California Pot Growers Caught Between Fires and Federal Law

By Paul Gaita 10/13/17

Without insurance, marijuana growers will have no way to recover the money lost from their destroyed crops. 

Brush fire in Ventura, California.

Wildfires in Northern California have burned more than 160,000 acres of land—including more than 2,000 homes in the city of Santa Rosa—claiming at least 31 lives and spurring Governor Jerry Brown to declare a state of emergency in eight counties.

The 22 fires have also wreaked havoc on two major local industries that intersect in the region: the vineyards of Napa, Sonoma and Mendocino counties, and the marijuana farms that make up the Emerald Triangle. And while the loss of life can never be recouped, some property owners and businesses will be able to overcome the destruction through insurance.

However, that won't be the case for Northern California's marijuana growers.

The reason? As noted in a feature on CNN, marijuana farmers cannot insure their farms because their crop remains illegal under federal law, which steers away major insurers. Derek Peterson, CEO of the cannabis-focused agricultural company Terra Tech, estimates that a typical marijuana farmer in the region will invest up to $8 million in their operation.  

"If their facilities burn down, a lot of these people won't be able to get any economic relief," he noted. "There's no mechanism for recovery to repay them for their loss. It's a tremendous risk for these people."

Since the fires are still raging in many parts of Northern California, it remains too early to say exactly how many marijuana farms have burned down. But Nikki Lastreto, secretary of the Mendocino Cannabis Industry Association, said that she is aware of several farmers who have lost their property and crops already. "In southern Mendocino County, there are farms burning right now," she said.

Josh Drayton, spokesman for the California Cannabis Industry Association, said that the toll taken by the fires "is going to be larger than anybody would hope it to be." That impact will largely be shouldered by the business owners, since the state's overall supply is so large and farms are located throughout the state.

A study by the California Department of Food and Agriculture found that the state produced more than 13 million pounds of marijuana in 2016, which generated more than $2.8 billion from medical marijuana sales alone. Marijuana industry observers predict that recreational sales, once the regulations have been solidified, will bring another $6.5 billion to the state by 2020.

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Paul Gaita lives in Los Angeles. He has contributed to the Los Angeles Times, Variety, LA Weekly, and The Los Angeles Beat, among many other publications and websites.