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 When companies cut corners and rely on outdated technology or press lamps designed for recreational use into industrial-scale applications, they don’t just waste their own money.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!

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. 

Keen Awards Mauser Packaging Solutions Environmental Stewardship Award

We work with a lot of companies that are driven to do big things sustainably. At Mauser Packaging Solutions, sustainability is a part of their DNA.

Our projects with Mauser Packaging Solutions have expanded, but it’s their Monroe facility that serves as the example for companies doing the right thing, the right way. Keen Technical Solutions worked with Mauser to identify the best areas to improve their energy efficiency. With lighting playing a crucial role in their operations, we found a number of ways to implement new technology to save energy and save money at the same time.

Mauser Packaging Solutions is a busy place. While they may have expected our project to impede their day-to-day operations, we worked around and with their schedule to make sure they were always up and running. After a few long nights, we had an entirely new system of fixtures fired up and offering a brighter, safer, more productive work environment for their team.

The project is offering more than just quality lighting; Mauser’s investment is going to save them over $35,000 per year. That’s money better spent investing in facilities, employees, and the future of a thriving, competitive company. Waste is waste, and when you can save money and save the planet, the decision is never hard to do the right thing.

Our own Bob Underhill and the team is proud to award our Environmental Stewardship Award to Gary Wolf and Mauser Packing Solutions’ Monroe, Ohio facility. On behalf of everyone at Keen Technical Solutions, thank you for being a part of a cleaner, greener future in manufacturing.

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