The fires that ravaged more than 200,000 acres in Northern California has hit the local cannabis industry hard. In Mendocino, Sonoma, and Napa counties, at least 34 farms were destroyed by the flames. Processed and packed product, drying buds, flowering crops, and farming equipment all went up in smoke, costing growers dearly at a time when many have made extensive investments in the California cannabis permitting process.
If your cannabis business is suffering as a result of these devastating fires and you want to know how to get back on your feet, call a California cannabis lawyer at McElfresh Law. Call today at (858) 756-7107.
Federal Cannabis Prohibition Rules Out Online Donations to Farmers
Adding insult to injury, the affected farmers have been unable to receive the more than $13,000 in donations raised by the California Growers Association on the crowdfunding website YouCaring.com. According to company spokesperson Austin Kapur, YouCaring.com “supports all forms of treatment and most fundraiser types,” but payment providers WePay and PayPal “do not allow fundraisers for anything marijuana-related, including for medical reasons.”
WePay representative Jeremy Milk wrote in an emailed statement that “to comply with federal law and related government notices, WePay’s bank and card association partners prohibit us from processing payments related to marijuana.” He added that they can “process payments for campaigns to support growers’ families, but not to support their cannabis crops.” This means that by refocusing the crowdfunding campaign, it may be possible to get the farmers the relief they deserve.
How Will the Fires Affect California’s Cannabis Industry?
The fires were tragic, but the resulting economic losses to cannabis growers are but a bump in the road for what is estimated to be a five billion-dollar-a-year industry.
Some Northern California farmers may be out of business, however. Dozens of farms were completely destroyed, while many others saw the value of their harvest significantly diminished by damage from smoke, heat, wind, and ash. Drying sheds, storage barns, greenhouses, and irrigation systems will need to be rebuilt. Some farmers lost their homes as well.
The first problem is that cannabis farmers do not benefit from the same safety nets available to other agricultural businesses, such as wineries. For example, federal regulations prohibit people who cultivate marijuana from obtaining crop insurance, which shelters much of the agricultural sector from accidents caused by weather and acts of god that can destroy a harvest. Similarly, cannabis businesses are ineligible for any relief from the Federal Emergency Management Agency (FEMA).
The second problem is that farmers are facing these liabilities at a time when they have made huge investments in becoming compliant with California’s new cannabis business regulations. Some farmers whose crops were destroyed have no money left to rebuild, because they’ve spent their entire savings on the consulting, legal, and permitting fees needed to comply with the new regulatory requirements.
Northern California’s Growers Will Rebound
Many affected growers have expressed their determination to stay in the business and overcome this hurdle. Some Northern California farmers are jokingly calling their lower-grade, ashy harvest “campfire pot” or “hickory kush.” They can still sell this product, albeit at a reduced rate. Another strategy is to process the damaged plants for the manufacturing of oils, tinctures, and edibles. The profit margin on these products is thinner, but it may enable cultivators to stay afloat until next harvest.
McElfresh Law Can Help
At McElfresh Law, our goal is to give California cannabis entrepreneurs the tools they need to succeed in a complex industry that is changing at a rapid pace. If you want to structure your cannabis business in a way that can protect your from unforeseen events and liabilities, California cannabis business lawyer Jessica McElfresh can help. Call us today at (858) 756-7107 to schedule your confidential consultation.
California marijuana laws change frequently. For updated information, see the following pages: Medicinal Uses of Marijuana and Recreational Marijuana Business