A cannabis supply chain battered by a global pandemic is picking up the pieces and bracing for months of additional headaches caused by Hurricane Ida.
The storm shuttered several medical marijuana dispensaries in Louisiana and put an indefinite pause on equipment and supplies passing through the Port of New Orleans.
As Ida clawed up the eastern half of the U.S., hemp and marijuana operators from Tennessee to New York faced flood damage and collapsed supply chains.
“We’re just trying to hang on right now,” said Tim Smith, who works at H&W Drug Store Dispensary in New Orleans, which lost power and closed for several days but planned to reopen without electricity for patients able to get to the shop and pay cash.
Those lucky enough to keep power and product found themselves scrambling ahead of the fast-moving storm to prevent disaster.
At Ilera Holistic Healthcare outside Baton Rouge, Louisiana, workers saw Ida escalate from a Category 2 hurricane to a Category 4 storm in a few hours, prompting employees to pile sandbags outside three growing facilities and check generators.
A few days later, the owner of a basement-level CBD retail shop in New York City had to frantically clear a drain to keep water out of his store.
“Our team had to drop everything and instantaneously react to the changing weather conditions,” Ilera CEO Chanda Macias said.
Ilera’s plants survived, but the company was forced to close its client dispensaries for lack of power, with patients forced to choose between evacuating to another state and leaving their cannabis behind or braving a deadly hurricane to stay in reach of cannabis medicine.
“It just pulled on the heartstrings to know that this natural disaster put people in the position to make a hard choice,” Macias told Hemp Industry Daily.
She anticipated another one to four weeks before some of the dispensaries she supplies would be open.
Bad to worse
Cannabis operators far from Ida were expecting significant business disruptions, too.
“We’re seeing huge logistical issues with freight and transportation. We’re getting close to panic at this point,” said Liz Geiselman, chief brand officer at 710 Spirits Extraction Products in Golden, Colorado, which sells solvents for cannabinoid extraction in both the hemp and marijuana industries.
Trucks and drivers already in short supply are being redirected to haul relief supplies or provide other emergency services. Fuel prices are going up because of oil and gas disruptions, and supply lines are already stretched thin by more than a year of pandemic closures.
The ripple effect means that even cannabis business operating in a single state far from the storm could experience rising costs and supply delays.
Extractors and infused-product manufacturers rely on chemical components and equipment that frequently must be imported, Geiselman pointed out.
“If you’re doing any kind of large-scale manufacturing, you know the supply chain is in critical condition,” she said.
“We’re still trying to get the market back together in a global pandemic (and) then you have Ida come along and take out even more. Even if folks can get supply in, it’s sitting in warehouses and no one can get to it.”
Unable to scale
Expansion in the cannabis industry has always been a challenge. The supply-chain disruptions have made it nearly impossible.
At HempRise, a CBD extraction company in Jeffersonville, Indiana, an $80 million factory slated to open earlier this year, has endured one delay after another.
Kyle Einhorn, HempRise’s vice president of sales, said the company had equipment sitting in a container ship off the coast of California for so long that the company redirected the ship to Canada, then airlifted extraction and construction supplies to Indiana.
“We have to get this facility operational,” he told Hemp Industry Daily.
“We can’t afford to say, ‘Hey, we can’t work for the next two weeks because we don’t have X, Y and Z to get things done,’” he said.
Even with equipment in place, staffing remains a challenge.
“We need all kinds of skilled trade – plumbers, electricians, steam fitters, welders,” Einhorn said. “But because of COVID, we’ve had to really reach out farther than one would typically need to do for a job.
“You look at our parking lot, there are license plates from all over the United States.”
Lessons for the future
Einhorn and Macias agreed that Hurricane Ida is just the latest disaster to underscore the importance of diversifying your supply chain.
“Don’t be single-sourced in anything,” Einhorn said. “Explore your options. You want to establish long-term relationships with a few different people.”
It doesn’t hurt to store a lot of inventory, either.
Ilera Holistic keeps a year’s supply of equipment needed to make some of its dosed inhalables. HempRise is building stainless-steel storage tanks capable of storing 72,000 gallons of extract.
“It’s more important for us to be able to make sure we have plenty of supply … for the patients that need it,” Macias said.
Climate disruption is something cannabis companies unfortunately must come to expect, said Kaelan Castetter, a New York hemp and marijuana consultant whose Manhattan client saved his CBD shop from major flood damage only to return home to a flooded apartment.
“Every year is unusual now with climate change,” Castetter said. “The intensity of these storms and the frequency are making it very difficult to reasonably predict yields for outdoor cannabis growing.
“It underscores the need for investment in our infrastructure and climate resiliency. Fortunately, I think hemp is going to play a big role in that.”
Kristen Nichols can be reached at [email protected].