Why Energy is Key to the Emerging Cannabis Industry

By NJSBA Staff posted 01-31-2019 11:26

Editor's Note: The following piece is authored by Elizabeth C. Bogle, an associate at Cole Schotz in both the firm’s environmental department and cannabis law group. It was originally published as part of the New Jersey State Bar Association Cannabis Law Committee Newsletter, which is distributed to members of the committee. To learn more about joining an NJSBA section or committee, email [email protected]

Often forgotten in the rush to expand the cannabis industry is the environmental impact of indoor cultivation operations and environmental considerations for the engineering and design of cultivation facilities. This article will briefly address environmental impacts of cannabis cultivation, specifically energy usage, in various states and how cultivators looking to the emerging New Jersey market can better equip themselves for potential regulation similar to what is being seen in other states.

Growing cannabis, especially indoors, is energy intensive. It can take upwards of 5,000 kWh1 to grow just one kilogram of cannabis (2,000 kWh to grow one pound)2 as compared to roughly 10,000 kWh of energyto power a residence in the United States for a year. Recent reports show the cannabis industry is having a significant impact on the use of electricity in states that have legalized it. In 2015, various reports concluded that cannabis growers accounted for approximately 1.7 percent of the United States’ total electricity usage, a cost of upwards of $6 billion.The vast majority of states that have legalized cannabis cultivation have not addressed the issues surrounding energy consumption prior to enacting legislation. As a result, municipal governments, state agencies and public utilities have had to take a reactive approach to the astronomical utilization of energy.

Currently, states and municipal governments are implementing various techniques in order to curtail electricity use. The techniques vary, but the most common are taxes and/or fees on energy consumption. For example, Boulder County, Colorado has a requirement that growers either offset energy consumption with the use of renewable energy or pay a $0.02 charge per kWh of energy use.In addition, some state regulations have an adverse effect on energy consumption, and compliance results in an increase in energy consumption by growers. For example, when Pennsylvania legalized cannabis in 2016, its regulations required growers to contain their entire crop in indoor facilities without addressing how the state would cope with the corresponding energy use from the requirement.6

Though most states have not addresses environmental impacts of cannabis cultivation until after licenses were already awarded, one state has put into place some of the strictest energy regulations for cannabis cultivation.

In 2008, Massachusetts entered into the Global Warming Solutions Act, which required a reduction in the state’s greenhouse gas emissions by 80 percent no later than the year 2050.However, with the legalization of adult-use cannabis, the state had to address the fact that not only is cannabis an energy-hungry crop, but it also emits dubious amounts of carbon dioxide (CO2). On average, the energy needed to grow one pound of cannabis indoors emits roughly 5,000 pounds of CO2 into the atmosphere.8  As a result, the Cannabis Control Commission of Massachusetts has included in their regulations a limit on how much energy can be utilized for cultivation operations.9

Although New Jersey has not yet weighed in on the energy use and carbon emission issues associated with the emerging cannabis industry in the most recent adultuse cannabis legalization bill, state lawmakers are openly moving New Jersey towards being a leader in climate change solutions, especially with New Jersey rejoining the Regional Greenhouse Gas Initiative.10 Additionally, broad environmental concern has not completely escaped legislators, as the most recent call for medicinal cannabis licenses required applicants to submit an environmental impact plan as part of the application process.

As a result, it is imperative that cultivators from out of state, as well as those who are thinking of starting a cultivation operation, who wish to apply for licensing in New Jersey, consider the impacts of their future operations regarding electricity use in order to be prepared for any future regulations and/or taxes that might negatively affect their operations and profitability.

Elizabeth C. Bogle is an associate at Cole Schotz in both the firm’s environmental department and cannabis law group. Prior to pursuing her legal career, she earned a master’s degree in sustainable studies with a focus on watershed policy and pollutant/waste stream management and worked for over five years as an environmental scientist on various site remediation and due diligence matters throughout the United States. She has developed remedial strategies and been responsible for project management and regulatory interactions for a wide variety of remediation projects, ranging from tank removals to complex industrial sites. In addition, she has worked on many sustainability and renewable energy projects with a focus on wind and solar energy.

1. Trevor Hughes, Power to the pot: Marijuana growers face electric fee, USA Today
(Nov. 10, 2014, 11:02 p.m.), https://www.usatoday.com/story/news/nation/2014/11/10/marijuana-power-consumption/18670007/.
2. Michael O’Hare et al., Environmental Risks and Opportunities in Cannabis Cultivation, BOTEC Analysis Corporation (Sept. 7, 2013), https://lcb.wa.gov/ publications/Marijuana/SEPA/5d_Environmental_Risks_and_Opportunities_in_Cannabis_Cultivation.pdf.
3. How much electricity does an American home use?, U.S. Energy Information Administration (Oct. 26, 2018), https://www.eia.gov/tools/faqs/faq.php?id=97&t=3.
4. Chelsea Harvey, The surprisingly huge energy footprint of the booming marijuana industry, The Washington Post (Feb. 18, 2016), https://www.washingtonpost.com/news/energy-environment/wp/2016/02/18/this-could-be-a-big-problem-for-the-boomingmarijuana-industry/?utm_term=.24864c8f0622.
5. Melanie Sevcenko, Pot is power hungry: why the marijuana industry’s energy footprint is growing, The Guardian (Feb. 27, 2016, 8:58 a.m.), https://www.theguardian.com/us-news/2016/feb/27/marijuana-industry-huge-energy-footprint.
6. Medical Marijuana Act, 35 Pa. Stat. Ann. § 10231.101 (May 17, 2016).
7. Global Warming Solutions Act Background, Mass.gov, https://www.mass.gov/servicedetails/global-warming-solutions-act-background.
8. Chris Mooney, One surprising downside of marijuana legalization: major energy use, (March 23, 2015), https://www.washingtonpost.com/news/energy-environment/wp/2015/03/23/one-surprising-downside-of-marijuana-legalization-major-energyuse/?noredirect=on&utm_term=.75c32faee027.
9. Adult Use of Marijuana, 935 Mass. Code Regs. § 500.000 (Dec. 14, 2018).
10. Governor Murphy Leading on Clean Air and Climate Change Solution in New Jersey, Environmental Defense Fund (Dec. 17, 2018), https://www.edf.org/media/governormurphy-leading-clean-air-and-climate-change-solutions-new-jersey