California Fires May Drive Pot Prices Up

The fires that hit Northern California and affected cannabis farmers in the state could drive pot prices up for a long time.

Marijuana farmers who lost their crops and homes to the recent California wildfires may find it hard to get back up due to the legal complications that are limiting the expansion of disaster recovery services to them.

For starters, marijuana growers are not eligible to receive federal disaster assistance grants from the Federal Emergency Management Agency (FEMA). They cannot get support from the United States Department of Agriculture (USDA) or the Small Business Administration (SBA) either due to the drug’s illegal status on the federal level.

If there ever were insurance programs catering to marijuana cultivators, the policies are usually expensive and the coverage, meager.

Those who successfully secured an insurance on their products are now faced with the challenge of laying down and cashing the payouts for their claims.

Aside from limited insurance options, banks are also shying away from extending their financing services to marijuana farmers. As a result, most of the rebuilding cost would have to come from the farmers’ pockets, something that may take a long time due to the current hurdles.

Price hike

California’s cannabis industry totalled $7 billion last year. With the state’s recent loss, there’s no telling how badly that would affect the numbers but it’s certainly not looking good.

Mendocino county took a hard hit, a part of so-called Emerald Triangle which is considered the capital of the country’s cannabis industry.

Any disruptions in the supply chain can cause a drastic impact on prices. Right now, it’s projected that prices may increase by 10 to 20 percent, based on disruption event patterns in other states. How long a hike is sustained depends on how quickly an issue is resolved and the current California picture is erasing all hopes for a quicker resolution.

The state is set to open their doors to recreational marijuana on January. But with the recent events, it’s beginning to look a lot like a bad start.

Justin Meerkat

Cannabis Entrepreneur & Cofounder | Follow @justinmeerkat on Instagram

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