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January 2017, Volume 23, Number 1

California: Salinas, Cannabis

The New York Times profiled Salinas on November 23, 2016, emphasizing that many of the farm workers in the US Salad Bowl have poor nutrition and are overweight. Over 90 percent of California farm workers were born abroad, usually in rural Mexico, and many prefer sugary drinks and high-calorie tacos and tamales to fruits and vegetables.

The so-called Mexican health paradox finds that rural Mexicans arrive in the US relatively healthy because they ate little meat and drank fewer sugary drinks in Mexico. Once in the US, sugary drinks and high-calorie foods are readily available, and often become staples that lead to obesity.

California's coastal valleys have high-cost housing that makes it difficult for farm workers to find affordable places to live. On April 15, 2016, Tanimura & Antle opened the first phase of an eventual $17 million, 800-bed facility for its workers in Spreckels ($25,000 a bed), charging workers $31 a week to live in Spreckels Crossing units with two, three and four beds. The Spreckels sugar beet factory closed in 1995, and T&A took over the site in 1997. T&A hires 3,000 or more workers, and built the housing to attract more.

Housing in East Salinas, where many farm workers live, is very expensive, costing $800 or more a month for a converted garage or $1,100 or more for a one-bedroom apartment.

Napa county taxes vineyards that do not provide housing $10 an acre to subsidize three farm worker housing centers with 180 beds. Residents pay $13 a day for room and board, but their rent does not cover the $1.3 million cost of operating the centers. Napa in January 2017 asked the state to allow the assessment to rise to $15 an acre.

California has expensive housing. In San Francisco, average rents are $4,500 a month, and median rents are at least $1,000 in every county. One argument for why over 25 percent of California residents are immigrants, compared to 17 percent of Texans, is that immigrants are more willing to live in cramped housing or commute longer distances than US-born workers.

Water. The 2016-17 water year began October 1, and Northern California got much more rain than normal; the northern Sierra mountains were on track for their wettest year in recorded history. Federal and state pumps that move water south from the Sacramento-San Joaquin Delta were operating at full capacity in January 2017, filling reservoirs that provide water to the San Joaquin Valley and Southern California.

The federal and state water system depends on snow falling in the Sierra mountains and melting during the summer months to feed rivers and dams that bring the water into the Sacramento-San Joaquin Delta, where it can be moved south of the Delta. University of California, Davis estimated that California farmers fallowed 79,000 acres in 2016, eliminating 4,700 jobs. By contrast, 540,000 acres were fallowed in 2015, resulting in 21,000 fewer jobs.

The federal Water Infrastructure Improvements for the Nation Act, signed into law in December 2016, allows more water to be sent south of the Sacramento-San Joaquin Delta, reversing some of the provisions of the Central Valley Project Improvement Act of 1992. Scientists will have to make more precise findings that fish are threatened in order to slow pumping water from the Delta.

Meanwhile, the state is finalizing a 3,000-page Bay-Delta plan that would raise the flows of the San Joaquin river, and its three major tributaries, the Merced, Stanislaus and Tuolumne rivers, from 20 to 40 percent of the normal flow during the spring months. Farmers protested, arguing that the state was choosing fish over food.

Cannabis. Californians approved Prop 64 in November 2016 by 56-44 percent, legalizing adult recreational marijuana use; Prop 215 legalized medical marijuana in 1996 by the same 56-44 margin. Medical marijuana is now a $2.5 billion a year business at the farm level in California, about the same as strawberries, and $7.5 billion at retail.

Recreational marijuana is expected to at least double the size of the industry. With a farm value of $6 billion, marijuana would be worth as much as almonds, currently the most valuable crop. However, the Drug Enforcement Agency still categorizes marijuana as a Schedule 1 controlled substance, which means it is as dangerous as heroin, with no medical use and high potential for abuse.

Relatively little is known about the structure of the cannabis industry and those employed in it. Anecdotal reports suggest that most growers are small with fewer than 5,000 plants, but can have gross revenues of $100,000 a year. Some growers work for others, but most of the trimming of the flowers to obtain their buds is done by local residents who reportedly earn $25 an hour at a piece rate of $150 per pound of trimmed buds.

CDFA is expected to charge growers for licenses to grow marijuana, and DPH is expected to require growers to pay for third-party testing of the marijuana sold to dispensaries, raising questions about how many small growers will obtain licenses and complete the paperwork required by the state to operate legally.

Over 20 percent of Americans live in states that permit recreational marijuana use; according to Gallup, 60 percent of Americans support legalizing marijuana. Colorado, which legalized recreational marijuana in 2012, had retail sales of $1 billion in 2015, generating $135 million in taxes and licensing fees. Cannabis Media reported 4,200 marijuana farmers across the US in 2016, 4,000 retailers, and 3,000 medical marijuana dispensaries.

Many of those voting to legalize marijuana cited the large number of arrests for possession as a reason to legalize usage. If recreational marijuana were legalized by all states, cannabis could become one of the most valuable farm commodities.

Elections. California is a super-blue state, with Democrats holding all statewide elected offices and a two-thirds majority in the Assembly and Senate. Democrats are three-fourths of California's Representatives in Congress, and hold both the state's Senate seats.

California voters in 1998 approved Prop 227 by a 60-40 vote, which replaced bilingual education with a year of intensive English for the state's 1.4 million English language learners (ELLs); ELL students are expected to move into regular classes at their grade level after a year. Prop 227 allowed parents to sign waivers to allow their children into bilingual classes.

Prop 58, the Language Education, Acquisition and Readiness Now (LEARN) initiative, reverses parts of Prop 227 and allows school districts to offer dual-language classes; it was approved on a 72-28 percent in November 2016. A quarter of the 39 million California residents in 2016 were born outside the US.

California's state government owed $777 billion in 2012, or $20,000 per resident. Voters in November 2016 approved Prop 51 to add more state debt to build more schools. The 50 states owed $5 trillion in 2012, with Alaska, $40,000, Hawaii, $33,000, and Connecticut, $31,000, the most indebted on a per capita basis, and Tennessee at $6,000 the least

Californians in 1978 approved Prop 13 by an almost two to one margin, limiting local property taxes. At a time when the state government had a budget surplus while property values and thus property taxes were rising by over 20 percent a year, Howard Jarvis and Paul Gann convinced voters to approve the People's Initiative to Limit Property Taxation, which reduced local property taxes to one percent of a home's assessed value and required a two-thirds majority vote to raise most local taxes.

Local property taxes fell, and the state diverted some of its surplus to local governments. But with state funds came more state control, and the $55 billion in property taxes collected today is a small share of state taxes. Owners of similar homes pay very different property taxes, depending on when they bought.

California began 2017 experiencing its 80th month of economic growth, the longest since 1960, powered largely by economic growth in the San Francisco area. About 70 percent of General Fund revenues are from the personal income tax, which in turn depends on capital gains taxes paid when firms go public and the stock market rises. The greater Bay Area had 17 percent of the state's people, but paid 37 percent of the state's personal income taxes in 2014, an average $3,700 for the 6.5 million residents. In the San Joaquin Valley, by contrast, the 4.1 million residents paid an average $600 in personal income taxes.

Population. The US population rose by 2.2 million in the year to July 2016 to 323 million. California had 39.3 million residents, followed by Texas with 27.9 million; California's population was stable between 2015 and 2016, while Texas added over 400,000 people.

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