The ‘Newer’ Energy Economy Of The Legalized Marijuana Industry


As legalizing marijuana has become a topic of political and socioeconomic debate, there is an opportunity to advance the insertion of better practices to alleviate the impact on our water and energy resources. This editorial is not about making the social and political decisions; this is about the importance of considering critical infrastructure needs that should be determined case by case at a municipal level when debating the legalization of marijuana. Much of these decisions will come down to cost-benefit analysis and infrastructure resource capacities.

Marijuana was legalized on a state-by-state basis starting in 1996 with California, the first state to legalize medical use of the substance. Since then, there has been an evolution of states legalizing and/or decriminalizing its use, with many states citing increased tax revenue as a basis for legalization. Sales in 2014 totaled $700 million in Colorado, $63 million of which were generated through tax revenue and $13 million through licenses and fees. As sales are expected to climb to more than $1 billion by the end of 2016, revenue for Colorado will continue to increase.

Colorado and Washington were the first states to make the landmark decision to legalize recreational use in November 2012. In the November 2016 voting cycle, Arizona, California, Maine, Massachusetts, and Nevada will vote to legalize the recreational use of marijuana and Arkansas, Florida, and Missouri will vote to legalize its medical use.

As of July 2016, five states have legalized the recreational use of marijuana: Alaska, Colorado, Delaware, Oregon, and Washington. Thirty-six states have legalized the medicinal/limited use of marijuana, three have decriminalized its use, and seven consider marijuana to be an illegal substance with criminal charges.

The United States Environmental Protection Agency (EPA) continues the quest to lower carbon pollution from existing power plants for energy generation under President Obama’s Aug. 3, 2015 announcement of the “Clean Power Plan” initiative, and the additional energy used to grow marijuana cannot be dismissed. More specifically, experts estimate that one-third of the cost of indoor marijuana production is attributable to its high energy intensity and use.

Gina S. Warren’s recent report in the Columbia Journal of Environmental Law states that nationwide legalized marijuana cultivation is “one of the most energy-intensive of the major industries,” consuming six times as much energy as the pharmaceutical industry and eight times more energy per square foot than the average United States commercial building.

As an increasing number of states legalize medical and recreational use of marijuana, new challenges continue to present themselves. Oregon created a task force that includes growers, lawmakers, and agency representation in an effort to better understand the energy and water use associated with increased production in their state. The task force concluded that in Colorado, indoor marijuana production “is responsible for 2% of the state’s electrical load and 45% of all new demand coming online.”

Researchers who examined Northern California’s marijuana cultivation region found that the area used for growing has doubled from 2009 to 2012, further straining scarce water and energy resources in the state. California has instituted a new regulatory approach to protect watersheds by issuing marijuana water permits and citations for environmental violations. On average, marijuana plants need about six gallons of water per day: some growers get by with only one, while others need upward of 106 gallons.

So why does marijuana require so much energy? The lights that are used to stimulate indoor plant growth heat up the respective spaces and require additional air conditioning. Dehumidifiers help control humidity from the water used in said enclosed spaces.

Fortunately, many marijuana growers have managed solutions in conserving electric usage during indoor cultivation to include the use of LED lights that reduce both electric usage and fire hazards created through excess heat in enclosed spaces. Other best management practices include using transformers and vents to allow for lower HVAC usage during mild outdoor temperatures, a combination of natural and artificial growing periods, seasonal switching from indoor to outdoor growing, and participating in clean energy programs such as wind and solar.

These practices present opportunities for reducing air quality impacts from carbon emitting power production.

Better practices for water conservation include soil amendments as well as using high-quality water retaining soil types and superior irrigation systems. Experienced growers have mastered a best practices approach to efficiently streamlining and growing their businesses. Nonetheless, more regulation is required to better guide new growers into setting up efficient operations in specific local climates and geologic settings.

According to the USDA, agriculture consumes about 80% of the water in the U.S. and up to 90% in many western states. While this number does not vary greatly from one year to the next, introducing states to brand new markets – in this case, ones that were once illegal – has the potential to drastically change the water and resource needs of entire communities. Legislation taxing marijuana will introduce a new income stream for states, and regulations could minimize negative environmental effects that arise from increased resource use.

No matter the public opinion of where marijuana should sit on the spectrum of controlled substances, its impact on the energy and water sectors should not be dismissed. A municipal tax structure can be set in place to offset the cost of energy production and protect air, water, and land resources. Lessons learned from Colorado and the Boulder County Energy Impact Offset Fund, which includes a 2.16 cents per kilowatt hour fee offset tax, indicates that such tax structures need to be implemented at the state and even municipal level to compensate for the marijuana industry’s impact on both ecological resources and electric production generation. Other tax revenues that need to be addressed are sales taxes, as well as who holds the rights to them.

In the fall of 2015, the “yes” vote on Colorado’s Proposition BB determined that $66 million in excess marijuana revenues, which were accrued through accounting errors in a marijuana tax projection, would remain with the State and be used for school construction, education, and anti-drug initiatives. Municipalities should include thorough analyses of both offset tax fees and sales taxes in their decision to legalize marijuana or not.

Unfortunately, natural resource management takes a back seat to political and public opinions in the debate of legalizing marijuana. From the utility industry’s perspective, legalizing marijuana presents an opportunity for capital gains as energy used to grow marijuana can help offset public energy use which may decrease due to energy efficiency programs and compliance.

Most importantly, the legalization of marijuana can provide an incentive to better manage resources and infrastructure.

News Moderator: Katelyn Baker
Full Article: The ‘Newer’ Energy Economy Of The Legalized Marijuana Industry
Author: Afamia Elnakat and Martha Wright
Photo Credit: Scott Ball
Website: The Rivard Report