Last month, I traveled to Las Vegas for the 5th Marijuana Business Conference & Expo—the largest cannabis industry convention nationwide. Cannabiz Media launched the first edition of the Marijuana Licensing Reference Guide and the new Cannabiz Media Database and Directory at the show before 10,000 attendees.
Over 350 vendors attended the show, including new participants in the cannabis economy as well as long-known businesses now serving the industry in an ancillary capacity. Sustainability—both economic and environmental—was a major theme throughout. Dozens of companies with irrigation equipment, lighting tools, automation technology, agricultural products, and a wide variety of other products and services were on hand.
The Dirty Side of a Rapidly Growing Market
During my previous research looking at land use and water issues in the industry, I discovered the high electric grid demands of marijuana cultivation sites—an industry problem that occurs at both licensed and unlicensed facilities. The cannabis space continues to suffer from a lack of peer-reviewed studies looking at resource use, but one report, “The Carbon Footprint of Indoor Cannabis Production,” by Evan Mills from Lawrence Berkeley National Laboratory, highlights an ugly reality of growing cannabis indoors—it consumes 1% of our nation’s electricity.
The paper compares energy use in the cannabis sector to that of other sectors, including:
- Alcohol, where the amount of energy required to produce one joint equals that of 18 pints of beer; and,
- Medicine, where indoor cultivations require roughly four times as much energy on a per square-foot basis as a hospital.
These issues have drawn the attention of utility companies and regulators nationwide, including in states where marijuana policy shifts have yet to occur. This issue was even discussed at the 2015 annual meeting of the National Association of Regulatory Utility Commissioners (NARUC) in Austin, Texas, where former Pennsylvania Public Utility Commissioner Pam Witmer noted states are looking for best practices to address the unsustainable demands of the fast-moving industry.
With even higher projections set for market revenue—now pushing $8 billion annually—focus shifts toward energy demands on the production side. Measures of sustainability for cannabis cultivation, and how to achieve them, have yet to be agreed upon as the market continues to evolve nationwide.
Conversations in Las Vegas
In addition to the expo’s 350+ vendors, a variety of sessions touched upon current issues in the industry, including tax challenges, the recent election, industry and market analysis, and cultivation, among many others.
One such session, Cultivation Workshop: Reducing Energy Use & Lowering Costs Through Sustainability, presented by Kathleen Hokanson (of Koan Energy Consultants) and Matthew Gaboury (of Cultivar) highlighted a major industry concern—staggering energy and water demand and cost—alongside ways for new and existing cannabusinesses to enhance their triple bottom line (social, environmental, and economic bottom line).
The presenters discussed how building and business operations affect the resource needs of a site—and the roles of automation and technology—as well as the variety of power sources available geographically—including renewables. In some markets where solar, wind, and geothermal are not available, credits are—representing the environmental attributes of renewable energy.
Additionally, a number of tax credits and other incentives are available. The Obama Administration has extended tax credits for wind and solar through 2020, while other federal, state, and local rebates incentivize inclusion of green technology. These policies weren’t established with the cannabis industry in mind, although the Oregon Energy Trust, a state-chartered organization, leads the way in educating and assisting cannabis cultivators. The energy trust has made available cash incentives for cultivators, which could cover up to 50% of project costs.
At the local level, Boulder County takes the lead as an innovator in promoting sustainable energy use practices through the Boulder County Energy Impact Offset Fund, which promotes marijuana industry use of renewable energy, educates cultivators on efficient cultivation practices, and funds carbon offset and renewable energy projects. The program notes sizable power demand at an average Boulder grow site (5,000 sq. ft); nearly 41,900 kilowatt hours monthly, compared to a similarly sized commercial space, using roughly 5,700 kilowatts.
Some states and municipalities mandate indoor cultivation, while in others, this is the only viable option. Climate forces many growers indoor in some markets, such as humid Hawaii, while Alaska’s dark winters will keep many newly licensed growers indoors, although the state doesn’t mandate indoor cultivation.
In arid regions, such as the Southwest, many communities permit outdoor cultivation. Some of these states, such as Arizona and California, will be crafting rules in the coming months, and outdoor cultivation will be discussed. As California moves forward with post-Proposition 64 rulemaking to create a regulated cannabis industry, it will be interesting to see how the state’s legislature, various agencies, and municipalities reconcile new rulemaking with recent legislation to lower the state’s carbon footprint.
When deciding to launch or expand cannabis cultivation operations, have a plan in place and know the geography you wish to work in early on:
- Will state and local regulations dictate land use and logistical possibilities?
- Will you be required to grow indoors?
- Can you use a greenhouse or hoop house instead?
- Can you include solar panels, wind turbines, or a geothermal well in your facility in an urban or rural area?
- Do you plan to include onsite extraction facilities or a dispensary? This may increase your energy consumption later on.
- Do you plan to meet Leadership in Energy & Environmental Design (LEED) standards and operate in a LEED-certified building?
 Pennsylvania PUC Commissioner Witmer was quoted in Bloomberg in December 2015, almost 5 months before Governor Tom Wolf signed Senate Bill 3, establishing Pennsylvania’s medical marijuana program. Program rules for Pennsylvania have not yet been finalized.