GROWING CANNABIS TRENDS

Starting in 2000, Mexican drug trafficking organizations (DTO) began
moving much of their pot growing operations from Mexico into remote
regions within the United States. This dramatic change is easily
recognized by the ever-larger pot grows eradicated within Mendocino
County by the Campaign Against Marijuana Planting. In 2000, the number
of plants seized by law enforcement across the United States was about
2.8 million plants. In 2006, there were nearly 4.5 million plants
seized across the country of those 256,000 came from Mendocino County.
This season there have already been nearly 240,000 plants removed from
211 sites in Mendocino County.

The US Department of Justice believes the Mexican DTOs shifted growing
operations out of Mexico to reduce the risk of seizure during border
crossings, to gain direct access to US drug markets and to grow higher
quality marijuana with the associated higher profit margins.

While 2006 and 2007 marijuana raids by law enforcement have netted
many more plants than in prior years, the Mexican growers appear
committed to continue growing operations in the United States. The
USDOJ has reported some changes apparently in response to the
increased seizures.

While the Mexican drug traffickers continue to grow most of their
marijuana in remote areas in California, Washington and Oregon, they
have begun to spread out into other remote areas across the country,
such as Idaho, Arizona and as far east as North Carolina and
Tennessee. Although some decentralization has occurred, California
remains the major grow site for Mexican DTOs. In 2006, only 16,000
more plants were seized from Washington and Oregon combined than were
seized from Mendocino County.

Some growers are shifting from the ideal growing sites in the coastal
range to harsher growing areas in the inland foothills. Since the
gardens require irrigation, growers are collecting water from springs
and year-round streams and piping the water to the grow site. This
practice typically dries up downstream streams and wetlands.

Some growers are changing from a single planting to two plantings per
season, using faster maturing varieties. These growers plant seedlings
early in the season; harvest in late June; and replant for an
additional harvest as late as October. Where eradication efforts are
most active, growers are harvesting the entire crop, including
immature plants as early as July to avoid the peak eradication period.

Mendocino National Forest had 405,000 plants eradicated in 2006,
dwarfing the take in all other National Forests. San Bernardino
National Forest in Southern California at 158,000 plants came in a
distant second. The Daniel Boone National Forest in Kentucky was third
at 149,000 plants.

Vigorous eradication of outdoor grows has pushed many, primarily the
independent growers, into indoor marijuana cultivation. The advantage
of indoor cultivation is the four to six harvests per year; the higher
prices paid for higher quality bud; and reduced chance of raids.
Mid-grade domestic marijuana in 2006 sold for $700 to $750 per pound
in Los Angeles while high potency marijuana commanded $2,500 to $6,000
per pound.