When it comes to energy and the environment, there is bad news and good news for cannabis growers. The bad news is the Trump Administration has abdicated much of its responsibility to protect the environment, and the cannabis industry—particularly energy- and water-intensive commercial-scale growing and processing facilities—will be squarely in the crosshairs of state energy and environmental regulators as a result. The good news, however, is that this presents three prime opportunities for cultivators:
- To come together to work with policymakers to craft regulations that make sense for the industry and the environment,
- To explore innovative ways to reduce the energy and environmental impact of cannabis production, and
- To brand the cannabis industry and its allies as leaders in environmentally responsible operations.
At the heart of the issue is resource consumption. Indoor growers know how power-hungry their operations are. Add up all the lights, heating, cooling and dehumidification systems, water pumps, CO2 injecting systems, fans and everything else (not to mention extractors and commercial kitchen equipment used during post-harvest processes), and you quickly have an enormous electric bill. You know that this bill represents the electricity it takes to power your business that month. Utilities try to understand how it affects the grid. And now environmental regulators—and increasingly customers—are connecting your business’s power consumption, along with your water and waste-management practices, with its overall environmental footprint.
A Regulator’s View
Environmental regulators, generally in the form of a state’s department of environmental protection, are charged with implementing the state’s environmental protection laws. They have long been focused on air and water pollution, but they are increasingly concerned with electricity use. Why? Because power generation is responsible for nearly a third of the country’s greenhouse gas emissions, though some grids tend to be cleaner than others due to the local energy mix used to generate power.
In recent years, all New England states plus others, including California, Oregon, Washington, Colorado and some local governments, have established greenhouse-gas-emissions reduction goals. These goals rely heavily on reducing the carbon footprint of energy use through a combination of cleaner energy sources and by encouraging customers to adopt energy-efficiency measures. To achieve these goals, lawmakers and regulators have largely opted to play the “good cop” by offering cash incentives through rebates for purchases of energy-efficient lights or HVAC systems, and by offering subsidies for onsite solar generation, for example. If you live in a state that offers such programs, they are very likely core aspects of your state’s climate plan. These programs are usually developed publicly by environmental protection staff and with input from others, including the state energy office, consumer groups and industry stakeholders.
In some cases, authorities may opt to use a proverbial “stick” to reduce emissions from certain types of sources, including from marijuana growers. The best example is Boulder County and the City of Boulder, Colo.: Each requires that local growers report their energy usage and offset their electricity with renewable energy or carbon offsets, or else pay a fee. In Boulder County’s case, this funds a program that explicitly works with growers to reduce their electricity usage.
Energy regulators are another animal all together. They are members of a state’s public utility commission or department of public utilities, and their mission is plain and simple: to keep electricity flowing to all customers and at reasonable rates. Their impact is often felt after they rule on a utility “rate case,” which is when a utility company asks for permission to adjust the rates they charge according to their actual and perceived future needs. Utilities will make their case, parties will weigh in with their opinions, and the commission will rule on the case. Many industries have associations that provide input into rate cases on behalf of its members, which may or may not include growers.
Over the next few years, cannabis growers may experience the perfect storm of environmental and energy regulation. Here is why:
- States that have acknowledged that climate change is a problem worth fighting are under pressure to pursue carbon-emission reductions wherever possible. As a result, they may be tempted to take a closer look at specific sectors that they perceive as being relatively inefficient or contributing disproportionately large amounts of carbon. A prime example, unfortunately, is the current commercial indoor cannabis grow sector.
- Because legal cannabis is still an emerging and quickly growing industry that many policymakers are nervous about, legislators and regulators are eager to try to control as many aspects of the industry as they can, including its carbon footprint. For example, Massachusetts’s legalization bill mandates energy and environmental standards for cultivators.
- Due to the massive electricity demand of indoor cannabis grow facilities, many utilities perceive them as a threat to the reliability of their grid and impose steep fees to upgrade their infrastructure to accommodate new grows.
Fortunately, growers and their allies have a golden opportunity to establish the industry as a positive force for reducing the environmental impact of commercial-scale production. Here are five suggested steps the cannabis industry can take to reduce its impact and to stay in the good graces of state environmental and energy regulators and advocates:
- Innovate. Take every step reasonably possible to adopt best practices to reduce your resource use, such as installing energy-efficient lighting and HVAC systems, and advanced energy- and water-management systems. Consider using zero- or low-carbon energy sources to power your facility, such as onsite solar energy, or by using natural gas chillers instead of electric chillers. Be proactive in managing your waste streams. In most cases, the return on investment on energy-efficient upgrades can be high, and many utilities offer rebates and free assistance for energy-efficient equipment to help costs. A knowledgeable energy consultant can offer guidance about how growers can save energy in their facilities while preserving yields and productivity.
- Educate. Learn about the regulatory processes in your state and how they can affect your business. Attend relevant meetings hosted by your state’s departments of energy and environmental protection or public utilities commission. These entities often hold publicly accessible meetings to discuss proposed regulations, and the state of greenhouse-gas-reduction targets and programs to achieve them, including energy-efficiency programs and renewable energy programs. Get to know members of your state’s utility commission, energy agency and department of environmental protection (yes, they are people, too!).
- Demonstrate. Be a part of the conversation with regulators. Share your experience so that any regulations are reasonable, fair and protect both business and the environment. State regulators want to hear from affected industries and will incorporate focused and thoughtful recommendations into their decision-making process. Send your best minds to meetings and hearings to submit comments, or hire qualified consultants to weigh in on your behalf.
- Collaborate. Commit to sharing your insights with others on ways to reduce excess energy and water usage. One organization fostering such collaboration is the Resource Innovation Institute (RII), which works with stakeholders across the industry to advance lower-impact approaches to cultivation. (Disclosure: The author is a member of RII.) If you are concerned about confidentiality, even by offering your experiences anonymously through RII or other channels, your insights can help lessen the industry’s overall environmental impact.
- Validate. A voluntary low-carbon certification would go a long way in giving consumers an opportunity to vote with their wallets for products that have a lower carbon footprint than others.