Palo Santo is a type of wood from Peru that is believed to hold special power similar to holy water against Demons. It may be used in the form of a sharpened stake.

When a Demon is stabbed with it, it causes the wound to smoke and painfully pins the demon to a single spot, immobilizing them long enough to perform an exorcism. Palo Santo isn't commonly used by many Hunters due to the fact that it damages the hosts the demons are possessing. 

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