The High Cost of Growing Cannabis

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http://confluence-denver.com/features/sustainable_cannabis_071614.aspx

The High Cost of Growing Cannabis

CHRIS MEEHAN | WEDNESDAY, JULY 16, 2014

Surna Climate Control Air Handlers

Cannabis cultivation uses as much as 10 percent of Denver’s electricity, and there are no best practices for sustainable growing. A number of startup businesses and organizations are looking to change this.

Cannabis cultivation is an industry that’s recently emerged from the shadows in Colorado, from basements and closets to full-fledged warehouse grows. It is one of the most valuable cash crops — marijuana reached wholesale prices as high as $4,000 a pound earlier this year.

A primo, organic heirloom tomato might fetch as much as $6 a pound. Perhaps only saffron and kopi luwak (coffee passed through a civet) are more expensive legal crops. The legalization and sale of marijuana in Colorado hasn’t created a maelstrom of maleficence or — heck — even led to more parking tickets, but the most common growing practices are often inefficient and straining local resources, chiefly the electric grid, not to mention water and waste management.

In and around Denver, the overwhelming majority of growers are still producing cannabis in warehouses. Growing in warehouses has some advantages. Growers contend that they grow more harvests annually — by some accounts up to five and a half harvests a year. However, that comes at a price. Some say as much as 10 percent of electricity in Denver is going to indoor grow operations.

“The two big energy sucks are the climate systems and lighting,” explains Brandy Keen, Vice President of Sales with Surna, which makes highly efficient water-chilled HVAC (heating, ventilation and air conditioning) systems for grow houses. 

The Boulder-based company is focused on disruptive technologies in the cannabis industry. Already a number of systems are used in grow houses in Denver.

“Every watt,”  Keen explains, “produces roughly 3.4 BTUs of heat.” A 1,000-watt light puts out more heat than some hair dryers and a warehouse may have hundreds of these lights. “That’s the primary issue, you’ve basically got thousands and thousands of watts of heating in a space that needs to be at 78 degrees for the plant.” 

The systems used to cool the grow room and keep the humidity at the right level also need to be big — and use a lot of electricity. Surna counters this with water-chilled HVAC systems designed for grow houses that she says can reduce HVAC energy use at grow facilities by 30 percent to 50 percent. 

Energy inefficiency

“The electricity is a huge, huge portion of the cost of growing,” says Dave Gardner, Senior Horticulturist with consulting firm Colorado Cannabis Systems. “In a warehouse, it costs $700 to $750 a pound. But that’s very efficient and people aren’t always achieving that number.”

Gardner says that’s just the figure that his company tries to target with efficient warehouse growing systems, without energy and resource efficient systems the costs can be much higher.

As more grow houses pop up it’s becoming a bigger issue. For instance, Gardner says that roughly 12 percent of the electric grid in Boulder is now supporting marijuana growing. Still, compared to other options, warehouses are easier to grow in under current law. They’re likely in areas designated for industrial use and are also easier to find and rent than building new structures, particularly for growing. 

Since marijuana is still in a fog over funding from banks and federal legality, many growers would have to fund a new building with cash as opposed to loans. Further, there’s the entrenched thought: “Some people believe that indoors in a warehouse is the only way to grow the product,” Gardner says. This ideology is a vestige of the past when people had to grow marijuana in clandestine places.

Now that it’s legal and grow houses have, well, grown to meet demand, it’s also had an impact on the electric grid. “There have been situations where we’ve had to upgrade transformers,” says Xcel Energy spokesperson Gabriel Romero. The utility has also had to upgrade the power lines going into the grow houses when they weren’t equipped for the higher voltage. 

“Those changes are paid for by the warehouse owner,” says Romero. “Those things are pretty expensive startup fees.” It can cost hundreds of thousands of dollars to upgrade the electric equipment in some situations.

Still, Romero says it hasn’t strained Xcel much. “We haven’t noticed anything out of the ordinary,” he says. “But there are new grow houses opening frequently.”

“It’s easy to point a finger at that industry and say ‘You’re using this much power, you’re being unsustainable,’ but a lot of it is driven by unintended consequences of regulation and lack of education,” contends John-Paul Maxfield, Founder and CEO of Waste Farmers. 

Maxfield is also the mastermind behind the recently formed Organic Cannabis Association. The association, he says, is working to make cannabis growing more sustainable and ensure that the organic label is appropriately applied in the marijuana industry since it’s not regulated federally.

Both Gardner and Maxfield anticipate big changes in how marijuana is grown in Colorado in the future. “The idea that this crop is going to be grown indoors under light…is crazy moving forward,” Maxfield says. “The economics just don’t add up. If increased production happens, it puts downward pressure on pricing” — ultimately making growing in inefficient warehouses less enticing.

A push for greenhouses

There are alternatives to warehouse cultivation. “It costs about half as much to grow in greenhouses,” Gardner contends. He says the electric costs for growing marijuana can drop to about $350 a pound in greenhouses.

“Initially it was thought that greenhouses weren’t a secure enough location,” Gardner says. “I found this absurd. You can build a greenhouse with steel walls or high fences to keep people out.” 

In Colorado and Denver, that means a greenhouse with polycarbonate, insulated plastic panels, as opposed to greenhouses made of plastic films. The latter are less secure and can be damaged in hail storms; the former offer greater climate control options.

“The big difficulty is finding a location where the city will allow you to construct a greenhouse,” Gardner says. This is particularly true in Denver where most land isn’t zoned to allow cannabis growing. “Even if you find a piece of property you really need to purchase that property. Then, to develop it and build the greenhouse, that’s a huge [up-front] cost.”

There’s also some stigma associated with greenhouse growing, but Gardner calls that notion hogwash. “Show me some actual qualifiable measures of how indoor grown cannabis is inferior,” he challenges. Others worry that they can’t grow as many harvests in a greenhouse.

“I personally know a cultivator who I work with in Denver that turns a greenhouse four times a year, with no supplemental lighting,” Gardner says. “He does admit that, in the wintertime, you get less yield and the buds tend not to be as dense or heavy. But he still turns it four times a year and still gets a good product out of the greenhouse.” 

Or growers can add a few lights and bolster their yield, he adds. “With supplemental lighting your options are a lot better.”  

Anticipate more greenhouses being built for marijuana growing in the future. “I think that’s what everyone will be doing in a matter of five years,” Gardner says. 

Maxfield anticipates an even lower-cost, more sustainable cannabis growing alternative — the outdoors. But right now there may be only one commercial outdoor grow of marijuana in Colorado and that’s closer to Pueblo. 

Concerns over security and kids having access to such areas are one reason why there aren’t more outdoor grows. But it certainly has advantages. “In an outdoor environment, it’s much easier to also grow other things like food crops in addition to medicine and cannabis,” Maxfield says.

Challenges are compounded by the fact that legal cannabis is a fledgling industry. “It took hella long to legalize this industry,” Maxfield says. “These growing pains are no different than any other industry. Some of the unintended consequences of trying to regulate the industry have unintended consequences like throwing away perfectly good organic matter that should be composted back into soil.” 

But change is coming — in Maxfield’s mind, that’s the inevitable endpoint of a black market that’s gone legit. “This is a new industry that’s trying to establish itself and establish baselines and then work towards more sustainable practices.”