California Wildfires Reveal the High Cost of Cannabis Prohibition

 

As the ash settles on what is now being called the most destructive wildfire season in the history of the state of California, Governor Jerry Brown referred to the horrific disaster as “the new normal”.

The most recent iteration, the Camp Fire in Northern California has claimed three times as many lives and structures as any other fire in the state’s history. In fact, in its two-week warpath, the Camp Fire destroyed more buildings than the previous seven “largest wildfires ever”, combined.

The staggering loss of life and property so far this year and the heroic efforts by fire crews and brave neighbors are rightfully dominating the headlines in most media outlets, but there is another underlying tragedy at play in California that is not receiving enough attention.

Last fall, the Emerald Triangle was ravaged by what, at the time, was the state’s largest wildfires on record. Among the losses were hundreds of acres of outdoor cannabis farms. Some were literally burnt to the ground while others were blanketed in the fallout of ash, rendering the affected buds unfit for any sort of consumption.

With the rapid growth of the legal California cannabis market in the past year, 2018’s Camp Fire, as well as the Woolsey Fire further south towards Malibu and Thousand Oaks, have undoubtedly affected a large number of outdoor cannabis grows.

And, to be sure, marijuana is not the only agricultural crop that went up in smoke this year as acres and acres of oranges, avocados, almonds, and more were likely lost as well as the fire fanned across some of Cali’s most fertile farmlands.

The difference though is that unlike those other cash crops, cannabis is still highly illegal at the federal level and that fact comes plainly into focus as the smoke clears on these tragic natural disasters.

THE HIGH COST OF PROHIBITION

In the wake of such events, the traditional response by the Federal Government is to step in and provide relief by way of funding, as well as boots-on-the-ground aid to provide temporary shelter, medical services, food distribution, crisis counseling, unemployment relief etc.

Instead, we got President Trump on November 10th (while the fires were still burning) issuing Twitter-threats to cut Cali’s disaster relief funding. Just a few days later his brain worms subsided enough that he announced (again, on Twitter), “Wanted to respond quickly in order to alleviate some of the incredible suffering going on. I am with you all the way. God Bless all of the victims and families affected.”

That final announcement came along with the approval of Gov. Brown’s November 8th request for expedited federal relief.

In addition to the services outlined above, these funds also go towards road and utility repairs, infrastructure maintenance, and even future hazard mitigation (no, not raking the forests like the president suggested).

But, just like in 2017, none of that federal relief will go to help replace the as yet undetermined amount of cannabis crops that were lost to this year’s firestorms.

It makes no difference what the law of the land is on the statewide level, since weed is still a Schedule I drug on the federal Controlled Substances Act, zero federal dollars are allowed to be allocated to bailing out Cali’s cannabis market, according to an official with the Federal Emergency Management Agency (FEMA).

It is this same top-down discrimination and prohibition that makes it impossible for these state-compliant cannabis farmers to legally bank their money. This leads to undesirable tax return filings and a dead end on most attempts at traditional loans and mortgages.

All of this after these companies and individuals have laid out tens of thousands of dollars for licenses and permits, they’ve spent much more than that for their own buildouts of their land, and then spent months working those crops only to lose them at the last minute.

Fortunately, most outdoor crops should have been harvested by the time this year’s largest fires took their toll, but active, surviving, greenhouses still suck in ash-polluted air and we still don’t know how much actual cannabis-related infrastructure or harvested/stored product was lost.

WHAT ABOUT INSURANCE?

Just a few years ago, asking an insurance agent to cover a crop of weed would have elicited any number of responses except for “Yes, let’s do it”.

But as the legal cannabis reform movement rises, the negative stigma surrounding the plant drops, and anyone who was at MJBizCon this year can tell you that there is no shortage of 3-piece-suits in the industry these days.

Among those corporate types making their way into weed are insurance agents.

In many of Cali’s jurisdictions, in order to be a legal, licensed operator under Prop 64 you must carry various types of insurance – like general liability, worker’s comp, or property insurance.

Crop insurance, however, is not as common. The choices are slim, the costs high.

Famously, one grower from Carpenteria was awarded $1,000,000 in a claim last year that his greenhouse crop was spoiled by ash-polluted air that caused his product to fail lab testing.

His annual premium was $30,000, his deductible $25,000.

That may seem like a small price to pay considering his 7-figure payout, but that is an incredibly steep number when compared to other agricultural businesses, especially for small to medium sized cultivation operations struggling to stay afloat in Cali’s new corporate-tilted marijuana market.

The reason that the costs are so high, if you can get coverage at all, is because in most cases only high-risk overseas insurance carriers have been willing to touch this industry.

In fact, after shelling out the one mill for the Carpenteria claim, that particular European carrier turned tail and ran as fast as they could away from weed.

Add in the reality that most outdoor cannabis grow ops in California are extremely rural. This often places them far from fire stations and gives carriers yet another reason to gouge those seeking protection.

CANNABIS IS THE “NEW NORMAL” NOW AS WELL

According to a report by Rolling Stone, approximately 30-40% of California’s cannabis cultivators were impacted by the 2017 wildfire season.

Despite the multitude of risks involved in growing marijuana, the fact remains that one acre of Napa grapes will yield about $350,000 a year, while an acre of even midgrade cannabis can pull over $1mill, so you shouldn’t expect farmers to flee as fast as their insurance carriers.

So what can be done to help them both now and in the future?

The cannabis community never fails to restore our faith in humanity when these disasters strike and many local grassroots fundraisers are likely already underway to help those affected by this year’s blazes.

Unfortunately, even popular online crowdsourcing applications have been known to shut down cannabis-related fundraisers – yet another distasteful aspect of federal prohibition.

On the macro level, the best thing that could happen for cannabis farmers not just in California, but across the country, would be a sensible and comprehensive cannabis reform at the federal level. The entire cannabis plant needs to be DEscheduled – as in removed – from the Controlled Substances Act completely.

Once this happens, not only will we see the full potential of the cannabis economy truly bloom, but those of us who are doing everything we can to be legal and compliant will finally have the same rights as other industries do in order to help our businesses grow during the good times, and just as importantly, to help them recover from the bad times.

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If you are looking to donate to the families and communities affected by this year’s record-breaking fire season, you can find a list of vetted charities HERE

 

 

 

 

Post by Jack Riordan

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