The Marijuana Industry’s Dirty Little Secret.

The cannabis industry is hiding a dirty little secret.

According to Evan Mills, a California-based energy and climate change scientist, the marijuana industry has a major problem…and it’s likely to get worse before it gets better. 

 

“Legislators and energy agencies have largely turned a blind eye to the carbon footprint of indoor cultivation, which already belches out greenhouse-gas emissions equal to that from 3 million cars in America,” says Mills.

In fact, just one marijuana cigarette creates over 10 pounds of carbon dioxide pollution.

An entire kilogram of finished product? 

That produces a staggering 4600 kg of CO2 emissions to the atmosphere. 

 

As far back as 2011, the then-illicit industry was racking up an energy bill of $6 billion per year in the U.S. That’s double the energy spent by all pharmaceutical companies combined!

And this was before commercial sized indoor growing facilities started popping up across the United States. 

The runaway-growth in the cannabis industry, fueled by rolling de-regulation and a high demand forecast, is bringing with it a growing carbon footprint.

But luckily, a handful of companies are trying to repair the damage. Firms like Cannabis One are bringing smart clean energy policies to the pot industry.

“You’ve got to be smart,” says Cannabis One CEO Jeffery Mascio, ”or sooner or later, you’ll have to turn out the lights.”

Growing Demand

The single most important factor in the cannabis sector has been growth—driven by rolling de-regulation and de-criminalization (and, in Canada, complete legalization).

In the United States, dozens of state governments have passed legislation, legalizing marijuana for medical use, or de-criminalizing it for recreational use—and the market has been growing by leaps and bounds as a result.

“You’ve never seen anything quite like this,” says Jeffery Mascio, CEO of Cannabis One Holdings, a company that develops and markets cannabis products in Colorado, Washington and Nevada. “It’s a new industry that’s sprung up practically over-night.”

Since 2011, legal marijuana sales have increased dramatically—fueling the growth of an industry which in the United States is worth $10 billion and employs 250,000 people.

In 2017, marijuana stocks exploded on to the market, led by some heavy-hitters like Canopy Growth Corp. In 2019, and sales are estimated to grow by 38% to $16.9 billion.

In Colorado, legal pot sales reached $6 billion in 2018. The industry has really taken off in the Rocky Mountain state, serving as a contrast to California, where the roll-out of legalized weed has been a bit bumpier. Colorado now earns more than $200 million in taxes from legal dispensaries.

By 2025, analysts predict the legal marijuana market could be worth $146.4 billion.

Impact on Energy Demand

Most people imagine pot growers like modern farmers—tilling the earth, planting their crops, gathering the harvest.

But in fact, most cannabis cultivation is done indoors, in specially-designed growing facilities that utilize heat lamps and temperature control to maximize yields over a year-long growing season.

When you factor in additional energy costs, like fertilizer and water, cannabis is one of the most energy-intensive crops out there.

Cannabis cultivation generates $6 billion in energy costs each year, and uses about 10x more power per square foot than a standard office building.

In Denver, 4% of all electricity goes to cannabis cultivation. Total power consumption in the cannabis sector has nearly tripled since 2013.

In 2017, about 1 mWh went towards cannabis cultivation—but projections have that figure rising to 2.79 mWh by 2022, an increase of 162%.

Compared to business or residential use, energy demand in cannabis grow houses is staggering. The average household in Boulder Country, Colorado uses about 630 kilowatt hours (Kwh). A grow house of 5,000 square feet, by comparison, uses 41,808 kWh—roughly enough electricity to power sixty-six homes.

And cannabis cultivation is a 24-hour business—the lights stay on, no matter what. So while most businesses and residences power down at night, growing facilities remain active, putting pressure on energy grids.

Most of the demand comes from appliances used in the growing process. Indoor lighting units are 500x times more powerful than normal reading lights, and four-plant lighting units use as much power as twenty-nine refrigerators.

In monetary terms, production from a grow house comes in at $2500 per kilogram—the energy used to produce one marijuana cigarette could produce 18 pints of beer.

For cannabis cultivators, this comes with a hefty price tag. One Colorado company spends$13,000 per month on electricity for a single grow facility.

For a vertically-integrated company like Cannabis One Holdings, electricity costs eat up a significant portion of revenues. “We’re making money,” says CEO Mascio, “but it costs a ton just to keep the lights on.”

Right now, such costs may be manageable—cannabis is in high demand and prices per kilo are high. But as the market is saturated, that price is sure to drop, squeezing producers’ margins.

In fact, falling prices and shrinking margins (as well as general concerns with reducing carbon emissions) are driving cannabis cultivators and state regulators to take aim at electricity use in the cannabis sector.

The amount of carbon emissions being pumped out by cannabis cultivators will double by 2020—so if the industry wants to stay green, it’s going to have to make some changes.

 

 

 

13 May 2019

OILPRICE.COM