Marijuana could get more expensive after California wildfires wiped out a year’s supply of weed


northern california sonoma napa wildfires fires 2017
A
firefighter hoses down hotspots from a wildfire in Santa Rosa,
California, on Saturday, October 14, 2017.

Marcio Jose Sanchez/AP

  • California wildfires have hit the state’s
    marijuana industry, burning dozens of farms and leaving many
    more engulfed in smoke.
  • The price of marijuana could spike as much as 20%
    in the aftermath of the fires.
  • The full extent of the damage will be unclear until
    growers send crop samples for testing.

Marijuana could get more expensive after a
series of massive fires in Northern California wiped out as
much as a year’s supply for some industry growers.

Nearly two dozen wildfires spread through the counties
of Napa, Sonoma, and six others last week, destroying an
estimated 5,700 structures, and
burning over 200,000 acres of land — a collective area
roughly the size of New York City.
Forty people are dead.

The fires scorched dozens of the region’s marijuana farms,
including those in Sonoma County and in Mendocino
County  — part of the Emerald
Triangle, which is considered the marijuana-growing capital
of the US. The number of farms burned is expected to “increase
significantly” as evacuation orders are lifted and growers
return to their homes.

The crop harvested later this month would have supplied
California dispensaries through the end of 2018. The
situation could create a shortage of marijuana in the
state 
just months ahead of California’s launch
of a recreational marijuana market. Tamar Maritz, regional
director for California at marijuana data insights company BDS
Analytics, said Californians could expect to see prices rise as
much as 10 to 20% in the aftermath of the fires.

BDS Analytics found that in Colorado, Washington, and Oregon, a
“major disruption in the supply chain” created price increases in
a magnitude of 10% to 20%, according to Maritz. Those breakdowns
varied from regulatory changes that shorted supply, to the debut
of a recreational market.

She added that those states saw prices return to normal one to
three months after the event.

The going rate nationwide for legal, non-medical marijuana is
about $11 per gram or $34 for an eighth of an ounce, according to
MJCharts. Using case
studies from states with fully legalized marijuana, California
could see the price of pot increase roughly $2 more per gram or
$7 more per eighth of an ounce after the price hikes set in.


marijuana plant fire
Marijuana
plants are covered in fire retardant.

Josh Edelson/AP

The fires came at one of the worst times for the marijuana
industry. Harvest takes place between the months of September and
November, and most grows provide crop for the entire year. Many
farmers had only just begun cutting their plants,
according to Forbes.

California produces
over half of the marijuana consumed in the US. According to
county surveys, there are between 3,000 and 9,000 marijuana farms
in Sonoma County, where the fires hit hard. The number of farms
in Mendocino County, where the illicit market thrives, is
unknown.

Both the California Cannabis Industry Association and the
California Growers Association reported “several
dozen” members that have lost their farms in the blazes. It’s
too soon to say what percent of grows in California were affected
by the fires, though it appears to be a minority.

Smoke also blanketed huge swaths of Northern California last
week, which presents a more widespread concern for the
marijuana industry, according to Nick DiNicola, whose
company, DiNicola Insurance Services, brokers insurance for
companies in the cannabis space.

“A lot of the farms weren’t destroyed but may not be able to sell
their product because of all the pollution that came down from
the fires,” DiNicola told Business Insider.

Smoke-exposed crops
are more vulnerable to disease, which could lead to unhealthy
levels of mold, mildew, and fungus. The marijuana might
also smell like fire, which causes it to lose value if
it’s meant to smell like “lemon haze” or “blueberry kush,”

according to the San Francisco Chronicle.


marijuana plant fire wildfire
Flames
surround a marijuana plant as a wildfire burns near Oroville,
California, on Saturday, July 8, 2017.

Noah Berger/AP

Still, the fires reached only a small section of the Emerald
Triangle, which also includes Humboldt County and Trinity County.

Local dispensaries that source their inventory from the
counties affected by the fires are more likely to experience
higher prices.

Marijuana extraction companies, which process marijuana plant
material for oils and concentrates, could also have trouble
getting their products to market,
according to Forbes.

Maritz, of BDS Analytics, added that the full extent of
the damage will be unclear until farmers collect what’s left
of their grow and send samples to marijuana testing
facilities.

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