California Cannabis Industry Weighs in on Wildfire Devastation

California Cannabis Industry Weighs in on Wildfire Devastation

Hezekiah Allen of the California Growers Association, SICPA’s Alex Spelman and local cultivators discuss the damage and their uncertain future as the fires continue to burn.

October 23, 2017

Wildfires in Mendocino, Sonoma, Napa, Solano and Yuba counties have likely caused more than $1 billion in crop losses in California’s $21 billion cannabis economy, with up to one third of the annual outdoor crop destroyed or damaged by flames in Mendocino and Sonoma counties, and surviving plants damaged by smoke, according to an SFGate report.

USA Today reported Oct. 22 that an estimated 8,400 structures have been destroyed statewide within and outside of the cannabis industry, and an Oct. 18 CNBC report said the death toll had grown to 42 with 53 people still missing in Sonoma County alone.

The Redwood Valley fire in Mendocino County had burned at least 34,000 acres, according to an Oct. 13 Los Angeles Times report. The Sulphur fire had burned at least 2,500 acres, while the Tubbs fire in Sonoma County had burned at least 34,770 acres and destroyed at least 2,800 homes and 400,000 sq. ft. of commercial space in Santa Rosa as of Oct. 13. The Atlas fire in Napa and Solano counties grew to 48,228 acres, the Los Angeles Times reported, while the Cascade fire in Yuba County had engulfed at least 10,171 acres. A total of about 245,000 acres had burned, according to USA Today.

Santa Rosa Mayor Chris Coursey estimated the fires have caused $1.2 billion in damage, as reported by the Los Angeles Times. At the height of the fires, about 100,000 people were evacuated according to an Oct. 18 report by The Mercury News. In Sonoma County, 16,000 homes were still without power  on Oct. 13, per the Los Angeles Times report, but 6,100 people in the county had returned to areas previously evacuated as of Oct. 18, per CNBC. Approximately 22,000 people remained under evacuation orders as of Oct. 18, according to The Mercury News.

In an interview with Cannabis Business Times, California Growers Association Executive Director Hezekiah Allen said the state is seeing “unprecedented devastation” and “widespread, severe impacts.”

Allen confirmed that at least 34 growers have significant crop loss, and many have also lost their homes. He said smoke damage is still uncertain, but the California Growers Association wants to ensure that products are safe. He said they want to be sure that products with only aesthetic damage can still get into the market, while products that may have been contaminated are not being sold.

“We’re working with some hazmat folks and some labs to figure out what we need to be testing for,” Allen said.

Toxic materials that may have burned and settled as ash on crops, as well as fire retardants that were used to fight the flames, could also harm the plants and the environment in which they are grown, said Alex Spelman,  Vice President of Business Development for SICPA, a company that provides secured identification, traceability and authentication solutions and services.

“I think the track and trace may prove to be beneficial to some of the operators that are in those affected areas that still have very high-quality product to sell, but where there might be some market concern around the effects of the event,” he said.

Cultivators Weigh the Damage

“A major concern is the fire microbes in the air landing on the cannabis and causing the end product to fail once tested due to 'foreign matter testing,’ ” said Blessed Coast Farms owner Siobhan Darwish. Her farm is in Humboldt County, a few hours from the fires, though she reports seeing smoke in the air from there.   “Currently the old Petri dish testing is still being implemented and is causing many full-sun outdoor farmers to fail testing although their product is organic.”

Dennis Hunter, CEO of Sonoma County’s CannaCraft, Inc., is unsure what the future holds for CannaCraft and other affected growers.

“It is too early to know the full extent of the damage to our home,” Hunter said in a statement emailed to Cannabis Business Times. “Presently, more than 120,000 acres have burned, an area three times larger than Washington, D.C. Upwards of 25,000 residents have been evacuated, thousands of homes and businesses have been lost, and hundreds of people are injured or missing.”

Hunter said all CannaCraft staff checked in safe, although some have lost their homes.

“We are encouraging our employees to make the safety and wellbeing of themselves and their loved ones their top priority,” he said.

CannaCraft’s manufacturing facility in Santa Rosa has not been affected by the fires and remains operational, Hunter said, and CannaCraft is committed to continuing to serve its patients and to help rebuild the community. It is donating more than $40,000 of medical cannabis products to patients who have been displaced or evacuated, and a portion of all CannaCraft sales will be donated to the Red Cross to aid local relief efforts. CannaCraft is also hosting the Red Cross at its Santa Rosa facility.

“We will evaluate where our funds and efforts can be of most help to our neighbors as more information emerges,” Hunter said.

"Our hearts are heavy as our community deals with massive devastation from the Northern California fires,” he added. “Our thoughts are with everyone impacted by destruction and evacuations, and with the brave first responders who are working tirelessly to minimize the loss of life and contain the fires in Sonoma, Napa, Mendocino and Lake Counties.” 

Bloom Farms’ Founder and CEO Michael Ray is still rebuilding his farm after the Butte Fire of 2015. The facility is in Mountain Ranch, far from where the wildfires broke out, but he is sympathetic to his fellow cultivators.

"Having experienced total loss of our family farm just two years ago in the Butte Fire, my heart is broken for all of those affected in the Northern California fires these past few days,” Ray said in an emailed statement to Cannabis Business Times. “We all need to take care of each other. We are mobilizing and coordinating efforts in the cannabis community to provide any relief that we can in this terribly sad time."

An Uncertain Future

Allen said firefighters have had better weather conditions in the past few days and containment numbers are continuing to rise.

“I do believe that maybe the worst is over at this point, and they seem to be transitioning from rescue to recovery,” Spelman added. “I think the challenge right now is getting through that damage assessment. Where is the direct impact of fire? Where are the tertiary impacts of fire where the smoke plumes may have gone?”

Marijuana remains illegal under federal law, so cannabis farmers generally cannot get crop insurance and cannabis businesses are not eligible for federal disaster relief.

“Many of these operators, they don’t have federally insured crop insurance, so for them, there’s really not an avenue for financial reparation if there is a loss,” Spelman said.

Not only are cultivators affected, but seed sellers’ properties, storage warehouses and oil extracting facilities have also been destroyed, SFGate reported.

Allen said the California Growers Association started a crowdfunding page and raised about $23,000 the week  of Oct. 9 to help those affected pay their mortgages and other basic expenses so they can reach the next harvest season. However, the crowdfunding site, Youcaring, has since shut down the efforts to help the legal cannabis farms, according to a BBC report, due to fear of contradictory national laws that declare cannabis an illegal substance, and because fundraising for cannabis-related purposes is banned by its payment providers, WePay and PayPal.

“Folks are out their entire year’s paycheck, so we really want to make sure folks stay on track to get those state licenses and that the fire doesn’t destroy the dream of legal cannabis for anyone out here,” Allen said. “From the helping hand up to the long-term support, there’s a lot of generosity, so we’ll get through together.”

Many cannabis businesses in the area were in the process of seeking local and state licensing to enter the adult-use market in 2018, and operators have been spending tens of hundreds of thousands of dollars for water permits and leasing warehouse space that is now ruined, according to SFGate.

California cultivators grow an estimated 13 million pounds of cannabis per year, according to another SFGate report. Northern California has the world’s largest concentration of cannabis farms, and one acre of cannabis is worth an estimated $1.7 million, according to SFGate.

Marijuana prices could increase with much of the year’s supply of cannabis destroyed in the fires, Business Insider reported. The state could expect to see a 10- to 20-percent price increase in the aftermath, said Tamar Maritz, the regional director for California at BDS Analytics, a cannabis business intelligence firm, in a statement to Business Insider.

Allen said the long-term outlook for many cultivators in uncertain, especially for the smaller and specialty growers in the area.

“It’s a pretty uncertain time,” he said. “What our organization has always been committed to doing is making sure folks have a pathway to get a license and get into the market, and from there, it’s up to the market. We just want to make sure that folks can stay on that pathway toward licensure.”

Although investigations into what caused the wildfires are ongoing, recent reports have cited Pacific Gas & Electric’s power lines as a possible cause of some of the fires, according to CNBC, and an arson arrest was made Oct. 15. A Santa Rosa couple has filed the first lawsuit against PG&E, alleging negligence and violations of safety codes, CNBC reported.

Images courtesy of the California Growers Association