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Is California’s Weed Market Ready For Legalization After A Year Of Wildfires?

On January 1, Californians will be able to use pot recreationally. But the huge fires in Northern California in the fall devastated many marijuana growing operations. Will there be enough–or will prices soar?

Is California’s Weed Market Ready For Legalization After A Year Of Wildfires?
[Photo: Josh Edelson/AFP/Getty Images]

Peter Pietrangeli received the dire news in the early morning of October 9. One of the dozen-plus wildfires that were just then spreading across Northern California was closing in on his Marin County cannabis farm. Pietrangeli, CEO of Acme Elixirs, a cannabis oil and edibles company that operates several marijuana growing facilities in Northern California, didn’t hesitate. Rounding up a group of volunteers and working as ash fell like rain around them, he began harvesting each of his towering plants and moving them by truck to an empty storage container on a nearby cannabis farm, where he hoped they would be safe from fire and smoke damage. After a week of 18-hour days, Pietrangeli was ready to celebrate with a margarita and a long night’s sleep. That’s when he got the other call: Flames were heading for another one of his “grows” in the Santa Cruz mountains.

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After evacuating the dozen workers staying there in the dead of night and waiting out the blaze with them at a nearby hotel, Pietrangeli returned to his property to assess the damage. While none of his farms burned down, smoke from the fires damaged a substantial part of his fall crop.

He’s far from the only one in the cannabis business reeling from California’s devastating wildfires, which swept through the state’s famed “Emerald Triangle,” the prime marijuana-producing region in Northern California comprised of Mendocino, Humboldt, and Trinity counties. At least 44 cannabis farms were consumed in the blazes, but in an industry that still largely exists in the shadows, many suspect the total number could be much greater. Plus, that number doesn’t include the crops that survived the fires but were contaminated by smoke or fire retardant chemicals, which could degrade the product or make it unusable. Crops also might have suffered when growers were forced to evacuate for extended periods of time, leaving them susceptible to desiccation and theft.

[Photo: George Rose/Getty Images]
“If you were in this situation and the fire didn’t take out your crop and smoke didn’t ruin it, you still weren’t able to get to your crop to water your plants or deal with the potential element of theft,” says Pietrangeli. It’s why he figures the fires could have a significant impact on California’s plan to launch a recreational cannabis industry at the beginning of 2018. “We are already seeing the price of cannabis going up right now,” he says. “And I think we are definitely going to see a dip in supply.”

The wildfires couldn’t have come at a worse time for California’s cannabis market: in the middle of harvest season and just a few months shy of the launch of the 2018 launch of a sprawling recreational cannabis program voters approved last year, which will mean legal pot is available across the state to anyone over 21. But will the damage be enough to complicate the launch of what’s estimated to be the world’s largest recreational cannabis market?

Some experts believe it might be. Greg Shoenfeld, director of retail relations for the marijuana data insights company BDS Analytics, says that when recreational cannabis markets in other states experienced similar supply-chain disruptions, like when unusually stringent new testing requirements plus a shortage of cannabis testing labs slowed down Oregon’s cannabis production in 2016, consumers saw marijuana prices increase by 10% to 20%. And while such upsurges didn’t last long, California might be the exception, since it will take a year before another outdoor cannabis crop is ready for harvest. (While indoor grow facilities can speed up the marijuana cultivation process and produce three or four harvests a year, outdoor cannabis farms only yield a single harvest annually.) “Rather than 90 or 120 days for the situation to rebound, the impact could be much more prolonged in California,” says Shoenfeld.

And while a 10% to 20% price spike might not seem like much, that premium would be on top of all of the pricey new taxes and fees that could leave recreational cannabis in the state costing up to 70% more than what Californians have been paying for medical marijuana. (According to MarijuanaRates.com, California cannabis currently goes for about $10 a gram.) Then there’s the fact that new legal cannabis markets tend to launch with built-in price surges. “What we have seen in other states when a recreational regime rolls out is there’s always a supply-and-demand issue,” says Shoenfeld. “We have naturally seen prices spike initially and decline over time.”

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In other words, the fire damage might exacerbate the sticker shock that’s already coming for those waiting to partake in California’s newly legit cannabis market. But there’s also reason to believe the wildfires’ impact on statewide cannabis supply and pricing could be fairly limited. As Shoenfeld and other experts point out, even if it turns out the blazes damaged or destroyed hundreds or even thousands of cannabis operations, that would still be relatively insignificant for a state that’s believed to have upwards of 50,000 cannabis grows in various states of legality.

“The fires themselves, while they did harm and burn cannabis crops, it’s a small drop in the bucket of what’s available in California,” says Andrew DeAngelo, director of operations at Harborside Health Center in Oakland, the largest dispensary in the state. DeAngelo adds that the fire damage could be offset by the fact that 2017 is turning out to be a very productive year for local cannabis growers. “The yields are a good 20% to 30% higher than usual, because the drought broke,” he says.

Sure enough, according to Cannabis Benchmarks, a wholesale cannabis price tracking company, wholesale marijuana prices have been dropping in California over the past month, as they usually do during harvest time. “Our main takeaway with regard to the question of whether pricing and availability of supply will be impacted is we do not think you will see any dramatic effects due to these wildfires,” says Cannabis Benchmarks editorial director Adam Koh.

[Photo: Gabrielle Lurie/AFP/Getty Images]
But that rosy outlook likely isn’t much of a consolation for those in the cannabis business directly impacted by the fires. Growers who watched their uninsurable crops go up in flames, might have also lost their houses and even their savings, since many people in the marijuana business can’t get bank accounts and so store their money on their property. Seasonal cannabis trimmers could also have much less work this year, since some growers who can no longer sell their smoke-damaged crops as top-shelf flower might instead turn to cheaper and less reliable trimming machines to process their plants for extracts, tinctures, and edibles.

To make matters worse, some of the business owners ravaged by the fires were already tens of thousands of dollars in the hole thanks to regulatory requirements and licensing fees required for them to go legit. (Since California only recently finalized its statewide medical marijuana regulations, many of these operators are facing regulatory fees for the first time.) Other fire victims who hadn’t begun the licensing process likely now won’t do so anytime soon. By the time all of these farmers are ready with another crop in late 2018, it might be too late to break into the state’s recreational cannabis industry.

“It’s kind of like we have farmers who are on tightropes,” says Amanda Reiman, vice president of community relations at Flow Kana, a cannabis distribution company that works with small farmers in the Emerald Triangle. “They have been holding on to the pole on one side for a long time, and then a lot of them let go and started to walk across, and in the middle someone started shaking the damn rope. I think right now, a lot of folks are just trying to hang on.”

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But some observers say there could be a silver lining to the devastation: It’s spurred the cannabis community to come together to help those in need. Cannabis organizations like the California Growers Association have raised hundreds of thousands of dollars to help with recovery efforts. Marijuana companies like Bloom Farms in San Francisco are marshaling ambitious donation efforts. And CannaCraft, a major Northern California cannabis manufacturer that lost roughly a million dollars in crops and several employees’ homes in the fires, offered up office space to the American Red Cross so it could establish a fire relief regional headquarters, as well as donated $50,000 in medical cannabis to area dispensaries to help patients displaced by the disaster.

Thanks to having to operate off the grid for so long, California cannabis growers have always had to look out for each other, says CannaCraft co-CEO Dennis Hunter. Now, thanks to the wildfires and the coming recreational market, cannabis operators are bringing those tendencies out of the shadows. “It’s been one of the first opportunities for a lot of people in the industry to contribute and let our communities know who we are and what we do,” says Hunter. “We are finally ready to come out into the light and let the rest of the community see who we are.”


Joel Warner is a Denver-based former staff writer for International Business Times and Westword newspaper who’s also written for Wired, Men’s Journal, Men’s Health, Popular Science, Bloomberg Businessweek, Slate, Grantland and many other publications. He’s coauthor of the 2014 book The Humor Code: A Global Search for What Makes Things Funny.

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