‘We lost it all’: Puerto Rico medical marijuana businesses assess hurricane damage

Just Released! Get realistic market forecasts, state-by-state insights and benchmarks with the new 2024 MJBiz Factbook member program, now with quarterly updates. Make informed decisions.

By Bart Schaneman

Hurricane Maria devastated Puerto Rico’s medical marijuana industry, setting back its development at least six months – if not much longer – and causing millions of dollars in damage to MMJ businesses.

No outdoor marijuana cultivation facilities survived, but some dispensaries are operating and patients who can access them are still buying.

When the hurricane made landfall Sept. 20, winds reached speeds of up to 200 mph accompanied by heavy rain that caused flash flooding. The natural disaster is estimated to have killed at least 36 and cost the U.S. territory $100 billion.

It also wreaked havoc on Puerto Rico’s fledgling MMJ industry.

“All the greenhouses were blown away,” said Walter Marrero, a Dorado, Puerto Rico-based attorney with Colorado’s Hoban Law Group. “They don’t exist. We lost it all.”

The Puerto Rico Medical Cannabis Association is gathering information about the financial toll business owners incurred.

Javier Vergne – CEO of Encanto Giving Tree Wellness Center, a vertically integrated company in San Juan – said the hurricane lasted up to 14 hours in some places.

“It was like nothing I could ever imagine,” Vergne said. “It plowed right through the middle of the island, and really nothing was spared.”

Three weeks after Hurricane Maria, 8-9 indoor cultivation facilities and 19 of Puerto Rico’s 29 dispensaries are still operating, though they’re doing so with the aid of diesel generators and water tanks.

According to reports from people on the ground:

  • 5% of the electricity is back on the island, mainly in hospitals, the airport and some government buildings.
  • 40% of the 3.4 million people on the island have no access to running water.
  • Only 20% of internet and cell communications are back online.

Marrero expects 3-6 cultivators will come out of the disaster with operational businesses.

“Only the people with large pockets will survive this year,” he said.

A long road

According to Mariela Quinones – vice president of marketing for Encanto Giving Tree – the demand for medical cannabis remains strong, with people still lined up at dispensaries.

“There’s a lot of movement in the industry,” she said about an MMJ program that has about 12,000 registered patients.

Before the disaster, some industry experts were predicting Puerto Rico’s MMJ market could reach 100,000 patients. The program began in January, and businesses have seen a steady uptick in patients.

Current projections are that it could take up to a year to restore electricity, water and telecommunications.

“If they don’t get the electricity back, (MMJ businesses) will have to stop,” Marrero said. “The demand won’t sustain it. There will be a shortage.”

There’s currently one brand of oil and one brand of flower for sale, but Marrero said it’s not enough supply for the 12,000 patients.

‘Pretty much destroyed’

Lilach Mazor Power – founder and managing director of Phoenix-based Giving Tree Wellness Center, which owns Encanto Giving Tree – said the subsidiary lost a 24,000-square-foot cultivation facility that was under construction in Santa Isabel.

“We had a greenhouse facility that pretty much got destroyed,” she said.

Encanto was about a month and a half away from starting genetics in its operation.

Encanto’s goal is to rebuild, according to Power.

She said the plan is to wait a couple of months for everything to drain and dry, and for some of the infrastructure on the island to be rebuilt. It will be a 6-9-month delay, she estimated.

“Luckily, we did have insurance,” Power said, noting that the business’ downtime from the destruction compounded the loss.

“Every day that you’re not open is the major cost,” Power added.

Vergne couldn’t put an exact dollar figure on the damage incurred by Encanto but said “it’s substantial.”

Initial estimates have the damage to the greenhouse at about $750,000. But beyond that financial hit, the costs for shipping and leases for dispensaries add up.

Vergne said the company isn’t planning to lay off any employees and will carry their salaries.

Power failure

Many of Puerto Rico’s 19 operating dispensaries are open for business but are working without electricity.

Some are using generators, but gasoline is in short supply. The hurricane destroyed power poles and transmission lines.

“In the middle of Puerto Rico, around the mountains, it’s like a bomb exploded,” Marrero said. “There’s no way to get us electricity.”

Even the indoor marijuana facilities sustained extensive damage.

Without electricity, the power needed for an indoor facility is almost impossible to sustain, Marrero said. The demand for electricity is too large, and keeping a generator running is too expensive.

“Everyone is talking this will be a week or two weeks, but we’re talking about easily six months or a year to get the electricity back,” he added.

Government aid

One positive: Puerto Rico’s government has designated the medical marijuana industry as a priority for aid, behind top-tier priorities like hospitals, according to Vergne.

The Puerto Rico Department of Health also issued an emergency order that allows registered cannabis patients to temporarily get MMJ from any dispensary, not just the one where they are registered.

“The government really did step up in a time of crisis,” Vergne said. “It definitely gives me more confidence that they’re going to work with us to make the industry work.”

In retrospect, Vergne said, it could be worse.

“It’s a pretty devastating blow when you lose what you’ve been building over a year,” Vergne added, “but when you look at what other people have lost, it’s nothing.”

Bart Schaneman can be reached at barts@mjbizdaily.com