Starting about90 miles northwest of Sacramento, an unbroken swath of national forestland follows the spine of California's rugged coastal mountains all the way to the Oregon border. Near the center of this vast wilderness, along the grassy banks of the Trinity River's south fork, lies the remote enclave of Hyampom (pop. 241), where, on a crisp November morning, I climb into a four-wheel-drive government pickup and bounce up a dirt logging road deep into the Six Rivers National Forest. I've come to visit what's known in cannabis country as a "trespass grow."
"This one probably has the most plants I've seen," says my driver, a young Forest Service cop who spends his summers lugging an AR-15 through the backcountry of the Emerald Triangle—the triad of Humboldt, Mendocino, and Trinity counties that is to pot what the Central Valley is to almonds and tomatoes. Fearing retaliation from growers, the officer asks that I not use his name. Back in August he was hiking through the bush, trying to locate the grow from an aerial photo, when he surprised a guy carrying an iPod, gardening tools, and a 9 mm pistol on his hip. He arrested the man and alerted his tactical team, which found about 5,500 plants growing nearby, with a potential street yield approaching $16 million.
"This is unicorns and rainbows, isn't it?" says wildlife ecologist Mourad Gabriel as he stuffs a garbage bag with trash the growers left behind.
Today, a work crew is hauling away the detritus by helicopter. Our little group, which includes a second federal officer and a Forest Service flack, hikes down an old skid trail lined with mossy oaks and madrones, passing the scat of a mountain lion, and a few minutes later, fresh black bear droppings. We follow what looks like a game trail to the lip of a wooded slope, a site known as Bear Camp. There, amid a scattering of garbage bags disemboweled by animals, we find the growers' tarps and eight dingy sleeping bags, the propane grill where they had cooked oatmeal for breakfast, and the backpack sprayers they used to douse the surrounding 50 acres with chemical fertilizers and pesticides. The air smells faintly of ammonia and weed. "This is unicorns and rainbows, isn't it?" says Mourad Gabriel, a former University of California-Davis wildlife ecologist who has joined us at the site, as he maniacally stuffs a garbage bag with empty booze bottles, Vienna Beef sausage tins, and Miracle-Gro refill packs.
According to federal stats, trespass grows in California alone account for more than one-third of the cannabis seized nationwide by law enforcement, which means they could well be the largest single source of domestically grown marijuana. Of course, nobody can say precisely how much pot comes from indoor grows and private plots that are less accessible to the authorities. What's clear is that California's marijuana harvest is vast—"likely the largest value crop (by far) in the state's lineup," notes the Field Guide to California Agriculture. Assuming, as the guide does, that the authorities seize about 10 percent of the harvest, that means they would have left behind more than 10 million outdoor plants last year, enough to yield about $31 billion worth of product. That's more than the combined value of the state's top 10 legal farm commodities.
"It simply isn't regulated, and the upshot is that nobody really knows what's in their cannabis."
Even before voters in Colorado and Washington legalized recreational pot in 2012, marijuana was quasi-legal in California, and not just for medical use. Senate Bill 1449, signed by Gov. Arnold Schwarzenegger in 2010, reclassified possession of an ounce or less from a misdemeanor to a maximum $100 infraction—you'll get a bigger fine for jaywalking in Los Angeles. Indeed, many states have eased restrictions on pot use. But with the exception of Colorado and Washington, whose laws dictate where, how, and by whom marijuana may be grown, they have had little to say about the manner in which it is cultivated—which is challenging to dictate in any case, since growers who cooperate with state regulators could still be prosecuted under federal statutes that classify pot as a Schedule 1 drug, the legal equivalent of LSD and heroin. So where is all this legal and semilegal weed supposed to come from? The answer, increasingly, is an unregulated backwoods economy, the scale of which makes Prohibition-era moonshining look quaint.
To meet demand, researchers say, the acreage dedicated to marijuana grows in the Emerald Triangle has doubled in the past five years. Like the Gold Rush of the mid-1800s, this "green rush," as it is known locally, has brought great wealth at a great cost to the environment. Whether grown in bunkers lit with pollution-spewing diesel generators, or doused with restricted pesticides and sown on muddy, deforested slopes that choke off salmon streams during the rainy season, this "pollution pot" isn't exactly high quality, or even a quality high. "The cannabis industry right now is in sort of the same position that the meatpacking industry was in before The Jungle was written by Upton Sinclair," says Stephen DeAngelo, the founder of Oakland's Harborside Health Center, a large medical marijuana dispensary. "It simply isn't regulated, and the upshot is that nobody really knows what's in their cannabis."
It's not just stoners who are at risk. Trespass grows have turned up everywhere from a stand of cottonwoods in Death Valley National Park to a clearing amid the pines in Yosemite. "I now have to spend 100 percent of my time working on the environmental impacts of marijuana," says Gabriel, who showed up at Bear Camp in military-style cargo pants and a kaffiyeh scarf. "I would never have envisioned that."
Gabriel grew up in Fresno, the son of immigrants from Mexico and Iraq, at a time when the Central Valley city was plagued by turf wars among pot-dealing street gangs, notably the local Norteños chapter and their rivals, the Bulldogs. That world did not interest Gabriel, who spent a lot of his free time catching frogs and crawdads on the banks of the San Joaquin River. His love of the outdoors led him to study wildlife management at Humboldt State University, where he became fascinated with fishers, the only predators besides mountain lions clever and tough enough to prey on porcupines. The fisher, which resembles the love child of a ferret and a wolverine, was nearly eradicated from the West by logging and trapping during the early 20th century. It still hasn't rebounded. This year, the US Fish and Wildlife Service will consider listing it as a threatened species.
On local blogs, people have threatened Gabriel and his family. In February, one of his dogs was fatally poisoned.
When Gabriel first began venturing into the woods to trap and radio-collar fishers, he assumed that most of them were dying from bobcat attacks, disease, and cars running them over. But then, in 2009, he discovered a dead fisher deep in the Sierra National Forest that showed no signs of any of those things. A toxicology test indicated that it had ingested large quantities of rat poison.
Back in his lab, he tested frozen tissue from 58 other fisher carcasses he'd collected on some of California's most remote public lands and found rodenticide traces in nearly 80 percent of them. Rat poison isn't used in national forests by anyone except marijuana cultivators, who put it out to protect their seedlings. Rodents that eat the poison stumble around for a few days before they die, making them easy prey for hungry fishers.
In 2012, after Gabriel published his rat poison results, he was the target of angry calls and messages. One person accused him of helping the feds "greenwash the war on drugs." Another made vague threats against his family and his dogs. Gabriel also received a prying email, later traced by federal agents to Ciudad Juárez, Mexico, soliciting the locations of his home, office, and field study sites. In Lost Coast Outpost and other local news sites, commenters shared links to his home address. "Snitches end up in ditches," one warned.
Then, last month, Gabriel's Labrador retriever, Nyxo, died after someone fed him meat infused with De-Con rat bait.
The types of threats Gabriel has received are not uncommon, and they have frightened scientists away from studying the environmental impacts of pot farming. "At my university, there is nobody who will even go near it," says Anthony Silvaggio, a sociologist with the state university's Humboldt Institute for Interdisciplinary Marijuana Research. Biologists who used to venture into the wilderness alone to survey wildlife now often pair up for protection. In July 2011, armed growers in the Sequoia National Forest chased a federal biologist through the woods for a half-hour before giving up. The following year, researchers surveying northern spotted owls on Humboldt County's Hoopa Valley Indian Reservation were shot at with high-caliber rifles. Each growing season, a significant chunk of one designated fisher habitat in the Sierra National Forest becomes inaccessible to scientists because it's dangerously close to illegal gardens.
Gabriel won't go near a known grow site before it's been cleared by law enforcement, as Bear Camp has. Scattered across the hillside, his team finds 4,200 pounds of chemical fertilizer, five kinds of insecticide, and three kinds of rodenticide. The stash includes a restricted pesticide capable of killing humans in small doses. Gabriel's friend and colleague Mark Higley dons a gas mask and seals the canister in a garbage bag. "If it does erupt, I want everyone to be at least 20 to 30 feet away," Gabriel warns. "It's aluminum phosphide, and when it hits the air, it turns into phosphine gas." Breathing it can kill you.
The Emerald Triangle's pot culture has changed a lot since the hippies drove up from San Francisco in the early 1970s in search of peace, freedom, and blissful communion with nature. At first, the back-to-the-landers grew pot primarily for themselves, but news that the United States was paying to have Mexican pot farms sprayed with paraquat, a toxic weed killer, convinced American stoners to seek out the hippie weed.
Before long, Humboldt had become a name brand, but marijuana might never have come to define the Emerald Triangle had the old-growth timber industry not logged itself out of business by the mid-1990s. In 1996, when California became the first state to legalize pot for medical use, out-of-work loggers took advantage of the opportunity. "Then you had everybody like, 'Sure, I'll grow some weed,'" recalls Humboldt State's Silvaggio. The size of the harvest grew, helped along by post-9/11 border enforcement, which made it harder for Mexican pot to enter the country. The latest leap in production was the result of Prop. 19, California's 2010 legalization measure; although it lost narrowly at the polls, the Emerald Triangle's growers boosted output in anticipation of having a mainstream product. Now marijuana "is all we have," Silvaggio says. "Every other thing is built here to serve that economy."
Drive around the Emerald Triangle during harvest season with the radio on, and you'll hear ads openly pitching Dutch hydroponic lamps, machines "for trimming flowers," and 2,800-gallon water storage tanks—because "you don't want to be the one that has to call the water truck in for multiple water deliveries late in the season." Even mainstream businesses like furniture stores get in on the green rush with "harvest sales." Talk of bud-trimming parties and the going price per pound dominates restaurant conversations. And in backwoods hamlets where you'd expect high unemployment, you come across a lot of $50,000 pickups.
With prices dropping as domestic supply expands, "you've got to go bigger these days to make the amount of money you used to make."
As with much of the state's agricultural industry, the pot trade is stratified, and much of the labor is done by undocumented farmworkers. The man arrested at Bear Camp confessed to the police that he'd traveled north from Michoacán, Mexico, to pick apples in Washington, but knew he could make more money tending pot in California. Industry observers believe that at least some of the trespass grows are run from south of the border, but Silvaggio adds that many are financed by locals. Either way, the grunt workers tend to be the only ones busted when the grows are raided.
Although the original Northern California growers saw pot cultivation as an extension of their hippie lifestyles, their environmental values haven't readily carried over to the next generation. "They are given a free pass to become wealthy at a young age, to get what they want," Silvaggio explains. "And do you think they are going to give it up when they turn 20, with a kid in the box? They can't get off that gravy train." But with prices dropping as domestic supply expands, "you can't go smaller; you've got to go bigger these days to make the amount of money you used to make. So what does that mean? You have to get another generator. You have to take more water. You've got to spray something because you may lose 20, 30 grand if you don't."
Smaller growers operating on their own properties tend to use slightly better environmental practices— avoiding rodenticides, for instance—than the industrial growers who have moved in solely to make money. Even so, Silvaggio says, "we found that it's just a tiny fraction of folks who are growing organic."
Among the downsides of the green rush is the strain it puts on water resources in a drought-plagued region. Scott Bauer, a biologist with the state Department of Fish and Wildlife, calculates that irrigation for cannabis farms has sucked up all of the water that would ordinarily keep local salmon streams running through the dry season. Marijuana cultivation, he believes, "is a big reason why" at least 24 salmon and steelhead streams stopped flowing last summer. "I would consider it probably the No. 1 threat" to salmon in the area, he told me. "We are spending millions of dollars on restoring streams. We are investing all this money in removing roads and trying to contain sediment and fixing fish path barriers, but without water there's no fish."
Thirty square miles in one Emerald Triangle watershed, where pot farms siphon up roughly 29 million gallons of water per season California Department of Fish and Wildlife.
At Bear Camp, Gabriel leads me to a steep slope where the growers have plugged a freshwater spring with a makeshift dam of logs and tarps, one of 17 water diversions found at the site. Where moisture-loving ferns and horsetails should be flourishing, a plastic pipe leads downhill to a 1,000-gallon reservoir feeding a vast irrigation network. Gabriel unkinks a hose to release an arc of water from a sprinkler. National Guard troops enlisted to help out have already yanked the cannabis plants here, leaving behind a hillside of girdled white oaks and bare soil. "When we have a two-to-four-inch rain, this will just be a mud river," Gabriel says. Sediment laced with pesticides and other chemicals will find its way into the salmon stream below. We hike down to a clearing where a helicopter is pulling out sling loads of irrigation piping. "Look at this!" Gabriel shouts after plunging into a thicket to help the soldiers rip out another dam. "Insect killer right in the middle of it!"
He and his colleagues have seen much worse. At a grow site in July, he found a fisher that had died from eating one of many poisoned hot dogs strung around the site on a trotline. A state game warden raiding a grow in 2011 discovered a black bear and her cubs convulsing on the ground, having eaten into a stash of pesticides. Two threatened northern spotted owls, the species once at the center of a bitter fight between loggers and environmentalists, tested positive for rodenticides in Gabriel's lab; he's now looking into whether toxins from grow sites could be impeding that species' recovery as well. "When there is no adequate regulatory framework," Silvaggio warns, "you are going to have nature taking a hit."
Most growers just want to be left alone, but the small minority who are politically outspoken tend to favor regulation. Kristin Nevedal chairs the Emerald Growers Association, the triangle's marijuana trade group. The coauthor of an ecofriendly pot-farming guide, she often consults with state and local lawmakers about how to make the industry more responsible. "Prohibition hasn't curbed the desire for cannabis," she says. "So we really need to look at changing our policy and starting to treat it like agriculture, so we can manage it."
"The trespass grows are really an issue because of prohibition," says one enviro. The growers "are just a symptom. The real disease is the failed drug war."
One of the most serious efforts on that front was a system put in place by Mendocino County, which as of 2010 allowed the cultivation of up to 99 plants, provided growers registered and tagged each one with zip ties purchased from the county. Sheriff's deputies monitored the grow sites and checked that they complied with environmental laws. "That program was in a lot of ways fabulous," Nevedal recalls. Almost 100 growers participated, but the program was shut down in early 2012, after federal agents raided one of the grows and US Attorney Melinda Haag hinted that she might just take the county to court. Later that year, a federal grand jury subpoenaed the county's zip tie records.
Since then, efforts to regulate pot farming have mostly shifted to the state level. In Colorado, pot vendors are required to list on their packaging all the farm chemicals used to produce their products, and the state recently implemented a "seed to sale" tracking system. Most Coloradans grow indoors due to the climate, which reduces pesticide use and makes it easier to keep pot off the black market, but it's highly energy intensive. In the journal Energy Policy, researcher Evan Mills estimated that indoor grows suck up enough electricity to supply 1.7 million homes—in California, they account for a whopping 9 percent of household energy use. The newly minted regulations for Washington state allow outdoor grows so long as they are well fenced and outfitted with security cameras and an alarm system.
California was the first state to legalize medical marijuana, but like the pimply-faced stoner dude you may have known in high school, it hasn't had the healthiest of relationships with Mary Jane. The Golden State differs from most others with medical pot laws in that it doesn't actually regulate production and sale of the herb. Instead, it lets cities and counties enact their own laws—though in practice most haven't. The result has been the Wild West of weed: Almost any adult can score a scrip and some bud from a local dispensary, assuming, of course, that it hasn't yet been raided and shut down by the feds.
But all of that might be about to change. The California Police Chiefs Association (CPCA) recently announced support for a bill that would put the state in the business of regulating the medical pot trade. Though you'd think cops would have pushed for such a thing decades ago, the reality is quite the opposite: The CPCA and other law enforcement organizations have, until now, opposed pretty much every reform to California's medical marijuana system for fear that anything short of completely abolishing it would legitimize it.
"With no regulations, you get your doors kicked in."
The CPCA's change of heart "is a huge for us," says Nate Bradley, executive director of the California Cannabis Industry Association, the state's marijuana industry trade group. Bradley agrees with his police adversaries that tighter regs would legitimize medical marijuana, which is why the CCIA has pushed for them since the group's inception four years ago. Bolstering his case, the US Department of Justice last year announced that it would no longer raid dispensaries in states that it believes are regulating them adequately—a formulation that seemed to exclude California. New rules issued last month by the Obama administration allow banks to accept funds from pot dealers, but only if they're licensed in the state where they operate.
So why are California's drug warriors reversing course? "We could no longer ignore that the political landscape on this issue was shifting," the CPCA explained in a letter written jointly with the League of California Cities. Polls and changing federal policies suggest that medical pot reform "could be enacted," and that "without our proactive intervention, it could take a form that was severely damaging to our interests."
The bill that law enforcement groups are backing, SB 1262, is flawed, but it's something that "we can work with," says Bradley, who previously worked as a cop in California's Yuba County. Advocates of medical pot don't like how the bill constrains the ability of doctors to recommend marijuana, outlaws potent pot concentrates such as hash oil, and puts regulation in the hands of the Department of Public Health, rather than the Department of Alcoholic Beverages Control.
When my in-laws moved from India to the United States some 35 years ago, they couldn't believe the low cost and abundance of our milk—until they developed digestive problems. They'll now tell you the same thing I've heard a lot of immigrants say: American milk will make you sick.
It turns out that they could be onto something. An emerging body of research suggests that many of the 1 in 4 Americans who exhibit symptoms of lactose intolerance could instead be unable to digest A1, a protein most often found in milk from the high-producing Holstein cows favored by American and some European industrial dairies. The A1 protein is much less prevalent in milk from Jersey, Guernsey, and most Asian and African cow breeds, where, instead, the A2 protein predominates.
"We've got a huge amount of observational evidence that a lot of people can digest the A2 but not the A1," says Keith Woodford, a professor of farm management and agribusiness at New Zealand's Lincoln University who wrote the 2007 book Devil in the Milk: Illness, Health, and the Politics of A1 and A2 Milk. "More than 100 studies suggest links between the A1 protein and a whole range of health conditions"—everything from heart disease to diabetes to autism, Woodford says, though the evidence is far from conclusive.
Holsteins, the most common dairy-cow breed in the United States, typically produce A1 milk. Sarahluv/Flickr
For more than a decade, an Auckland-based company called A2 Corporation has been selling a brand of A2 milk in New Zealand and Australia; it now accounts for 8 percent of Australia's dairy market. In 2012, A2 Corp. introduced its milk in the United Kingdom through the Tesco chain, where a two-liter bottle sells for about 18 percent more than conventional milk.
A2 Corp. recently announced plans to offer its milk in the United States in coming months.
But critics write off the success of A2 Corp. as a victory of marketing over science. Indeed, a 2009 review by the European Food Safety Authority found no link between the consumption of A1 milk and health and digestive problems. So far, much of the research on the matter is funded by A2 Corp., which holds a patent for the only genetic test that can separate A1 from A2 cows. And in 2004, the same year that A2 Corp. went public on the New Zealand Stock Exchange, Australia's Queensland Health Department fined its marketers $15,000 for making false and misleading claims about the health benefits of its milk.
The A1/A2 debate has raged for years in Australia, New Zealand, and parts of Europe, but it is still virtually unheard of across the pond. That could soon change: A2 Corp. recently announced plans to offer its milk in the United States in coming months. In a letter to investors, the company claims that "consumer research [in Los Angeles] confirms the attractiveness of the A2 proposition."
The difference between A1 and A2 proteins is subtle: They are different forms of beta-casein, a part of the curds (i.e., milk solids ) that make up about 30 percent of the protein content in milk. The A2 variety of beta-casein mutated into the A1 version several thousand years ago in some European dairy herds. Two genes code for beta-casein, so modern cows can either be purely A2, A1/A2 hybrids, or purely A1. Milk from goats and humans contains only the A2 beta-casein, yet not everyone likes the flavor of goat milk, which also contains comparatively less vitamin B-12—a nutrient essential for creating red blood cells.
The A1 milk hypothesis was devised in 1993 by Bob Elliott, a professor of child health research at the University of Auckland. Elliott believed that consumption of A1 milk could account for the unusually high incidence of type-1 diabetes among Samoan children growing up in New Zealand. He and a colleague, Corran McLachlan, later compared the per capita consumption of A1 milk to the prevalence of diabetes and heart disease in 20 countries and came up with strong correlations.
Critics argued that the relationships could be explained away by other factors, such as diet, lifestyle, and latitude-dependent exposure to vitamin D in sunlight—and in any case started to fall apart when more countries were included.
Yet a 1997 study by Elliott published by the International Dairy Federation showed A1 beta-casein caused mice to develop diabetes, lending support to the hypothesis, and McLachlan remained convinced. In 2000, he partnered with entrepreneur Howard Paterson, then regarded as the wealthiest man on New Zealand's South Island, to found the A2 Corporation.
Starting in 2003, A2 Corp. sold milk in the United States through a licensing agreement, but pulled out in 2007 after it failed to catch on. Susan Massasso, A2 Corp.'s chief marketing officer, blamed mistakes by the company's US partner, but declined to elaborate. But now the market dynamics may be changing in A2 Corp.'s favor as compelling new research on the A1/A2 debate grabs headlines in the Australian and UK press.
When digested, A1 beta-casein (but not the A2 variety) releases beta-casomorphin7 (BCM7), an opioid with a structure similar to that of morphine. Studies increasingly point to BCM7 as a troublemaker. Numerous recent tests, for example, have shown that blood from people with autism and schizophrenia contains higher-than-average amounts of BCM7. In a recent study, Richard Deth, a professor of pharmacology at Northeastern University in Boston, and his postdoctoral fellow, Malav Trivedi, showed in cell cultures that the presence of similarly high amounts of BCM7 in gut cells causes a chain reaction that creates a shortage of antioxidants in neural cells, a condition that other research has tied to autism. The study, underwritten in part by A2 Corp., is now undergoing peer review in the Journal of Nutritional Biochemistry.
The results suggest that drinking A2 milk instead of A1 milk could reduce the symptoms of autism, Trivedi says, but, he adds: "There's a lot more research that needs to be done to support these claims."
Researchers without ties to A2 Corp. are also lending increasing support to the A1 hypothesis. One peer-reviewed study conducted at the National Dairy Research Institute in India, published in October in the European Journal of Nutrition, found that mice fed A1 beta-casein overproduced enzymes and immune regulators that other studies have linked to heart disease and autoimmune conditions such as eczema and asthma.
The leading explanation for why some people but not others may react poorly to A1 milk implicates leaky gut syndrome—a concept that got its start in alternative medicine circles but has been gaining wider traction in the medical establishment. The idea is that that loose connections in the gut, like tears in a coffee filter, allow rogue proteins such as BCM7 to enter the body and run amok. The body brings in immune cells to fight them off, creating inflammation that manifests as swelling and pain—a telltale symptom of autoimmune diseases such as arthritis and diabetes, and autism.
The A2-producing Normande is a popular breed in France. dominiqueb/Flickr
Though many adults may suffer from leaky guts, the condition is normal in babies less than a year old, who naturally have semi-permeable intestines. This may pose a problem when they're fed typical cow-milk formula. A 2009 study documented that formula-fed infants developed muscle tone and psychomotor skills more slowly than infants that were fed (A2-only) breast milk. Researchers in Russia, Poland, and the Czech Republic have suggested links between BCM7 in cow milk formula and childhood health issues. A 2011 study implicates BCM7 in sudden infant death syndrome: the blood serum of some infants that experienced a "near-miss SIDS" incident contained more BCM7 than of healthy infants the same age. Capitalizing on those findings, A2 Corp. also sells an A2-only infant formula, a2PLATINUM, in Australia, New Zealand, and China.
The mainstream dairy industry in the United States may be more interested in the A1/A2 debate than it lets on. For example, US companies that sell bull semen for breeding purposes maintain information on the exact A1/A2 genetics of all of their offerings. And breeders have already developed A2 Holsteins to replace the A1 varieties typically used in confined agricultural feeding operations. "There is absolutely no problem in moving across to A2 and still having these high-production cows," says Woodford, the Devil in the Milk author, who has in more recent years worked as a consultant for A2 Corp.
But the transition to A2 milk would take a bit of money and a lot of time—probably about a decade, Woodford believes. "The mainstream industry has always seen it as a threat," he says, "whereas another way of looking at it is, hey, this can actually bring more people to drinking milk."
For now, here in the United States, the best way to get milk with a higher-than-average A2 content is to buy it from a dairy that uses A2-dominant cow breeds such as the Jersey, the Guernsey, or the Normande. In Northern California, for example, Sonoma County's Saint Benoit Creamery specifies on its milk labels that it uses "pastured Jersey cows."
The heirloom A2 cow breeds tend to be hardy animals adapted to living on the open range and not producing a ton of milk, but what they do produce is comparatively thicker, creamier, and, many people say, a lot tastier than what you'll typically find at the supermarket.
"People taste our milk and they say: 'Oh my gosh, I haven't tasted milk like this since I left home,'" and came to America, says Warren Taylor, the owner of Ohio's Snowville Creamery, which has been phasing out A1 cows from its herds. For the time being, the switch to A2 milk "is going to be for the small producers—people like us," he adds. "It's just a part of our responsibility."
Remember the "War on the 1%" rant by the poor, embattled multimillionaire Tom Perkins? Well, Kleiner Perkins Caufield & Byers, the venture-capital firm he cofounded, is backing Secret, a hot new social-networking app that has captivated Silicon Valley with commentary that could have come from Perkins himself, for all we know. A sort of anti-Facebook, it lets users post updates to their "circles" (friends and friends of friends) anonymously, which means that instead of cheery wedding announcements and cute cat photos, you get friends bragging and bitching in a fashion you may not have seen at your last dinner party. Given that Secret's early adopters skew towards the tech world, the app is, at least for now, a revealing window into what people in the Valley really think—or at the very least, a fascinating study in trolling. Here are some fairly typical posts from circles in San Francisco and beyond.
Whether waxing poetic about net neutrality or defending the merits of outsourcing, Silicon Valley execs love to talk about how a free market breeds innovation. So it might come as a surprise that some of those execs were engaged in a secret pact not to recruit one another's employees—in other words, to game the labor market. The potentially illegal deals suppressed salaries across the sector by a whopping $3 billion, claims a class-action lawsuit scheduled for a May trial in San Jose, and were done to juice the bottom lines of some of the nation's most profitable companies.
"I don't want to create a paper trail over which we can be sued later?" Google's Eric Schmidt wrote in an email.
Documents filed in conjunction with the litigation, first reported last month by PandoDaily's Mark Ames, offer a fascinating behind-the-scenes glimpse of interactions among the likes of Apple's Steve Jobs, Google's Eric Schmidt, and Intuit Chairman Bill Campbell. In early 2005, the documents show, Campbell brokered an anti-recruitment pact between Jobs and Schmidt, confirming to Jobs in an email that "Schmidt got directly involved and firmly stopped all efforts to recruit anyone from Apple." On the day of that email, Apple's head of human resources ordered her staff to "please add Google to your 'hands off' list." Likewise, Google's recruiting director was asked to create a formal "Do Not Cold Call List" of companies with which it had "special agreements" not to compete for employees.
A few months later, Schmidt instructed a fellow exec not to discuss the no-call list other than "verbally," he wrote in an email, "since I don't want to create a paper trail over which we can be sued later?"
Eric Schmidt Google
Good luck with that. The "no poaching policies," as they were known among senior-level executives at companies such as Adobe, Intel, Intuit, and Pixar, were first exposed by a 2010 antitrust lawsuit filed by the Department of Justice. The DOJ complaint is the basis for the current class action, which was filed in 2011 by the San Francisco law firm Lieff Cabraser Heimann & Bernstein, alleging that some 64,000 tech workers were harmed.
The case, interestingly, has garnered little attention outside of the tech world. Sure, the average middle-class worker probably won't shed a tear for the most likely victim here: Silicon Valley code jockeys and junior execs banking six-figure salaries and perhaps million-dollar stock options. The Bay Area, after all, is recently ablaze with animosity over tech-fueled gentrification and income inequality. And yet the collusion of CEOs to artificially suppress high-end salaries speaks to an economic malaise that affects every working stiff: The widening gap between the rich and poor isn't some accident of free-market capitalism, but the product of a system that puts corporate leaders and their shareholders ahead of everyone else.
"I'm sure you realize the asymmetry in financial resources of our respective companies," Steve Jobs emailed Palm's then-CEO.
The lawsuit describes the rapid spread of anti-recruitment pacts between 2004 and 2007—arrangements perhaps facilitated by the overlap on Silicon Valley's corporate boards: Jobs, who became Disney's largest shareholder after it bought Pixar, served on Disney's board until his death in 2011. Schmidt sat on Apple's board until 2009, and Intuit's Campbell (a former Schmidt adviser) still does. Intel CEO Paul Otellini has held a seat on Google's board since 2004. Such close ties have long been seen as a problem for shareholders, but the nonrecruitment pacts suggest that such cozy relationships could harm workers, too.
Steve Jobs, according to unsealed court documents obtained by Mother Jones, was a leading advocate and enforcer of the nonrecruitment pacts. Two months after entering into the agreement with Google, he emailed Bruce Chizen, then Adobe's CEO, complaining that Adobe was poaching Apple employees. Chizen's reply, that he thought they'd agreed only to avoid "senior level employees," didn't satisfy Jobs. "OK, I'll tell our recruiters that they are free to approach any Adobe employee who is not Sr. Director or VP," he shot back. "Am I understanding your position correctly?"
Chizen responded that he would rather the arrangement apply to all employees:
The next day, Adobe's vice president of human resources announced to her recruiting team that "Bruce and Steve Jobs have an agreement that we not solicit ANY Apple employees, and vice versa."
In one instance*, Jobs allegedly played hardball with a reluctant CEO. In mid-2007, he called Edward Colligan, then president and CEO of Palm, to propose "an arrangement between Palm and Apple by which neither company would hire the other's employees," Colligan testified in a sworn deposition. When he refused, citing the deal's possible illegality, Jobs threatened to sue Palm for patent infringement. "I'm sure you realize the asymmetry in financial resources of our respective companies…" he wrote Colligan in a follow-up email. "My advice is to take a look at your patent portfolio before you make a final decision here."
The Valley's hush-hush wage-control policies have been in play at least since the 1980s, soon after Jobs bought Lucasfilm's "computer graphics division" and renamed it Pixar. As George Lucas later put it in a deposition, firms in the digital-filmmaking realm "could not get into a bidding war with other companies because we don't have the margins for that sort of thing." Lucas and Pixar's then-president, Edward Catmull, made the following agreement, according to the lawsuit:
(1) not to cold call each other's employees; (2) to notify each other when making an offer to an employee of the other company even if that employee applied for a job on his or her own initiative; and (3) that any offer would be "final" and would not be improved in response to a counter-offer by the employee's current employer (whether Lucasfilm or Pixar).
After its purchase by Disney in 2006, Pixar made the same "gentleman's agreement" with Apple, according to unsealed emails from the lawsuit. (Last year, Pixar, Lucasfilm, and Intuit settled their part of the class-action lawsuit for an undisclosed sum in a deal that allows the affected employees to file anonymous claims.)
There's "no evidence that our policy hindered hiring or affected wages," a Google attorney wrote.
In its earlier antitrust suit, the DOJ argued that the Valley's no-poaching agreements were patently illegal—clear violations of the Sherman Antitrust Act's ban on restraining interstate commerce. In 2011, without admitting fault or paying fines, Google, Apple, and four other tech firms settled with the DOJ and agreed to discontinue their anti-competitive behavior.
Representatives for Apple and Google declined to comment for this story, but Google argued at the time that its pacts hadn't hurt workers. There's "no evidence that our policy hindered hiring or affected wages," a Google attorney wrote on the company's public-policy blog. But "we abandoned our 'no cold calling' policy in late 2009 once the Justice Department raised concerns, and are happy to continue with this approach as part of the settlement."
Whether and how the pacts truly affected wages is at the heart of the ongoing suit, which is slated for trial May 27. The defendant firms insist that their employees' salaries weren't widely suppressed because they were based on a "pay for performance" model. That is, workers got raises based on their accomplishments, not on what their coworkers earned.