Marijuana Business Magazine November December 2018

A ny business is vulnerable to a natural disaster, be it a flood, hurricane, earthquake or wildfire. But in the cannabis industry, where business and property insurance can be hard to come by, an act of God can be particularly devastating. Since 2017, the cannabis industry has seen several catastrophic events hit business owners, forcing them to rebuild their operations from the ground up. Two natural disasters in 2017 were particularly damaging: the deadly wild- fires in California and the devastating impact of Hurricane Maria on the south- eastern United States and the Caribbean. In Puerto Rico, medical marijuana business owners suffered millions of dollars in losses after the Category 4 hur- ricane wiped out cultivation, manufactur- ing and retail facilities and knocked out power on the island for months. In Northern California, cannabis growers watched wildfires ravage their farms while smoke contaminated their plants. “There’s a lot of chance and bad luck that comes with events like this,” said Erich Pearson, the founder of SPARC, which has a cannabis cultivation opera- tion in Glen Ellen, California. Pearson lost about $5 million worth of cannabis in October 2017, when wildfires roared through Sonoma County. “That’s the thing about natural disas- ters,” he added. “They’re natural disasters because we’re all caught off guard.” What can a cannabis business owner do to rebuild once a company has been ravaged by something beyond their control? Industry experts recommend the following: • Choose materials – think metal – that are better suited to withstand damaging elements, including fire or wind. • Build greenhouses that are lower and sturdier, making them less vulnerable to strong winds. • Procure insurance that will replace the full cost of a lost crop, although options for such coverage may be limited. • Prepare the surrounding land – dig fire breaks or thin trees, for example – to protect buildings against wildfires. • Buy a tanker truck to fight any fires that do break out. Prepared in Puerto Rico Mariela Quiñones, vice president of business development for Encanto Giv- ing Tree, a Puerto Rico MMJ business with a greenhouse and manufacturing site in Santa Isabel and four dispensaries across the island, had to rebuild after Hurricane Maria hit in September 2017. The winds, which clocked in at more than 100 mph, destroyed the greenhouse, costing the company at least $1.5 million in damages and lost revenue. This time, Quiñones is building two smaller greenhouses out of galvanized steel that can be easily dismantled to avoid the damaging winds of a tropical storm.The galvanized steel columns are designed to sustain winds of 80-100 mph.The greenhouses also are closer to the ground, so they aren’t as exposed to hurricane-force winds. Her company also has built a “bun- ker” – a building with concrete walls where employees can store materials such as hydroponic equipment and trellises during a hurricane.The facility doubles as a nursery when it’s not pro- tecting equipment and crops. “We’re ready,” Quiñones said. “We took all the measures necessary to pre- vent this from happening again.” Careful in California Pearson’s cannabis farm is on a 400- acre ranch. Last year, his crop was har- vested and had just begun drying when fires swept through, torching everything, including the property’s outbuildings and homes. The marijuana that didn’t burn suffered significant smoke and soot damage. Unfortunately for Pearson, the $5 million loss wasn’t insured. It was a straight hit to his bottom line. EXECUTIVE SUMMARY What do you do when your cannabis farm is hit with a natural disaster? Hurricanes, wildfires and other acts of God can be devastating to your marijuana business. In order to mitigate the damage and recover efficiently, keep the following in mind: • Choose building materials such as steel that are more resistant to fire and wind. Build shorter, smaller greenhouses. • Get insurance, if available, that will cover the full damages for a lost crop. • A tanker truck that holds water can be useful for fighting your own fires. • Prepare the land around your facility to lessen the chance of flames reaching your cannabis. Taylor Blake, executive producer of the Emerald Cup in Northern California, suggests cash-based businesses keep their money in a fireproof safe. Photo courtesy of Taylor Blake November/December 2018 • Marijuana Business Magazine • 87