We stare at what was once a fully functioning utility vehicle, now a rusty hunk of junkyard scrap. Russell Daniels and his girlfriend Katie Cuddy, who own the vehicle and rent the property it’s resting on, seem more shocked than upset. Daniels points at the tires, which are now just puddles of liquid metal and coiled wires. “There’s just no trace of the tires,” he says indignantly. “That’s how hot it got.” This is the first time Daniels and Cuddy have been here since the Tubbs Fire scorched the property a month earlier. Throughout last October, the fire destroyed some 5,500 structures in Sonoma County as the country watched on, earning the flames the dubious honor of one of California’s most destructive wildfire in history. Its estimated cost of damage: more than $7 billion.
With a GDP of $2.4 trillion, one of the highest in the world, much of California, and especially northern California, is home to gorgeous, green acreage ripe for agriculture and some of the most famous wineries in the country. But the north end of the state is also famous for another crop: cannabis. In October, the Tubbs Fire damaged or completely devoured numerous cannabis farms like the one we’re standing on, where Daniels and Cuddy had been cultivating marijuana for their company Candy Stripe Confections. The loss is massive. Daniels and Cuddy invested some $180,000 in infrastructure. Roughly $100,000 worth of product was almost ready for harvesting. All of it was destroyed.
As we look at the remaining greenhouses, the couple begins to have a visibly hard time processing what has happened to their farm, which is located on Mark West Springs Road in Santa Rosa, a city of 175,000 people about 60 miles north of San Francisco. The fire began in the area late in the evening of October 8, 2017, the first day of its ultimate 22-day decimation. Earlier that day, around 2 p.m., Daniels was on site checking on the plants. “It was clear. There was no smoke, no smell of a fire. Nothing,” Daniels says in his slow Californian drawl. “Our friend called us around 1 a.m. like, ‘I don’t know if the hill’s going to make it.’ It didn’t even click. It was like, no way. There would have been a sign.”
Cuddy interjects to tell me that until now, they’ve avoided coming back because of how emotionally taxing they knew it’d be. “We spent a year building this place. It’s devastating,” she says. “We never thought this would happen to us here. We thought we could get robbed, not that a fire would burn everything down.”
I follow them as they walk through the once meticulously designed, neatly organized and entirely organic farm they had poured blood, sweat and money into. They point out some melted pipes—formerly the irrigation system—and torn pieces of fabric hanging from charred trees.
More than two dozen of northern California’s vineyards were destroyed in the Tubbs Fire, but winemaking is an established, respected and federally legal industry, which means it is heavily insured. Cannabis cultivation is none of the above. According to Hezekiah Allen, executive director of California Growers Association, 47 cannabis farms reported significant damage after the fire. He suspects the real number is three times as high, and that estimate doesn’t include illegal operations.
The timing of the Tubbs Fire couldn’t have been worse. Following the 2016 election, many growers dumped thousands of dollars into proper permitting, compliance measures and stockpiling product ahead of California’s legalization of adult-use recreational marijuana, which took effect January 1, 2018. According to BDS Analytics, a cannabis market-research agency, annual sales are projected to reach $4.3 billion by 2021.
Unlike the wine industry, California’s cannabis growers received no help from the Federal Emergency Management Agency, the government’s disaster response and recovery outfit, since the Drug Enforcement Administration still classifies marijuana as a Schedule 1 drug alongside heroin and LSD. Though insurance plans for cannabis businesses exist, they are so limited and untested that few growers consider purchasing them. Daniels and Cuddy had no coverage; no company would commit to insuring an outdoor farm.
For growers who suffered losses, whether they still have a place at the economic table—or will recoup in general—is still in flux some four months later. One reason is that million-dollar companies armed with venture capitalists are moving into the state at rapid speed. As an example of just how seriously non-cannabis corporations are exploring the new market, in October, New York-based Constellation Brands, whose liquor portfolio includes Svedka and Corona, invested almost $200 million in a Canadian medical marijuana company called Canopy Growth Corp. In November, the former chief marketing office of Anheuser-Busch told the Washington Post that he had joined greenRush.com, a San Francisco-based startup that aims to be the leading online retailer of weed. “This is one of the fastest-growing categories globally,” he said.
Most insiders predict that fire damage will increase the price of cannabis for consumers, but local growers are facing other, subtler effects as the nation hits a major turning point in pot culture, with 29 states having passed some form of legality as of January 2018.
Throw in the growing threat of natural disasters and you end up with a burgeoning, billion-dollar industry whose sufficiency lies in delicate balance with the whims of Mother Nature.
On October 9th, the day after the fire began, Daniels and Cuddy drove south to Salinas, California to meet Pete Pietrangeli, owner of Los Angeles-based cannabis company Acme Elixirs. They made the drive under the assumption that they’d soon lose their farms (they have two) and their home. (The city evacuated them around 4 a.m. that morning. It would be another few days before they learned that their house had survived but one of their farms had not.) Their meeting with Pietrangeli was already scheduled, and surprisingly, they didn’t cancel. “We had to keep moving,” Daniels says nonchalantly.
Daniels has been making his income from cannabis one way or another for 17 years. He’s a careful planner, thoughtful saver and low-key about it all. But 2018 was supposed to be a big move forward for the couple with their three-year old company, Candy Stripe Confection. Daniels and Cuddy’s harvest was set to go into Candy Stripe Confections’ products for what many have deemed the Green Rush.
Luckily, one of their farms survived. For that reason, their October meeting with Pietrangeli had a different tone. Pietrangeli started Acme Elixirs in 2015, and a dispensary, LA Confidential Caregivers, in 2009. A film producer who started working in television in 2000, Pietrangeli moved to Los Angeles in 2006 and released his first feature, the Jennifer Aniston-led Life of Crime, in 2013. Much of the film’s financing came from his cannabis business.
He still works in filmmaking, but he excels in cannabis. "My true passion is filmmaking, but my dharma is cannabis,” he says. Pietrangeli recognized Daniels’ and Cuddy’s drive and the importance of building relationships with small growers as the industry becomes more legitimate. So Pietrangeli decided to make a deal with them, despite their fractured state, to help out in any way he could.
“I wasn’t thinking about their product or their assets or their resources. All I was thinking about was their motivation. It spoke volumes that they still showed up in good spirits. Not many people could pull that off,” Pietrangeli says. “The silver lining [of the fire] is the industry is coming together at such a crucial time, because before we weren’t on the same page.” In the wake of the Tubbs Fire, for example, the California Growers Association raised more than $200,000 to help fire victims in the cannabis community.
Northern California’s reputation for high-quality cannabis is well known among those who smoke pot regularly. In the last decade, an influx of small growers has moved to the area. This is partially the product of the progressive policies of Sonoma County and specifically, the city of Santa Rosa. I spoke with Casey Edmondson, vice chair of Santa Rosa’s planning commission, about whether the city plans to brand itself as an epicenter of cannabis tourism, much in the way Napa is for wine, but he said no. Cities already popular for tourism, like San Francisco and Los Angeles, he tells me, will take that mantle. Instead, he sees Santa Rosa as the future Silicon Valley of cannabis.
“The leadership here, and the business community here, don’t treat the cannabis industry as a second-class industry,” Edmondson says. “They see the cannabis industry as an opportunity to make the economy stronger for everybody. The number-one goal of the leadership, and the people, of Santa Rosa is to make sure that nobody who was living here when the fire happened has to move away because they can’t afford to rebuild or pay rent.”
Santa Rosa committed to making sure everything supporting adult-use pot stayed on schedule in the fire’s aftermath, despite the neverending list of issues everyone had to contend with. It’s a strong indicator of how local leaders are prioritizing pot. A few weeks after the fire, Santa Rosa’s planning commission voted 5-0 in favor of recommending the City Council adopt a comprehensive ordinance that treats adult-use and medical cannabis largely the same.
"Santa Rosa has been open in embracing the cannabis industry, and has taken a lot of steps in the land use and economic development categories to make it easier for cannabis businesses to set up shop and do business smoothly here,” Edmondson says.
Before the fire, housing had already been an issue, but with thousands of houses being burned to the ground, supply is down and demand is way up. Those who do find housing face outrageous, unaffordable rent hikes. For citizens affected by the fire who make their money from cannabis, they now face the double hurdle of high living expenses and increasing operating costs.
Commercial and industrial rates for cannabis have doubled as of late because of legalizaion and the Green Rush, pitting cash-strapped local growers against outside companies who are attracted to the city’s friendly policies. Many people who suffered even minor damage in the fire are now behind when they should be open for business. At this point, they may not be able to afford to operate legally even if they want to.
Dan, a grower who agrees to speak to me anonymously, was at home in Sonoma County’s Mark West area when the fire showed up at his door step. He only had time to put on some shorts and one shoe before escaping. By the time he reached the end of his driveway, his house was in flames.
Dan is an entrepreneur. While he grew weed at home illegally, he was in the process of getting his permits sorted out. A former tile-setter, he entered the black market a few years ago and generated startup capital from his own operation. Weeks from harvest, he had lined up a buyer and his safe was stocked with more than $75,000. Everything was set for him to start a licensed business in January. All of that’s gone. In October, he left his house with $20 in his wallet and $300 in his checking account.
"I had to go to the Red Cross to get toilet paper, toothpaste and a toothbrush,” Dan says. “It’s hard to say if I’m financially going to be able to get back into it. I love the business. I want to be able to tell people, Hey, I grow marijuana legally. I’m still trying to get over the loss.”
Pietrangeli estimates he lost roughly $100,000 worth of value in his harvest.
It’s hard to track exactly how many people had been growing pot in their homes like Dan. But the number of illegal growers is likely higher than that of legal growers.
"They’re like two tornados hitting each other,” says Andrew Whiting, an account manager for one of the largest cannabis distributors in the state. ”[Fires like these and operating costs] are serious speed bumps. People start considering, ‘Should I go back to the black market?’ It’s a muscle reaction. Go back to what worked because they know they can generate cash.“
The size of California’s black market is already significant, even with recreational use becoming legal. According to Pietrangeli, the black market is an essential part of many civic economies because California-grown weed is coveted around the world. "California is Costco for weed for the rest of the world. They say we’re a $2 or $3 billion-dollar industry. We’re a $13 billion-dollar industry,” he says.
And the state’s legislature knows that. That’s why, going forward, the war on drugs may very well transition into a war over taxes, especially with the federal corporate tax rate recently being cut from 35 percent to 21 percent. Fiona Ma, a member of the state’s Board of Equalization, told me that California expects to receive $1 billion in additional tax revenue in 2018 alone from cannabis. It will take three to five years, she presumes, for the system to be fully implemented, but when it is, resources that had once been dedicated to shutting down drug operations will be directed toward getting legal growers to pay more taxes. In other words, while pot legalization is a windfall for the state, California may crack down more on legal growers than they have previously on black-market growers.
Both Pietrangeli and Daniels tell me about the big sums of money they’ve made in the shadows in their early years. “I was making $4,000 a week,” Pietrangeli shares. Now they’re facing taxes as high as 45 percent, and they know there’s no way around it if they want legitimacy.
“It’s going to be great for our economy,” Ma says. “The criminal element is still going to be around. But the faster we can move it above ground, the better it’ll be for Californians.”
The jump to legalization is, oddly, a risk for growers who have found success operating underground. However much they invest, there’s no guarantee that they’ll be perfectly compliant, as many California cities are still working out local regulations and zoning laws. Back in Santa Rosa and elsewhere, small-time growers affected by fire damange have had less cash to devote to shifting regulations.
“Compliance is expensive. You have to worry about water runoff. You have to worry about licenses and permits. So many different variables can disqualify your property from being compliant,” Daniels says. In other words, legalization has offered few safeguards for growers. Throw in the growing threat of natural disasters like wildfires, which continued to ravage California through the end of 2017, and you end up with a burgeoning, billion-dollar industry whose sufficiency lies in delicate balance with the whims of Mother Nature.
I visit Pietrangeli at a cannabis grower resources store, GrowGeneration, in Santa Rosa, shortly after I witness the damage at Daniels and Cuddy’s farm. The store remains perfectly intact despite sitting a mere parking lot’s length from a Kmart that burned to the ground. Many customers assumed GrowGeneration also burned down. “We are still fielding several calls a day with people saying, ‘Are you still open?’” store manager Joe Nelson tells me. GrowGeneration has been doing what they can to donate equipment to affected growers. "These guys have been self-reliant, successful and hardworking their whole lives, and now they’re sleeping in their truck and have nowhere to go,” Nelson says.
Though Acme’s headquarters and his dispensary are located in southern California, Pietrangeli works with five farms up north. We drive out to a farm he leases just outside of Lagunitas, about 30 miles south. Since the Tubbs Fire spread quickly, he and on-site grower Chris Leenhouts evacuated as much of the crop as possible. If they didn’t, smoke damage would render it less sellable regardless.
"There was ash raining and smoke so thick it hurt to breath. My lungs were burning,” Leenhouts recalls. Indeed, smoke damage may have damaged more cannabis than the actual flames. Pietrangeli estimates he lost roughly $100,000 worth of value in his harvest.
In the panicked evacuation, Pietrangeli realized he had no place to store his product, so he reached out to Andrew DeAngelo of Oakland, California dispensary Harborside Health Center, another small player in the cannabis community. DeAngelo’s dispensary carries Beboe products, one of Acme’s collaborations. “We help everybody in our community—or we try anyway,” says DeAngelo. “We don’t have insurance, we don’t have banks. We don’t have credit card processing. We still have law enforcement doing their thing. When disaster strikes, we have to come together.”
For Pietrangeli and Daniels, two men who’ve made their income from cannabis since they were teenagers, weed means more than money to them. It’s a culture that they, and people like them, have helped create. It’s because of their hard work and appetite for risk-taking that marijuana has been able to leap into mainstream commerce. “We paved the way,” Daniels says. “It’s just like prohibition with alcohol. Those people who created their liquor businesses are now multi-millionaires with huge corporations. That’s what’s going to happen to us. Guaranteed. We are the originators. We set the trends.”
Outdoor-grown cannabis is what northern California is known for. To preserve the quality—and the culture—of the region’s cannabis, it needs to continue to grow outdoors, insured or not. For now, farms like Daniels’s and Cuddy’s will remain uninsured until cannabis the federal government legalizes pot nationwide. In the meantime, one has to wonder what will happen to California’s recovering growers as cash-rich corporations move in and state lawmakers pile on more and more regulations.
Can the small guys, like Daniels and Pietrangeli, who created successful businesses from nothing, become competitive again before it’s too late? In many ways, legitimacy has been a pain in the ass for people in California’s cannabis economy. Taxes will be high and keeping up with codes will be challenging. But there’s something driving these growers to a life out of the shadows. As I talk to farmers like Daniels and Pietrangeli and others, it becomes clear that these entrepreneurs, now their own special community, have always seen themselves as outsiders and now crave legitimacy beyond the system.
“It’s sad when you as a person have a passion in something but you grew up hiding it. A lot of major industry people are in the same shoes. I’m over living in the shadows,” Daniels says. “Now my opinion is the educated one. While everyone else labeled me a drug dealer, I learned a lot about marijuana. Now everyone wants to be what I am.”