California Fires: Will You Pay More For Wine, Marijuana, And More?

Posted: Oct 22, 2017

Very few events are more devastating than having your entire life’s work go up in flames. For thousands of Californians, complete dismay and heartache have ravaged their lives along with those of their loved ones in the wake of 2017’s wildfires. Despite the evacuations that ensued as the wildfires spread across Northern California, dozens of residents were unable to get out. And the flames that engulfed much of the area displaced thousands more.

The regions most dramatically impacted are those of Sonoma and Napa counties. With some residents still waiting to return to their properties, the level of annihilation to homes, farmlands, and wineries continues to grow. The looming fear is that industries, including wine, marijuana, and real estate, could take years to recover from the carnage. Here’s how the wildfires could affect California’s economy — and your wallet.

Wine costs might not rise the way you’d expect
Only time will tell the impact of the fires on the cost of wine. What we do know now is this. Vintners in the area had harvested nearly 70% to 90% of their grapes prior to the fires, The Orange County Register reports. And only a fraction of the state’s wine production comes from Sonoma and Napa. The vast majority (75%) of the production happens in the Central Valley. Consumers probably won’t see much of a price jump at the store, but it will be interesting to see if those numbers change over the next few years.

But wine tourism will take a major hit

Tourists from all around the world frequent Napa and Sonoma for tasting tours and to see the harvest season. Besides those traveling specifically to taste wines, the wedding industry in Sonoma and Napa has been booming for years.

It’s estimated that tourism brings over $2 billion into the region each year, Reuters reports. But Jamie Cherry, co-owner of Napa’s Inn on First, told the publication in early October, “People are cancelling as far out as November already.” When the smoke finally clears, business owners believe a substantial amount of work and time will be required before the tourists and wedding parties will be lured back to the valleys.

Marijuana harvests are up in smoke

October is a busy month for marijuana growers in the state because it marks harvest time. In Sonoma County alone, there are anywhere from 3,000 to 9,000 cannabis farms, not including those that are undocumented. And the newly budding recreational sector of the industry expects to be a $6.5 billion market by 2020.

But the wildfires stalled production. Bloomberg reports fires destroyed at least six farms. And because cannabis is still illegal on the federal level farmers are not eligible for federal crop insurance, according to Bloomberg. Ultimately, prices for consumers might rise by as much as 20% in coming months, according to some estimates.

The struggling real estate industry has taken a massive hit

It doesn’t come as any surprise that victims of the fires are suffering the most in terms of finding a place to rest their weary bones. When tens of thousands of residents evacuated, they knew coming home to a pile of ash was a great possibility.

The area’s real estate market will take years to regrow. Homes that still stand could likely sell for 10% to 35% less than their original worth, according to For properties with destroyed homes, it’s likely to see those lots sell for 60% lower. In terms of rebuilding back to what the region once was, it’s expected to happen at a rate of 10% to 15% each year.

The overall economic impact is massive

The grandiose impact of these fires on the economy of both California and the United States is already being felt. The estimated cost of the fires to the U.S. economy is around $85 billion. But that number could still rise. Also, firefighting agencies both on federal and state levels are eating up more of their budgets each year, the Associated Press reports.

Who is responsible for these fires?

Investigations are underway to find evidence on how these wildfires transpired. Meanwhile, a Santa Rosa couple filed a lawsuit against PG&E, California’s largest electric company, after fire destroyed their home. The lawsuit alleges PG&E practiced negligence when it came to the upkeep of equipment, leading to malfunctions that sparked one of these fires. If PG&E is found guilty, the company could be paying out millions. That’s bad news if you own stock in the utility. Its share price dropped 16% after the fires broke out.

By Trisha Phillips
October 22, 2017
Source: Cheat Sheet

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