American Cannabis Prices Are About To Spike By 20 Percent
California is the hub of Marijuana production. Early this month a huge wildfire was reported that has engulfed dozens of farms. The rest of the areas have been damaged by the fire smoke. The complete extent of the damage will be known only after the crop growers send samples of the damaged crop for testing. The effect of this huge catastrophe will be an upward spike in the marijuana prices. It is expected to see a 20% hike in the prices of these plants as an after effect of the fire which has destroyed a full year’s supply for certain crop growers. The magnitude of the loss is huge as California alone is responsible for the production of more than half the amount of marijuana that is consumed in the United States.
Northern California saw more than twenty wildfires that were spread across Sonoma, Napa which lead to the complete destruction of more than 5000 structures and land areas upto two lakhs acres, which is the total amount of land in New York. Around forty people have been reported dead. This figure is a rough estimate of the complete damage and the figures are likely to change after the crop growers that had been evacuated, return to their homes. We can expect an increase in the total damage estimate once the evacuation orders are withdrawn.
Wildfire’s Effect on Marijuana Farms
The areas most badly affected were the marijuana farms located at Sonoma County, few areas of Mendocino County also reported damages. There are not less than 9000 farms and processing units at Sonoma County that were gutted down by the fire. Mendocino County has a lot of illicit crop growers and so the exact damage is not well known as yet. Both these areas form parts of Emerald Triangle which is called as the marijuana capital of the United States. 60% of this area if affected will have serious implications on the legal and illicit marijuana markets.
The fire struck at the most unfortunate time. The months of September to November are usually harvest months for marijuana plants and most of the crop growers had begun the process of harvesting their produce. Also many crop growers do not have insurance for their farms thus making such losses very big and irreparable.
There have been several reports of damaged farms from the California Cannabis Industry Association and California Growers Association. In an interview one of the consultants who provides insurance services to farms in the Cannabis space said that not too many farms have been lost, but the smoke rising from the fire has damaged the surrounding crop making it unfit for sale. The crops that have been exposed to the smoke of the fire are more prone to developing fungus, mildew and mold like diseases making them unhealthy for consumption. Another major problem is the smell of the plant. Marijuana plants are perfected to have blueberry seeds or lemon haze smells which are completely replaced by the burnt odour. Fire is also known to change the soil composition and decrease the nutrients within it. The soil is more prone to erosin and the nutrients required to grow the weed are significantly reduced. High-intensity fires like this one thus reduce the overall productivity of the soil affecting the marijuana production to a great extent.
The crop that got destroyed in the fire would have made for the medicinal supply through the entire 2018. So a shortage in the supply is expected as there is a planned launch of a market for recreational use of marijuana. The California regional director on marijuana data, Tamar Maritz has analysed a 10-20% rise in the marijuana prices as a result of the wildfires. The studies of BDS Analytics have found a big disturbance in the demand and supply chain in Washington, Colorado and Oregon. This price hike was studied to be different from the price change that happens prior to a recreational launch. The transient price variation comes back to normal within three months of the launch.
The market rate for legally sold, marijuana for nonmedical use is $11 for one gram as per reports by MJ charts. According to market studies, the price of legalized marijuana could rise by $2 for one gram.
Image Source: nbcnews
October 28, 2017
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