, "give me a ride to the airport, i'll bring you a seed back." yeah. lemonis: from what i hear, those seeds and the plants they produced would cement humboldt's place as pot capital of the united states. man: this area called humboldt county doesn't seem like california. lemonis: it was the mid-'70s. man: they say people here are different, that they think differently.
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lemonis: and as that weed grew in reputation, folks here realized they could make some serious money. by the 1980s, humboldt's economy was riding high on pot, and supplying cities across the u.s., and that caught the attention of law enforcement. man: ready to go. even after california legalized medical marijuana in 1996... man: there's another big batch. ...the crackdowns continued. through it all, tom and karen stayed up on the mountain, tending their crop and raising their family. their son, nya, and their daughter, elan, both helped out on the farm, but it wasn't always idyllic. lemonis: did you know what your parents did when you were young? did you understand that they were essentially involved in illegal activity? -oh, yeah. -you did know that? -yeah. yeah, we knew. -yes. and how old were you when you say you found out?
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probably seven or eight. -same for you? -i think so. i think, you know, it was just kind of the way they raised us. it was just so natural, and then you started going to school and it was like, oh, boy. and certain kids in school you avoided, because their dad with a sheriff. did you ever wonder if your parents were going to go to jail? -oh, yeah, all the time. -yeah. so you'd be riding the school bus home and watch the sheriff vehicles heading out, loaded down with what they had taken. -from you guys? -no. no. but you didn't know when you're coming home and they're passing you, and i'm thinking, is my mom or dad in that car? are they going to pick up at the school bus stop? you just kind of worry until you get there and see if they're there to meet you or not. that is scary. you know, i've been right here when i've woken up -- if we're watching the house when the parents are gone and i wake up with a guy with a machine gun and in a helicopter pointing it at you, you know. come on. oh, yeah, no, multiple times. and, actually, that one time, they chased me all the way through the woods with a helicopter for, like, 45 minutes. -with you running? -yeah.
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i just finally stopped and just sat there and waited. they finally just flew off. lemonis: but even that couldn't keep nya and elan from joining the family business. and now they're helping their parents fulfill a lifelong dream, getting a permit for their farm. they've already spent $75,000 to get everything up to code. why did you decide, after all those years at the top of the mountain, where it takes an hour to get up the road and it's bumpy, and it's not easy, why did you decide that it was appropriate to follow the law? well, you finally get tired of helicopters. the harassing gets to you. and maybe you're sleeping with both eyes closed now, as opposed to one eye open? yeah. yeah. lemonis: when it comes to the law, they got lucky. not everyone in the neighborhood can say that. johnny casali lives just down the road. tom and karen consider him family. we know where you live and you're so special to us.
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these days, his life looks a lot like there is, but it wasn't always that way. you love this land, don't you? i grew up here, and there's just something inside me that i just can't shake it. johnny has lived on his 40-acre farm since he was five, and growing marijuana is in his dna. who taught you all this? -this is mom. mom taught you how to do this? mom was one of the greatest horticulturalists ever, and i just learned with her. i learned a lot of things from my mother, but growing pot, well, that wasn't one of them. she just always had a love for plants, and that kind of just transferred to me, and i just started following her around and enjoying it just like she did. family, his farm, freedom, these things mattered to johnny because he knows what it feels like to have them taken away. coming up, johnny casali's story takes a dramatic turn. i woke up at 6:00 in the morning, 30 federal agents showed up at my door, guns to my head. whoa.
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and it's the place where his life would change forever. one morning i woke up at 6:00 in the morning to 30 federal agents showed up at my door. whoa. guns to my head. they searched my property. they searched the house. it was 1992. johnny and his best friend were caught growing 1,500 marijuana plants. [ helicopter blades whirring ] at that time, there was a lot of eradication going on in humboldt, and they were trying to make an example out of us. and you stopped. all the plants went away. oh, we stopped because you had a gun at your head. he was charged with eight federal counts, including conspiracy to manufacture and distribute marijuana. we told the judge, "hey, look, we're guilty." but i thought it was super important to tell the judge, "i want you to know before you sentence me that i'm somebody that i would never hurt a single person and i care about -- [ coughs ] i care about my family and my friends." [ clears throat ] why did you want him to know that?
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i don't know why it was important to me, but it was. and, you know, his hands were tied. growing more than a thousand plants meant the mandatory minimum sentence, ten years in prison. johnny had no prior criminal record. he was 29 years old. your mom was able to come see you there? my mom was able to come see me, and then -- how was that for her? that was probably the toughest thing for me, because she held a lot of guilt inside and she blamed herself. maybe if she wouldn't have brought me up here maybe this wouldn't have happened. but i never felt that way. johnny's mother died when he was behind bars. he ended up serving nearly eight years. how long have you been out? -it's like 13 years now. and now you're standing in the middle of -- and now i'm back doing something that i have so deeply embedded in me. this farm is about showing the cannabis community that there's a right and a wrong way that you can grow cannabis. this time it's all legal. he's got a permit.
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how many plants are in here? so on this whole farm there's, like, 2,200 plants. so there's more here today than when you went to jail. yes. -it's ironic, isn't it? -it's ironic, and it's scary. you scared that something's going to change and you'll have to go back? no. does it haunt you a little bit? well, it haunts everybody that's ever lived here. the minute you hear a helicopter, it's a whole different feeling. i don't care if you're permitted. i don't care if you're not. i heard about that fear again and again from the farmers i met. decades of hiding from the law can't be erased overnight. but now those choppers aren't going after farmers like johnny casali, they're chasing big-time illegal growers. sheriff. -yes. -nice to meet you. -pleasure to meet you. billy honsal is the sheriff of humboldt county, a local guy born and bred. for him, the fight against pot is in his blood. when you were growing up, you knew, really,
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what the dirty little secret was about the county? absolutely, because my dad was in law enforcement. -okay. -my mom was in education. no matter what part of humboldt county you grew up in, you saw marijuana and the people that were associated with it. and most of those people have decided to stay outside the law, because going legal means paying taxes. sheriff honsal has just two officers in his marijuana unit, doing battle against 10,000 illegal grows. how many can you get to a year? maybe 125. and while you're getting to the 125, how many are popping up at the same time, 225? -possibly. -you want to take a ride? yeah, let's go. i'll show you all around here. let's go. to see exactly what the sheriff and his men are up against, i wanted to get a bird's-eye view. man: all right, everyone, we're lifting. lemonis: we took off from a town near the coast and flew inland over miles of dense forest and snaking rivers. just one of every ten farms is going for a permit.
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from the air, i couldn't tell the difference between what's legal and what's not. while we're up here, is it safe to say that people down below are tracking our whereabouts? this helicopter flying here is causing a lot of angst and anxiety with a lot of people. but for the sheriff's deputies, it's the best way to find illegal growers. once they do, they roll in, over roads that are unmarked, unpaved, and unwelcomed. how much organized crime is running through these hills? there's a lot of it. you have international drug trafficking organizations that are here. anywhere where they can go and make money, they're going to come. and the sheriff suspects one of those cartels is here, trespassing on the hoopa valley indian reservation. as officers fly over the area,
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they spot a clearing packed with cannabis plants. after a hike deep into the forest, they discover a camp pitched in between the trees, gun drawn, a deputy moves in. the suspects get away, leaving everything behind. based upon the food that's here, it looks like mexican nationals might be here. but we don't know which organization they might be tied to. this is a methamphetamine pipe right here. it looks like there's two people. that's all it takes. all this speckled white grayish substance on these leaves, that's them spraying it. that not fertilizer. that's a pesticide, and that's going to hit the streets. the team works its way uphill, destroying the crop. five hours later, they're air lifted out.
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-what's the plant count? -total number was 4,608. fully grown, those 4,600 plans would have produced some 4,600 pounds of pot. in california, at a thousand bucks a pound, that's worth about $4.5 million. but drive that weed to new york city, where it can sell for five grand a pound on the street, we're talking $23 million. the sheriff says that kind of money is driving crime in his county. you know, we have one area of humboldt that we've nicknamed "murder mountain" because so many murders have happened there. every year we have people that call us and say, my son or daughter, my friend who went to humboldt county to work in the marijuana industry, i haven't heard from them in months, and we don't know where they go. is there a lot of this marijuana a dea issue? they were really a big help in the 1980s. the federal resources kind of -- they turned off the faucet
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and we've had a hard time keeping up ever since. another big concern, the illegal grows are killing the environment. you see how greenhouses are growing right next to the creek. all of the nutrients that people are feeding their marijuana, all of their insecticides are now flowing into this river and killing off all of the fish out of there. well, that seems like, for me, if i was in your job, the first place i would start is run the river trail. yes. i mean, you can see this here is a natural salmon creek here, and they're got these terrible structures right on the creek. the state has spent millions to restore the endangered fish populations. it's also beefed up environment laws, which are now one of the sheriff's biggest weapons. it's a misdemeanor to grow marijuana in california. -so you just get a citation? -you can get a citation. but where the real felony happens is the environment crimes. so growing marijuana, you know. yeah. and then damaging the environment, that's what makes it a felony in california.
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it's like al capone went to jail for taxes... yes. ...as opposed to killing people. that's right, exactly. grow a thousand plants, it's a misdemeanor. but hurt the environment, that's a felony. the sheriff is determined, but he's up against a ton of resistance in a county peppered with outlaws. what i saw out there and what i've heard sounds more like the wild west than it does some organized apply-for-a-permit process, and somebody's going to get shot. it has happened. you're in a real drug war here. unfortunately, yes, we are. this is the last thing i want to deal with is freaking marijuana. up next, going big or going broke, a new generation betting the farm on pot. are you the first grower in humboldt county? our company was probably one of the first, for sure, at our scale, by far.
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lemonis: if somebody ever writes a book about the history of marijuana in modern times, the two of you would have a chapter. [ laughs ] a sentence anyway. you'd be in the book. -thank you very much. -thank you very much. meeting the hesslers was one of the highlights of my time in humboldt county. tom and karen had been through a lot, but not nearly as much as their neighbor, johnny casali. i did ten years, i'm not a rat. it would have been really easy for me to have turned in a friend of mine and not done any time. after hearing their stories, i had a pretty good feel for the history of humboldt. but what about its future? well, i think i found it. i'm marcus. -alex. -nice to meet you. -nice to meet you. how many acres do you have here? -900. -holy cow. alex moore has invested millions in honeydew farms,
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and when it comes to weed, bigger is definitely better. what happens on this 900 acres? we have cultivation sites spread out in different locations on the ranch. honeydew has nearly three acres of open-air plants and 22 greenhouses -- all of it legal. so if you see a helicopter, you don't care. oh, no, the sheriff's department is welcome to come over any time they want. i mean, we're completely transparent at this point. you know, i don't want to be looking through, you know, a jail cell at my kids. lemonis: alex runs honeydew, along with his wife, miranda. it's a far cry from the years he spent working in the shadows. did you wonder if you were gonna potentially go to jail on certain days? absolutely. -you did? -absolutely. and what did you tell people you did for a living? well, i mean, i did do construction back then during the day, but then maybe early in the morning or late in the evening i had a few plants in the woods. and the thing i think i would be worried about is, okay, the state of california said it was legal. yeah. and then humboldt county gave me a license.
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but what if the federal government's like, "nope, we don't agree"? if the federal government is going to start somewhere, i would hope they would start with the big black-market producers crossing state lines. i want to see more. how can we do that? hop in my truck and go for a tour. lemonis: born in philadelphia, he came to humboldt in 1991, when he was just 19. this is our house, but we're going to run up to the top of that side of the ranch. alex never even told his mom what he did until recently. well, i didn't tell her about the marijuana until we were, like... -legal. ...completely legal, because, yeah, i got like -- my mom's like your typical jewish mother. yeah. she literally would have parked herself in my driveway, you know. -you're not going. locked herself to the gate, you know. "you're not doing this anymore!" if you're watching, mom, relax. your son has come a long way since he headed west 27 years ago. we've already passed a couple greenhouses. this one we planted yesterday. okay. what's it cost to put up a greenhouse like that, $50,000?
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you're looking at about 50. the feds may say it's illegal, but the county is happy to collect its share. so how do they tax you? they're taxing us on square footage right now. lemonis: honeydew has more than 250,000 feet of growing space and a tax bill to match. you got to pay half up front, so they split it in two installments just like your property taxes. whether you are growing or not? whether i pull this crop off or not, i paid the county $140,000 to have the permits to do it. -for the rights to do it? -for the rights to do it. and then come november, i owe them another $140,000. a license to grow pot is not a license to print money. outdoors, a thousand things can go wrong. bad weather or a bug infestation can ruin a crop. miranda says, "you better knock on wood," and i can tell you ever single time -- this is agriculture -- there's a problem every single time. are you intimidated by how fast this is growing?
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it's concerning, especially because it's just alex and i for owners. we don't have outside investors, and so this is all of our eggs in one basket, which, you know, obviously is recommended not to do. the stress can add up, but so can the profits. miranda and alex are banking on what could soon be a $6 billion legal marijuana market in california. but for every grower working with the law, paying taxes, there are many more who aren't. i think most people up here have decided not to go legal, or the ones that have decided not to go legal have done it for all the same reasons. the costs are phenomenal. we met one farmer who asked us to hide her identity because she's not going legal, at least for now. it wasn't worth it for me to do the compliance because i've always been a small farmer. the costs in doing it were monumental compared to the income i have had.
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here's a thousand. part of the decision not to comply was simply a financial one. i would not have been able to afford it. probably at least $100,000 to get my farm into complete compliance. steep costs like that favor the big operators. at honeydew farms, there's a lot riding on each crop. how many harvests a year do you get? -we get two. -two, that's it? two, that's it, yeah. indoor growers get four. we get two. those indoor grows are the new wave in industrialized pot production. i saw it firsthand in the southern california desert, climate control, high-tech, and highly popular. they pose a serious threat to the farmers in humboldt county. -people like indoor. -they do? i think that it's basically cannabis on steroids. -it's amped up. -it's amped up. it looks pretty amazing. doesn't have the variations in the weather and stuff that we have. it's like every day is ideal. alex says that indoor pot is creating a glut. that's driving the prices and the profits down.
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back in the '90s, humboldt weed was selling for more than $6,000 a pound. you were a king if you grew five pounds back then. today, he's only getting about $1,000. so how do you regulate overproducing, meaning that there's more supply than this is demanded? yeah. how do you find that balance to make sure that you maximize your margin? ultimately, it would be great if all the farmers got together and, you know, would say, well, you know what, this year, just like opec, we're not going to expand. but if everybody goes, well, you know, i have to double what i did last year to make the same amount of money this year, they're ultimately driving the market into the ground and that is ultimately putting people out of business. we've got this main line coming in here. lemonis: overproduction and falling prices aren't the only challenges facing alex and miranda. coming up, everybody and their brother is looking to buy a pot farm in humboldt, and she wants to help. what prompted you to actually become the pot girl?
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♪ lemonis: at honeydew farms, alex and miranda moore haven't hit pay dirt yet, but they think they've planted the seeds. they're convinced the full legalization of pot will bring a surge in demand from thousands of new recreational users. but i couldn't help wondering what if their expectations don't meet reality.
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lemonis: do you think there's that many people that are waiting until january to try marijuana for the first time? i don't know if they're waiting until january. i think that the consumer market is going to get gigantic. i just worry that the demand isn't going to be what everybody expects it to be, because this is i-know-a-guy business. -oh, yeah. -i know a guy. yeah. everybody that wants it can get it. they know a guy or they go get the medical license. yeah. and i share that concern. lemonis: and there's something else farmers need to worry about -- more competition. wealthy investors are scouring humboldt, buying land and looking to get in on the cannabis crowd. dana wallace makes her living by helping that happen. what prompted you to actually become the pot girl? because i saw the potential and i saw these properties that these investors were going to start going after, and somebody's got to do it. dana is different from any realtor i've ever met.
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she specializes in one thing -- selling pot farms. you look at all the properties in the state of california that are for sale today, for this type of venture, would you say it's $100 million, $200 million across the whole state? we could be looking at over a billion dollars. -i'm marcus. -brennan thicke. how are you? nice to meet you. brennan thicke is one of dana's clients. he's the son of the late actor alan thicke. after a decade running dispensaries in southern california, brennan's come to humboldt looking to buy a pot farm. so let's say that you called me and you said, "marcus, i know you invest in all sorts of crazy stuff, i want you to invest in the marijuana business, and here's my pitch -- i want you to put up $5 million." i would say that as the legal market expands that this is going to be a $10-plus billion-a-year industry. but what happens if everybody's wrong about the demand side and the supply is just --
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-through the roof? -yeah. unbelievable supply, commodity prices drop. instead of being $1,200 a pound or $1,500 a pound, it's now $400 a pound or $300 a pound. it's really going to come down to branding and quality. if you're producing an excellent product, and you're creating a beautiful flower, then there's going to be good money in that as well. good money? maybe. but there's a fear among many growers that big agriculture or big tobacco could one day move into pot production. it's challenging because of the talk on the street. everyone is very doomsday right now. what are they doomsday about? doomsday just that... big ag's going to come in. big ag is going to come in or the price is going to be, you know, $100 a pound in five years, and, you know, this is -- just like big plasma tvs used to be five grand, and now they're $399. yes. or wal-mart's going to come in and you're going to get, you know, an eighth for $10 at wal-mart, and that's a concern. do you really think that wal-mart will sell marijuana at some point?
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i don't know. i mean, when it's federally legal, i'm sure they will, right. when do you think that will happen? oh, you know that's not up to me, unfortunately. lemonis: up next, high in the mountains there are millions in pot profits. but where does it all go? every single business on main street is funded by the cannabis industry, whether people want to admit it or not.
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♪ lemonis: humboldt county is a lot like other places in america. there are flag-draped main streets, rotary clubs, baseball games on summer nights. let's go murph! here, yellow 50/50! [ cheers and applause ] its small-town charms can almost make you forget that this is the nation's cannabis-growing capital. as much as a quarter of the economy here comes from pot. hidden in these hills is an industry estimated to be worth more than $2 billion. i wanted to find out where all that money goes. and whether it flows down to the towns along highway 101. i started in fortuna, population 12,000. it's actually a pretty conservative town, but even here, almost everyone's tied to the cannabis economy. -hello. -my husband, greg.
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cara and greg knostman have run lotus mountain screen printing for close to 20 years. we started it to have more family time, because he was working at a -- you started a business to hamore family time? i know, ironic, isn't it? so who's the one who made it big? that would be, i mean, i guess probably me. -and it would be us. -yeah. us, yeah. it takes a woman to make it bigger. -yeah, it does. -[ laughs ] lemonis: lotus mountain prints custom-designed t-shirts, hats, and decals for humboldt businesses. they don't grow pot, but they sure do profit from it. a third of their revenue comes from cannabis-related companies. and how has that grown over the last four, five years? in the last year, it's probably at least doubled from what it was before that, and another two years before that, it was probably maybe -- and in dollars? we did about $850,000 in sales last year. nice job. with competition between marijuana businesses on the rise, establishing a brand identity is critical.
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and what's more american than announcing yourself to the world with a bunch of t-shirts and hats? and have you seen the business really explode since prop 64 passed? totally. our spike was october of last year. -right before the election. -right before. everyone could feel the tide turning. all this cash is being generated up in the mountain. how does it end up on main street? everyone. every single business on main street is funded by the cannabis industry. whether people want to admit it or not, i would say the number-one moneymaker in this county. -why won't they admit it? -i think that people, especially in the smaller conservative towns, want to pretend like it's not happening. and if they pretend like it's not happening -- -then it's not happening. -then it's not happening. but we all know what's happening. the shops that line the main drag may be flush with marijuana money, but the industry priming the pump hasn't been paying taxes. and that's my thing, bring the people out of the shadows, have them start paying taxes.
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have you guys visited south fork high school? the classrooms are practically falling apart. the tax base isn't there. yeah, there's no taxes, and it's gotten more money in that community than just about anywhere, and they're not paying taxes. they're not utilizing what could be. on paper, humboldt county is one of the poorest counties in california, with a poverty rate well above the national average. look, there's a possibility that marijuana may one day help this region turn a corner, but that hasn't happened yet. i left fortuna, and headed to a city that's opened its doors to the pot business. eureka wants its share of the $7 million in marijuana tax money the county expects to take in each year. but even here, not everyone's on board. hi there. -how's it going? -i'm marcus. -i'm adam. nice to meet you. -adam, how are you? i met adam dick. he's the cofounder of a craft chocolate company. it's one of the holdouts against the marijuana movement.
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that's amazing. -thank you. have people approached you about make cannabis edibles? yeah, we've been approached about that. that's just not kind of our scene. i think that, to a certain degree, it would cheapen our brand. adam's not in the marijuana industry, but he's definitely feeling its effects. with all the pot businesses moving onto his block, rents are climbing. why are rents so high? because of the zoning for cannabis in this particular area. -oh. -it's certainly something that keeps us up at night every night. -it's expensive to just move. -oh, yeah. looking around, i was impressed with adam's commitment to his craft, but i wondered if he's fighting a losing battle. but you're paying 65 cents. -right. but you've been in a lease prior to prop 64. yes. and so a building across the street in the same zone, what would that rent be if you were starting today? i'm guessing, like in this same block, it's probably north of $225 a square foot. -really? -yeah. if the rent suddenly triples,
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it's going to be nearly impossible to make ends meet, unless you infuse your chocolate with pot and raise the prices. i was surprised no one had ever offered to do just that and buy the business. you wouldn't sell it -- $3 million, $4 million? [ chuckles ] yeah, i don't know. -$5 million. sure. okay, i'm going to become your friend. if they ever call, you call me first. okay. [ laughs ] i'll negotiate. i'll get us to $6. yeah. you give me like some free chocolate for a while, we're good. as i left adam, i wondered, how much of eureka's embrace of the pot industry actually make a difference. driving through the town, i felt it could really use a shot in the arm. look, if humboldt county is churning out billions of dollars' worth of pot each year, where is all of that money? i asked someone who should know -- sheriff billy honsal. as i spent more time through the town, i scratch my head a little bit. -right. -i saw homelessness like i would not have expected to see right.
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i see vacancies and boarded up buildings. -right. -where is all the money? is money leaving here? lots of money is living here. a ton of money is leaving here. -where is it going? -it's going all over the world. i've heard of people buying houses in the grand caymans. i've heard of people buying property in south america with their marijuana money. because marijuana is illegal under federal law, it's hard for pot businesses to deposit cash or take out loans. the sheriff says their money does flow down the mountain, but in ways you might not expect. when i think about hospice centers, therapy centers, community centers, how are those actually being funded? we have a very generous community here. so, if i go to a fundraiser here at town hall, are people dropping a bag of cash? yes, they are. bags of cash show up at schools, and there are people that actually have so much money that money is buried. several hundred million dollars a year in tax evasion here in the county? easily. easily.
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luckily, they were spared. but it's still been a tough season for some the growers here. when i first met alex and miranda at honeydew farms in the spring, they had just begun planting their outdoor crop. we've invested everything in this, yeah. -your life savings. -oh, yeah, everything. -everything you have? -yeah. this definitely could be a complete crash and burn. lemonis: by october, those three acres of thin seedlings had grown into thick trees, and the fall harvest is about to begin. these are monsters. got some big buds here. but there were problems, including an invasion of microscopic critters called russet mites. there's going to be, you know, significant loss. lemonis: fighting them off sent his labor costs sky high, just as wholesale prices were dropping. alex: this year we'll probably go down, i would imagine, as probably one of the worst, because there's so many people that have jumped into this right now.
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it's pretty out of control, really, that, you know, so many unregulated, unpermitted farms are all competing in the same marketplace. lemonis: but alex and miranda know it's a marathon, not a sprint. in five years we're going to be, hopefully, on every shelf in every dispensary in the state of california. i mean, that's our plan. i think there's going to be a lot of people that are going to be out of it. a lot of the people that don't know what they're doing that think they're going to get in here and get rich in one year. you know, those people don't understand farming. lemonis: for these early settlers, it's not just a living but a way of life. unlike some of their neighbors, tom and karen hessler had one of their best summers ever. the weather's just been perfect, absolutely perfect. growing legal allowed them to grow more marijuana than they had ever dared before. let's go get marcus's plant. okay. back in the spring, i had given them a hand. that little sprout turned into this.
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it's nice and full and looks really aromatic. really aromatic, beautiful. it's just solid. everything is perfect on it. couldn't get it better. it's been a season of mixed emotions for tom. sure, he's relieved to not be running from the law anymore, but he's also angry over the get-rich-quick newcomers with no ties to humboldt county. we've been doing this for 50 years, and for almost 50 years, people have been chasing us, chastising us, and trying to destroy us. now they all want to be in with us, so sometimes i feel like telling them all where to put it. they're like carpet baggers, and now they're trying to take everything, our way of life, and it's kind of disturbing, you know. it really is. lemonis: the hesslers are facing a pivotal moment. so are the other growers i met traveling humboldt county.
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the supply glut is driving prices down. steep taxes may hurt them even more. and there's still the threat of federal enforcement. california is about to become the largest legal marijuana market in the world. it's one of eight states to pass laws legalizing recreational pot. as more states join, the black market with probably shrink. investing in the marijuana industry seems tempting but i've decided to leave that to others. as for the farmers of humboldt, i wish them success, making an honest living. i'm marcus lemonis. ♪ ♪
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