August 16, 2022

It’s time for the cannabis industry to embrace sustainability.

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For years, most cannabis companies have been independent about their social and environmental impact. Indeed, cannabis’ progressive aura has made it the darling of the sustainability series. Which is recognized as a natural product that has many benefits for humanity.

But some critics are building on that reputation.

Recent research reports have called on the investment and sustainability community to pay insufficient attention to the ESG effects of cannabis cultivation. especially the large environmental footprint.

This is not a modern-day relief movement. Most of the criticism is away from scolding the evil of “Fridge mania“As it was once called Instead, it’s at the heart of what is commonly considered material from an ESG perspective: water, imported materials, chemicals and energy, carbon, air, and other water and air emissions. from all those production inputs and processes The health implications for cannabis workers as well as the poorer communities closer to cannabis cultivation practices and accountability and transparency or the aforementioned lack of industry actors.

As Evan Mills puts it: “The cannabis industry has yet to experience tension between productive and anti-ESG-related activities.”

If a large multinational company misrepresents itself in these ways It is likely to be pursued by activists. being sued by regulators and consumers disgust

Mills, a self-described organic gardener and energy fanatic, prefers gin and tonics over cannabis, spent 40 years at Lawrence Berkeley National Lab before retiring in 2018 as a senior scientist. Although he was still a subsidiary there. He participated in the work of the Intergovernmental Panel on Climate Change. which received the 2007 Nobel Peace Prize with Al Gore.

For more than a decade, Mills has questioned the sustainability of cannabis. Starting from using a huge amount of energy. But it extends to broad environmental, social and governance impacts. He is the author of several landmark studies of the industry dating back to 2012 when he wrote a paper Regarding the carbon footprint of indoor cannabis production, at the time, he calculated that the US cannabis industry’s energy use Equivalent to 3 million cars

And that’s just what’s legal. The effects of illegal cultivation and cultivation are likely to be much larger.

mills latest documentIn the “Journal of Impact & ESG” winter 2022 issue, “Friction and Market Failures Regulatory Distortion lack of transparency Green Cleanup and inaccurate consumer data,” he said, which is widespread across the industry. summarize of that paper was published last week on the media.

is generally accepted

reverse

As the cannabis industry grows globally with impact It’s time for the industry to take responsibility. Legal marijuana is a $150 billion to $200 billion global industry. In the United States, cannabis is The country’s largest economic crop.

Mills’ cannabis upgrading focuses primarily on indoor cultivation. In 2020, he said, 42 percent of growers grow cannabis. “Only in a sprawling windowless factory farm. They are often several times larger than Walmart and use as much energy as they do. with a data center”, about 200 watts per square foot, that jibes with the latest UN look for that the carbon footprint of indoor cannabis cultivation is “16 to 100 times bigger than outdoor cultivation.”

Windowless plants represent a resource-intensive farming environment, Mills explains, with mechanically regulated temperature, humidity, air movement, and climate. and artificial light “Bright as the sun” and maintained according to the standard “day” length, regardless of outdoor conditions. Plants typically take root in a single-use, inert medium, such as mineral wool, which is made by mixing basalt lava with sand, limestone and soda ash in a furnace. “With artificial nutrients in water concentrations”, while industrial carbon dioxide is often injected into buildings to accelerate plant growth at five times the natural atmospheric concentration.

He added: “Such industrial cannabis cultivation facilities – whether in Fairbanks or Phoenix – must simulate and maintain a tropical environment free of artificial clouds while reducing humidity year-round.”

On the other hand, according to Mills, appropriate outdoor cultivation “The impact on the environment has been greatly reduced,” he emphasized on the word “appropriate.”

There is some irony here. The thriving indoor farming industry today owes huge debts to cannabis growers. which pioneered — often surreptitious — method of growing concentrated crops in a limited space. Controlling hydroponics, growing electricity and other technologies that are now commonly seen in the cultivation of things such as microgreens or tomatoes. Warehouse and shipping containers Those indoor operations also had the same negative impact on cannabis. Although, according to Mills, “marijuana is more intense.”

All of this should be of interest to risk-aware investors. and especially with the impact on investors. That seems to attract marijuana companies, despite a lack of transparency about their impact. Mills noted that many of the major ESG ratings companies are poorly rated publicly traded marijuana companies. Morningstar, for example, ranks 16 marijuana stocks. In most cases, S&P Global rates four of these companies between 6 and 39 out of 100, with higher being better. The International Space Station ranks 15 companies between D and C-plus, only eight cannabis companies issued an ESG report at the beginning of 2022, and only four are among the top 27 companies by market capitalization.

Despite the rather unfortunate statistics But there doesn’t seem to be a problem with exaggerating green claims. Solar Cannabis Co., Ltd.which operates a 67,000 square foot factory in Somerset. Massachusetts The company’s homepage states that it produces “Sustainable marijuana powered by solar energy,” but an inside story reveals that the company “Burn natural gas and capture heat to circulate it into the HVAC system.” Mills calculates that Solar Cannabis “should get 10 percent or less of its electricity” from onsite sunlight.

He said that other cannabis companies claim sustainability is semi-finished, such as installing “a few tokens of solar panels on the roof to create a false impression. Emphasis on recyclable packaging while there is a large amount of non-recyclable waste from cultivation. Process landfills or use illegal carbon offsets.”

If a large multinational company misrepresents itself in these ways It is likely to be pursued by activists. being sued by regulators and consumers disgust

Policy matters

Can the industry creatively confront these miserable realities? Many organizations are trying, for example, to have Sustainable Cannabis AllianceIt was founded last year by a group of industry players. is working with ASTM, the international standards organization to set consensus standards For the industry, as cannabis co-founder Shawn Cooney explains, ASTM has nine cannabis-related “tasks” covering things like indoor and outdoor farming. quality management system safety and transportation The outcome of all of this will be a voluntary standard. It doesn’t have to be mandatory, although the work of ASTM can inform policy makers.

As Mills pointed out, one of the big problems for the cannabis industry is the lack of accurate data at both the company and industry level. Ultimately, Cooney’s consortium is working with Dartmouth College’s Thayer School of Engineering on a research project on energy use in the cannabis sector Conducted an in-depth analysis of a worker’s plantation site in New Bedford. Massachusetts Cooney said, “We’ve taken action in the first year. And we’re working on the second year.” The group will release the results of the first year later this summer.

“Whether it’s indoor, greenhouse or outdoor, the industry needs to be able to record what it’s doing. report what is being done and see improvements for more sustainable goals. whether using water waste or energy use or production of greenhouse gases said Cooney.

Industrial practices and measurements are not the only obstacles. Another is the policy. At least in the United States, Evan Mills notes that cannabis is “Few economic groups have disappeared that are largely overlooked in energy and environmental policy.”

Industrial practices and measurements are not the only obstacles. Another is the policy.

Although there is a policy But they are often more persuaded to grow them indoors rather than outdoors. For example, US law prohibits interstate trading of cannabis and its derivatives. This means that anything sold in a given state must be grown and produced there. And not every state has a mix of energy. A comparison of electricity usage per unit of output across seven states found a 26-fold difference in greenhouse gas emissions, “and this does not include the severity of climate or power plant emissions factors seen across the country. said Mills.

Transportation is another factor. in general Marijuana is transported at least four times between the point of cultivation and the point of consumption. Regulations require farmers to transport their products to processors. then transported to the supplier and transported to the pharmacy Small consumers will transport the final product from the pharmacy.

and in some areas it is forbidden to grow outdoors should be a security measure Surprisingly, this may mean that farmers have to grow indoor homes on fertile farmland.

Going outdoors can solve a number of cannabis sustainability issues. According to Mills, some companies have already switched to outdoor cultivation. He said that between 2016 and 2020, the number of primarily home-grown growers dropped from 80 percent to 60 percent.

“Contrary to conventional wisdom Sustainable bio-powered outdoor cultivation uses significantly less water and less land than state-of-the-art indoor practices. Eliminate major arguments for indoor operations,” Mills said. Eliminate single-use planting media and conventional plastics in indoor operations.

Shawn Cooney had high hopes that things will continue to change “I think states “I think it’s going to vary from region to region and demographic.” Use the destination “so high value products are grown in the home. medium-sized things are in the greenhouse and the outdoors is where they make extraction products.”

Evan Mills had a simpler vision. “I think the gold ring is where we go back to what we’ve been doing for 5,000 years, growing outward.”

Thanks for reading. You can find my past articles here. invite you follow me on twitter and LinkedInSubscribe to the reprinted GreenBuzz Monday morning newsletter and listen to my weekly GreenBiz 350 podcast with Heather Clancy.

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