What the California Fires Mean for the Weed Industry

The devastating Northern California wildfires couldn't have come at a worse time for the area's cannabis farms

CannaCraft, a Northern California cannabis company, lost at least $1 million worth of marijuana in the fires. Credit: Courtesy of CannaCraft

Ashley Oldham, one of only a few dozen legal pot growers in Northern California's Mendocino County, was sound asleep in the early hours of October 9th when she woke to the sound of her neighbor banging on her door. He'd driven through flames and jumped her fence to tell her that she needed to get out, that a fire was headed straight for her home and cannabis farm.

Oldham, the owner of Frost Flower Farms, jumped out of bed. She grabbed her daughter, dogs, computer, a filing cabinet, some clean laundry and the stash of cash that she kept in her office – other stashes with more money weren't easily accessible, so she left them behind. Then, she got out. About 15 minutes later, the flames consumed her house and burned it to the ground.

Oldham stayed the night at her best friend's house in Ukiah, a 20-minute drive away. In the coming days, high winds and dry conditions contributed to Northern California fires that burnt at least 240,000 acres and blanketed multiple counties in smoke. So far, the fires have killed at least 42 people (with 50 others still missing), displaced 100,000 and caused more than $1 billion of insured losses.

California's thriving cannabis industry wasn't spared by the destruction. Assessing the early damage, Hezekiah Allen, executive director of the California Growers Association, says that 30 to 40 percent of the state's marijuana growers could have been affected in some way, whether by fires or the resulting smoke and toxic particles in the air.

In the morning, after a long and terrifying night, Oldham drove back to her neighborhood. She needed to see if her plants were still alive. If they were, she needed to water them. Cannabis like hers, grown with a combination of lamps and natural light, can dry out in as little as a day, she says.

Oldham, like other growers in Mendocino County, has invested thousands – in her case, she says, $80,000 so far – to meet the requirements to become a legal, registered marijuana grower in anticipation of full recreational legalization in the state, which is set to go into effect on January 1st, 2018. It's the reason why this year, of all years, was perhaps the worst for a fire like this, according to Chiah Rodriques, the CEO of Mendocino Generations, a collective of organic cannabis farmers in the county. There are 40 farms in the collective, all of which are either legal or are in the process of becoming legal.

"So many of these people have literally spent their last dollar trying to get permitted," Rodriques says. And what's worse, she notes, once growers are legal they're subject to a flat fee local tax. Those with 5,000 to 10,000-square-feet of canopy, for instance, are required to pay at least $5,000 per-growing-cycle, whether they make any money or not.

"Other industries don't have a flat rate tax like that," she says. And, in a case of especially bad timing, some farmers who likely lost everything received their bill for that tax this week, although the Mendocino County Tax Collector's Office said on Friday that the Board of Supervisors may consider waiving the fee for those who lost their farms. Yet still, it's one of those things that can make legality seem like more trouble than it's worth.

"Every time we turn around it's 'Go this way, pay this fee, talk to this agency,'" Rodriques says. "We're really getting the shaft here and [it's too bad because] we've really been putting ourselves on the line.'"

On her way to her property on Monday, Oldham was stopped by a blockade. Her rural neighborhood was an evacuation zone and no one was being let in. So, Oldham parked her car and hiked three and a half miles to her property with a friend. On the way, she says, they saw multiple small fires, some of them in her neighbor's yards. Every time she saw one, Oldham would grab the nearest hose and extinguish the flames. She wasn't supposed to be behind the lines, but she needed to get to her crop, she says.

When she reached her property, Oldham found her greenhouse and the majority of her plants still standing amidst the rubble. Some of the plants were singed, and two of her other buildings, which housed processing and other equipment, were gone. But she still had something. She watered the plants and left.

On the second day, Oldham hiked in again, this time with three friends. Again, they put the out fires they found, hoping to save neighbor's homes. Again, they watered the plants.

On day three, Oldham learned that the sheriff's office was letting dozens of vintners in to water their grapes. As a legal grower who is registered with the county and pays taxes, Oldham had nothing to hide. She approached a sheriff's deputy and asked to be let in.

"I said, 'Hey, I need to get in. I pay my taxes. I passed every agency test. I'm 100 percent legal.' They basically laughed in my face," she says.

Over the next few days, Oldham tried repeatedly to return to her property. She says that each time, she was denied entry and told that her name wasn't on "the list," despite having permission from the County Agriculture Department and a public statement from the Sheriff that legal growers would be given the same access as those with vineyards in the area.

Greg Van Patten Captain, who served as the operations chief for the Mendocino County Sheriff's Office during the emergency, says that there were probably "hiccups" in the communication between the local agriculture department, the farm bureau and his office. He also says that some farmers whose names were on the list may have been turned away because their properties were in "active fire zones," not just evacuated zones, because it was considered too dangerous to let them in.

"If the information was given [was to let them in] I could care less about what they do or who they are," Van Patten says.

But discrimination is something that legal cannabis operations are familiar with. Santa Rosa-based CannaCraft, Inc., a legal company which saw at least $1 million-worth of cannabis and several of its structures destroyed in the fires, as well as 20 percent of its employees evacuated, experienced another kind of disaster when it was raided in 2016 because of alleged code violations. Law enforcement, including officers from the Santa Rosa Police Department and U.S. Drug Enforcement Administration, took $8 million worth of equipment and cash that they have still not returned, according to spokeswoman Kial Long. The Santa Rosa Police Department says that it was not able to confirm or deny that it still had CannaCraft property in its possession, because the city is still in a state of emergency and officers who would normally be in the office were all out assisting people who had lost their homes in the fire.

But one silver lining of the fires, according to Long, came in the dark days after the blazes started, when much of Santa Rosa looked like a smoking wasteland. CannaCraft employees went into an evacuated area to see how bad the damage to one of their structures was. While there, a sheriff's deputy stopped by. The CannaCraft employees were originally concerned that the deputy would wrongly suspect that they were an illegal operation. But instead, he advised them that they should protect their surviving plants from looters. For Long, it was a hopeful sign that cannabis was gaining recognition as a legitimate industry, and that their business is being seen as a part of the community, not something that's undermining it. To that end, CannaCraft also offered up part of their office to growers who lost their facilities and as a temporary regional headquarters to 200 members of the Red Cross, who set up their office in CannaCraft's building.

"We have so little help outside of the industry that we're really used to helping one another," Long says.

Like Oldham's operation, CannaCraft didn't have insurance on the marijuana plants, because it's either too difficult to get or prohibitively expensive.

Erich Pearson, the CEO of SPARC SF, San Francisco's largest licensed dispensary, is experiencing uninsured losses, too. In 2016, SPARC moved some of its greenhouses to Glen Ellen in Eastern Sonoma County, directly in the path of one of the fires. "We were basically ground zero for the 'Nuns Fire'" Pearson says, referring to one of the many fires that sprung up in the area starting on October 9th. As for why he didn't buy insurance, Pearson says, he didn't think it was worth it at the time. "Insurance for a crop loss seems like you're flushing your money down the toilet until it happens," he says. "You have so many other expenses. Everyone's going through these regulatory processes now. Who would have ever thought that we'd have a massive forest fire sweep through the property?"

And yet, all of the cannabis growers say they went into this business knowing it was risky and uncertain. Staying in the shadows and operating illegally has as many risks as trying to become legal. "It depends what kind of risks you want," says Oldham.

Pearson agrees. "This is a pretty risk-inherent industry," he says. "And you go in understanding those risks, whether you lose crop to law enforcement who's taking it or whether it's crop loss."

Rodriques says she wishes public agencies would be more helpful. "This is about livelihoods," she says. "We paid a lot of fees to the government and they don't have our backs."

Part of the issue, Oldham says, comes from the misconception that all cannabis growers are making boatloads of money, or that they're all the same, whether they're legal or illegal.

"I feel like we are treated unfairly in general," she says. "There's a major lack of respect for cannabis growers and our local bureaucracy is having a hard time differentiating between black market cultivators and those who are legal. And they have this major misconception about how much money we have – like we all have millions of dollars buried in the forest. That's not true."

At a cannabis business conference in Oakland last Friday, some people say that the fires could keep the price of weed from tanking this year. With so many new growers and larger operations, that has been a concern. But Pearson says he doubts the fires will affect the cost. His estimation is that the fires only destroyed about 5 percent of this year's crop.

But the total number of those affected is still unclear, according to Josh Drayton, the spokesman for the California Cannabis Industry Association. In the days following the fire, he says, cell service was spotty, and the association couldn't reach members. As it stands now, some people are just beginning to return home and assess the real damage.

"We will know much more in the next few days," he says.

Oldham, for one, says she intends to return and rebuild, although she doesn't know where she'll start. Technically, her grower's permit depends on there being a house on her land and a fence around it – two of the things that burned down. She also feels the need to be close to her crop, to tend and protect it, but she doesn't know if it would be dangerous to stay in a trailer on her property, since the some of the ash from her burned home could be unhealthy to expose herself and her children to.

"I'm not going to sit here in my burnt-down house and cry about it," she says. "The only thing I can do is keep my chin up and put one foot in front of the other. This will be like starting over. But I think, with the support of my community, I can pull it off. The legal community is totally different than the black market community… people are way more into supporting and helping each other (and) there is a major sense of solidarity."

Pearson, who survived the fire with much of his total SPARC operations unscathed, is similarly optimistic. But not everyone is feeling as resilient.

According to Rodriques, the fires have almost certainly finished off some very good farmers who were just getting started. "It's depressing," she says. "It's just incomprehensible for someone to go back to their farm, the only thing they have left, and find crispy cannabis...It's like being raided. In fact, it's worse."