Freakonomics Radio Episode Summary: "609. What Does It Take to Run a Cannabis Farm?"

Release Date: October 31, 2024

In the third installment of Freakonomics Radio’s four-part series, "Is America Switching from Booze to Weed?", host Stephen J. Dubner delves into the intricate world of cannabis farming through an in-depth conversation with Chris Weld, a seasoned cannabis farmer and owner of Berkshire Mountain Distillers and the Pass dispensary in Sheffield, Massachusetts. This episode explores the operational, economic, and regulatory challenges faced by those navigating the burgeoning cannabis industry.

1. Introduction to Chris Weld and His Businesses

Timestamp: [02:30]

Chris Weld introduces himself as a cannabis farmer operating in Western Massachusetts. Alongside his cannabis venture, he runs Berkshire Mountain Distillers, a successful alcohol distillery known for producing award-winning spirits. Weld’s unique position straddling both the alcohol and cannabis industries provides a compelling lens through which to examine the evolving landscape of legalized cannabis.

Notable Quote:

"I'm a very stubborn person, so I've not given up on the cannabis. It's just been a wild ride." – Chris Weld [04:30]

2. The Cannabis Economy: Current State and Challenges

Timestamp: [00:00] – [04:35]

Dubner contextualizes the episode within the broader series by recapping the comparison between the harms of cannabis and alcohol, noting that while alcohol has been extensively studied, cannabis remains less understood due to its federal illegality. This federal status perpetuates a chaotic market where “three quarters of all licensed operators are losing money” ([04:00]).

Notable Quote:

"Everyone we talked to for that episode, researchers and regulators and industry insiders, they all described a cannabis economy that's in a state of chaos." – Stephen Dubner [04:03]

3. Touring the Cannabis Farm: Operations and Techniques

Timestamp: [05:15] – [26:11]

Dubner takes listeners on a tour of Weld’s cannabis farm, highlighting the sophisticated setup necessary for modern cannabis cultivation. The farm features three distinct growing environments: an outdoor field, a greenhouse, and a highly controlled indoor grow house. Each environment serves different purposes and requires unique cultivation techniques.

• Indoor Grow House: Equipped with precise controls over temperature, light, and moisture, the indoor facility allows for consistent quality and higher THC yields. Weld explains the importance of maintaining female-only plants to maximize THC production and prevent energy loss to seed production.

  Notable Quote:

  "Every plant in this facility is a female plant. The male plants have no THC, and they will pollinate a female plant." – Chris Weld [10:59]

• Greenhouse and Outdoor Fields: These areas offer cost-effective cultivation with natural light but come with challenges related to environmental variability and pest management. The outdoor fields, in particular, require careful monitoring to ensure optimal bud structure and yield.

Notable Quote:

"In a perfect cannabis world, you might not even try to grow cannabis in a place like Massachusetts. You might just import it from the parts of California where it grows so well." – Stephen Dubner [14:11]

4. Energy Consumption and Environmental Impact

Timestamp: [12:49] – [13:27]

The discussion addresses criticisms of the cannabis industry’s high electricity usage. Weld acknowledges the significant energy demands of indoor cultivation, which can result in substantial monthly electricity bills. He contrasts this with the lower costs associated with outdoor growing, though it comes with its own set of challenges.

Notable Quote:

"It's a couple grand a month" for heating the greenhouse in winter. – Chris Weld [12:35]

5. Cannabis Products and Consumer Trends

Timestamp: [18:31] – [27:02]

Weld provides insight into the diverse range of cannabis products available at his dispensary, The Pass. He notes that while flower remains the most popular consumption method, edibles and beverages are gaining significant traction. The conversation delves into the potency of modern cannabis products, highlighting the rise of concentrates like wax, shatter, and live rosin carts, which offer much higher THC levels compared to traditional flower.

Notable Quote:

"When the store first opened, people would come in and talk to our budtenders. And the budtender would get the response, listen, whippersnapper, I was smoking that since before you were born." – Chris Weld [20:26]

6. Public Health Concerns and Regulatory Oversight

Timestamp: [19:52] – [34:50]

The episode addresses significant public health concerns related to cannabis, particularly the lack of comprehensive research on high-THC concentrates and their long-term effects. Yasmin Hurd, a neuroscientist and addiction specialist, is cited to emphasize the potential risks of high-THC products, especially for younger users.

Weld discusses the rigorous testing processes his company employs to ensure product safety, including extensive screening for heavy metals, pesticides, and mold. He critiques the overregulation in Massachusetts, which he feels imposes excessive burdens compared to other states, leading to higher operational costs and inefficiencies.

Notable Quotes:

"People don't realize that cannabis is a plant that actually holds onto metals. It's like hyper sucking of metals." – Yasmin Hurd [22:09]

"We spent $287,000 last year on testing." – Chris Weld [32:56]

7. Comparative Regulation: Cannabis vs. Alcohol

Timestamp: [37:15] – [38:20]

Weld contrasts the regulatory frameworks governing his alcohol distillery and cannabis farm. While alcohol production in Massachusetts requires meticulous record-keeping and tax reporting, cannabis operations are subject to even more stringent regulations, including seed-to-sale tracking systems. These systems can lead to significant administrative burdens, especially when discrepancies such as plant losses occur.

Notable Quote:

"So we send off cannabis to one of several state-sanctioned labs and they test for heavy metals, they test for yeast and mold, they test for pesticides. It's a pretty in-depth panel that they do." – Stephen Dubner [32:02]

8. Market Dynamics and Economic Viability

Timestamp: [38:47] – [42:00]

The conversation shifts to the economic realities of the cannabis industry in Massachusetts and beyond. Weld explains that the market is currently oversaturated, leading to a price war and reduced profitability for many operators. Despite these challenges, Weld remains optimistic, believing that the market will eventually stabilize, favoring high-quality producers with strong branding.

He also touches upon the volatility in Canadian cannabis stocks and the broader implications of over-licensing and overproduction in initial market phases.

Notable Quote:

"The cannabis business is definitely more fluid and it's hard to guess what's going to happen." – Chris Weld [40:49]

9. Alcohol Business Stability vs. Cannabis Industry Fluctuations

Timestamp: [40:49] – [41:30]

Drawing from his experience, Weld highlights the relative stability of his alcohol distillery compared to the unpredictable cannabis market. While the distillery enjoys steady operations, the cannabis business is susceptible to rapid changes in regulations and market demands, making long-term planning more challenging.

Notable Quote:

"In the 16 years I've been in operation here, the distillery has been pretty steady state." – Chris Weld [40:49]

10. Future Prospects and Federal Legalization

Timestamp: [42:00] – [44:17]

Looking ahead, Weld speculates on the potential impact of federal legalization, predicting accelerated consolidation and the emergence of larger companies dominating the market. He envisions a future where small producers might maintain niche markets, but the overall trend will likely favor larger, more efficient operations.

Notable Quote:

"President Harris is going to sign a federal legalization bill. And what would happen then?" – Chris Weld [44:04]

11. Conclusions and Insights

The episode concludes with Weld expressing no regrets about entering the cannabis industry despite its tumultuous journey. He remains committed to his cannabis ventures, driven by passion and resilience, while also maintaining his successful alcohol distillery.

Notable Quote:

"I've not given up on the cannabis. It's just been a wild ride." – Chris Weld [42:00]

Key Takeaways

• Operational Complexity: Running a cannabis farm involves navigating sophisticated cultivation techniques and stringent regulatory requirements, which vary significantly from the alcohol industry.

• Economic Challenges: The cannabis market is currently oversaturated, leading to reduced profitability for many operators. However, high-quality producers with strong branding may thrive as the market stabilizes.

• Public Health Concerns: The rise of high-THC concentrates poses new public health challenges, necessitating more comprehensive research and better regulatory oversight.

• Regulatory Burdens: Cannabis operators face more intensive regulatory frameworks compared to alcohol producers, including seed-to-sale tracking and extensive testing protocols.

• Future Outlook: Federal legalization could lead to increased market consolidation, potentially disadvantaging smaller producers unless alternative models are developed.

This episode provides a nuanced exploration of the cannabis industry's current landscape, underscoring the intricate balance between economic viability, regulatory compliance, and public health considerations. Through Chris Weld’s experiences, listeners gain a deeper understanding of what it takes to run a cannabis farm amidst an evolving and often unpredictable market environment.