The cannabis industry is finally addressing the issue of its environmental impact and this, clearly, is a good thing. Until recently, the industry has not employed an environmentally sustainable mode. Far from it. When I built my cannabis business, I started off with a focus on profitability, but I realized later that profitability can be directly related to an environmentally sustainable position. To understand the relationship, it’s important to identify the various methods and parameters of growing cannabis, a crop that might soon become the most popular crop in the world.
First, there is traditional agriculture, the most old-school method of growing any crop. This method requires vast amounts of land and soil use, substantial water use (most of it wasted), and lots of crop loss due to bad weather, drought, over-farmed land, insects, pollution, and cross-pollination issues. Large cannabis producers that grow with this method have unaudited claims of producing eight-cents-per-gram dry cannabis flower, but we don't really know how this math is calculated and if it includes crop loss. It can be stated with near certainty this type of crop is not consistent in quality and cannot, with any consistency, target the medical market.
Greenhouse cultivation is a second method that is frequently used to grow cannabis but is also highly inefficient and not environmentally friendly. We are talking about millions of square feet of land under glass structures that are also subject to most of the previously mentioned farming issues like weather, pollution, and insects. The positive difference is that in a greenhouse you can have additional controls on temperature, humidity, and lighting, though all of it comes at a price.
Energy use in a greenhouse is incredibly high, plus it utilizes all that energy for the same inconsistency of quality and crop loss as outdoor crops. Most greenhouse operations are producing cannabis in the $2 per gram range, which is too high to be competitive.
Standard horizontal indoor cultivation operations are similar to greenhouses but utilize more of these controls. These buildings are still sprawled over millions of square feet; they are still leaky and let non-filtered air, pollution, and insects in. The other issues with greenhouses and standard horizontal buildings built for indoor cultivation of cannabis is that they are typically closer to residential neighborhoods or along highways, causing issues with odor and intense lighting.
I was recently at a cannabis trade show in Boston and learned that the few cannabis cultivation operators who have licenses are using up to six per cent of the power grid in Massachusetts. That number is four per cent in Denver and one per cent in the US. This industry is still in its infancy but should still have the responsibility to be environmentally sustainable.
So, how do you avoid using so much land, water, and other resources? Go vertical. What about the issues of crop loss, contamination, and consistent quality? The answer to that is gas-tight, controlled climate facilities. With this technology, we could essentially grow these plants on the moon. This means all pertinent gases like CO2, O2, N2, ethylene, ethanol, and, of course, temperature and humidity. With this model crop loss is less than one per cent and quality is consistent at each harvest; pharma-grade quality in terpenes and cannabinoids.
What’s holding the industry back from this option? So far, the industry has been focused on licensing, market share, and shareholder expectations. Quality and consistency have not been the focus, neither has profitability, and the environment has definitely taken a back seat to all of it. With a gas-tight design we can use up to 20 times less water compared to a greenhouse or standard horizontal cultivation center. Another important factor to consider is canopy density per square footprint.
Big density and big yield per square footprint will reduce the cost per gram. To achieve this, you need very low emitting lights that will allow the plants to come six inches from the light without burning them while still performing great quality in terms of buds and cannabinoids. The lighting industry has evolved in leaps and bounds, but today most cultivation facilities still use energy-hungry HPS lights that emit very high heat. For various reasons, but mostly familiarity, many master growers are reluctant to part with HPS lights.
Operating LEDs (or LLEDs) in a high-density canopy in a high-volume facility is, for the most part, unknown. When you put all that in a gas-tight bubble, there is no way cannabis master growers can give any type of prediction on yield or quality.
This is why most companies following the same cultivation patterns are not environmentally sustainable. It may work for some time in new markets where cannabis wholesale pricing is still very high, but as production increases and consolidation happens, prices fall and all of a sudden, these companies are not profitable enough. This is what we are seeing with the stock market recently that saw the valuation of most large cannabis companies go way down. The solution is to lower operating costs while still focusing on quality.