No Access To Banks Hurts Marijuana Companies. It Also Hurts The Environment.

The number of states with new cannabis regulations on the books is nearing twenty. States like Colorado, Illinois, and Michigan have seen tens of millions of dollars worth of sales in a single week. But the financial institutions are still wary. That hesitation doesn’t just hurt this growing industry; it also hurts the environment. 

Last month, Michigan began selling legal cannabis products for the very first time. In just six weeks, retail sales surpassed $10 million and generated $1.7 million in new tax revenue. All of that success came from businesses that relied on personal or small-scale venture rounds to handle the substantial investments that go into a successful grow facility. From the ground up, many of these firms have had no access to the financial support that nearly any other business would rely on to get started. 

Marijuana remains illegal at the federal level, and banks rely on federal rules, licensing, and regulations to operate. At the end of the day, most banks won’t touch cannabis companies for fear of breaking federal law. In some cities and states, smaller credit unions and banks have very quietly financed cannabis operations. However, that liquid capital stream has been almost entirely out of reach for marijuana firms. That’s put a massive brake on growth, but it has bigger consequences, too. It’s also hurting the environment. 

As we’ve discussed many times, marijuana growers face immense energy demands. Its lighting and HVAC demands are a massive strain on the grid, and that electrical need is expected to nearly triple by 2023. When companies cut corners and rely on outdated technology or press lamps designed for recreational use into industrial-scale applications, they don’t just waste their own money. They’re also wasting staggering amounts of electricity, and that added strain hurts both the grid and the planet. 

Looking ahead, we see banking protections as one of the most important pieces of legislation in Michigan and in any of the twenty states with legal marijuana laws. There is traction on that front. The SAFE Banking Act passed the US House of Representatives way back in September of 2019, though with some reservations. Critics of the bill maintain often confuse the banking regulation with marijuana regulation more broadly, a misinterpretation that has slowed acceptance of the Act in the Senate which, as you may have noticed, has had other pressing issues pushed to the center of its attention. 

We’ve seen first hand just how important cannabis’ reliance on energy is now, and with growth in the industry projected to skyrocket, what businesses have in place right now will dictate not just which companies will survive, but if our aging grid system will continue to be able to handle the load of growers and the general public successfully. By allowing banks to safely loan necessary funds to these firms, state and federal governments will benefit even more from tax revenue and let market forces work, without putting the environment at risk.

Start Smart, Grow Smart: Investing In Your Cannabis Facility

What’s the most expensive and wasteful investment to make? One you have to make twice. For marijuana growers, starting their sustainability and energy efficiency efforts the right way from the start is a key component to being competitive in an ever-tightening industry. 

The basic laws of supply and demand have played out in textbook fashion in the still young legal marijuana business. As more states enact legislation to legalize cannabis, supply us skyrocketed, causing prices to drop. And drop. And drop. The well-cushioned margins of Day One were nice, but enjoyed only by those firms already up and running. Today, many of those companies are feeling the pinch, and it’s not just from outside competition. These companies’ biggest battle comes from inside their facilities, where inefficient lighting and HVAC systems have kept production costs high and prices have slipped. 

Those firms are quickly implementing new, more efficient systems to battle the problems arising from lower prices. In an industry that sees so many factors and influences outside of their control, like legislation, banking restrictions, and limited licensing opportunities, production costs are often the one area firms can address head-on. 

As the old guard upgrade, newer producers have learned those same lessons and taken them to heart. Growers in the past 12-18 months quickly realized that the only smart way to address margin concerns over the long run is by making smart investments in fixtures and equipment right now. There are many lessons to learn for utilities, too. For instance, 4% of Denver’s energy demand comes from marijuana growers. With demand expected to more than double by 2023, both consumers and producers need to implement new ideas, new sources, and new standards to handle the load. 

We’re working with growers to make their facilities as energy efficient as possible, plugging in innovative techniques to make the most out of heat byproducts, recycle humidity, and make each light fixture do more with less. Technology learns and adapts, empowering business owners to take data in real-time and make better decisions in their energy usage and get the most out of each crop. 

Ready to grow? Let’s get after it!

High Demand, High Cost: Energy Foot Print Grows For Marijuana in Michigan

As the national rolls into a new year, recreational marijuana legislation across the country has gone into effect. Thousands of people lined up for hours, even days, to be the first to purchase legal marijuana in Illinois. It was a similar story in Michigan, who saw legal weed sales take off in late 2019. Demand for safe, regulated, and legal pot is reflected in the prevalence of new laws legalizing the drug and the tens of thousands of people eager to buy.

But there’s more to that demand than just sales. Marijuana is an extremely energy-intensive crop, and as growers have multiplied and stepped up production, their energy footprint has grown, too. In 2018 alone, a recent study found that legal growers used up 1.1 million megawatt hours, the same amount of energy used by over 92,000 homes.

That’s just the start. With another half dozen states legalizing marijuana in 2020 and more states expecting to follow suit after elections this November, more and more growers will pop up across the country. With demand high and revenue flowing, current producers will increase their output as well. From 2017 to 2022, the electrical demand of legal marijuana growers is forecasted to increase by 162%.

Going forward, outdoor growers may have some advantages, provided they have a cooperative climate. Indoor growers use up nearly 18 times more electricity than outdoor per gram of weed grown. They also emit over 25 times the amount of carbon emissions. That’s because indoor growers rely heavily on artificial light, heaters, fans, and climate control systems to control humidity.

In Michigan, there’s already an interest in regulating just how much energy a grower can use. For now, the state doesn’t even mandate reporting of energy consumption by growers. There are no Michigan laws to monitor or track energy use, a measure that Illinois did include when it legalized marijuana.

There’s a drawback to that lack of oversight, too. It’s the perfect opportunity to offer incentives and tax breaks to growers who do invest in efficient and responsible practices. By encouraging metered energy use, both private and public entities have the opportunity to invest in the most efficient firms who, as a result, will be the most competitive and successful in the long-term.

And that might be incentive enough. As more growers enter the market, the industry is going to get more and more competitive, and energy efficiency is going to offer the best way to reduce costs and maintain the current retail margin. We’re already working on reducing energy use, carbon emissions, and improving crop yields for both indoor and outdoor growing facilities in the Midwest. Tomorrow’s winners will be firms that invested in efficiency early; be one of the smart ones.

Illinois Sets The Standard For Cannabis Regulations

Cannabis is an industry that’s only just beginning. Earlier this month, the state of Illinois put standards in place that will shape the cannabis industry for the Midwest and the rest of the country for decades to come. 

We’re living in extraordinary times. Cannabis is changing the country from medicine to production, with industrial giants and small-time growers all searching for some sense of direction. With states across the country passing legislation to allow legal adult use, the regulations have been relatively inconsistent. 

Illinois is one of those states. With their marijuana law taking action On January 1, 2020, they’ve passed some of the tightest cannabis production legislation in the country, detailed regulations in energy consumption, water, and other aspects of production that demands a high level of efficiency from Day One. 

There’s a lot at stake for the industry, and for the most part, cannabis growers are excited to take charge of their expansive energy footprint. A five thousand foot growing facility uses 66% more energy than the average US household. To offset that demand, Illinois is joining Massachusetts in passing strict energy regulations. These include:

  • A cap of 36 Watts per per square foot
  • Mandatory installation of automatic watering and irrigation systems
  • Mandatory use of DesignLights Consortium approved lighting fixtures
  • Limit water runoff to less than 20%
  • Specific high-efficiency HVAC equipment

The scale of Illinois’ cannabis industry is large and is expected to grow each year. Right now, they have 20 indoor facilities licensed for production, with a further 100 smaller producers with licenses to grow in facilities up to 5,000 square feet. 

One of the most important parts of the legislation is that the law requires producers to explain in detail exactly how each grower will meet the standards of the law. It’s a process that demands an intimate knowledge of the complex systems in place, and a field we feel uniquely situated to support businesses tackle. With these regulations regarded as the new standard, we expect to see similar laws passed across the country, and we’re ready to support businesses everywhere. 

Whether you’re looking to get started, upgrade your facility to meet regulations, or need help presenting your current HVAC to inspectors, we can help!

Measuring Growth: Energy Will Shape Cannabis Growth

The cannabis industry is one of the most intriguing opportunities in the country right now. Across the nation, more states are legalizing cannabis than ever before, giving producers a “green light” to go big. But in the race to scale up comes the hurdle of overcoming the big energy demands of indoor production. 

Especially in states like Michigan, indoor production is going to make up a big chunk of the industry’s efforts to meet all-new levels of demand. With more production comes a larger supply, and prices have dropped accordingly. In addition to this new challenge, that extra production means energy costs go up, too. Roughly 63% of cannabis production is exclusively indoors, with a further 20% partially indoors, often for specific parts of the growth cycle. 

That adds up to a lot of juice; in 2012, before many states introduced and passed legalization legislation, cannabis production made up 1% of the nation’s electrical demand. Every production facility has a sizeable footprint, with a national average of over 41,000 kwh per month for a 5,000 square foot indoor facility. 

It makes a lot of sense that cannabis producers are preparing for both more energy costs and new tech; before they grow, they’re working with energy efficiency experts like Keen Technical Solutions to make sustainable practices as part of their blueprint. We’re working with companies across the Midwest to plug in renewable energy options like solar and wind power to support best practices developed by the industry. Every tool in our toolbox has a role in a cannabis facility, from HVAC to mechanical insulation, light fixtures to sustainable development.

We’re able to bring our decades of experience to a brand new industry. This is an incredible opportunity for us to support growers who are primed to reach all-new levels of production, but just as importantly, it’s a chance for us to help them do so with as little impact on our environment as possible. We all have something invested in the direction the cannabis industry takes right now; we’re ready to do our part with companies taking the forward-thinking route.