Friday, July 17, 2015

A Day at the Annual Cannabis Business Summit, Part I

To get a sense of how legal cannabis farmers are thinking about and growing their crop, I recently spent a day at the National Cannabis Industry Association's (NCIA) second annual Summit and Expo at the Colorado Convention Center in Denver. Since it was a pretty long day, I'm doing my readers a favor and breaking it up into two posts - one before lunch and one after.

NCIA calls itself "the voice of the cannabis industry."
I had heard about the expo from David Rice, cannabis farmer and founder of the Washington Sungrowers Industry Association (WSIA). Rice's organization, like similar ones in Oregon and California, seeks to unite and be the voice of growers lobbying for an environmentally sustainable industry and for regulation that treats cannabis as a crop instead of purely as a drug. Two weeks earlier, over a spotty cell phone connection from the rolling hills of Northern California, Rice told me he was part of a panel for one of the expo's workshops and invited me to attend.

When I inquired about a press pass, an NCIA rep practically hurled one at me across cyberspace. On day one, June 29, I arrived at the convention center a few minutes after registration opened at 8:30 a.m. The registration line was already long. As I shuffled to the end, a woman filing in behind me asked if she was in the right line, and I confirmed. Her employer, a Nevada investment firm, sent her to scout out the industry for potential business opportunities. Based on the seventy or so people already in line - a generally well-dressed amalgam of growers, aspiring growers, lawyers, consultants, and reps from lighting, construction, and who knows how many other companies - I figured she would leave with plenty of options.

The registration line for the NCIA expo on June 29, 2015 in Denver. 

After picking up my registration materials, I was directed to the end of a second line to get my name badge electronically tethered to the sessions I'd registered for. Not being familiar with this process, I hadn't registered for any, but it turned out that the press pass allowed me to attend all of the workshops. Nice, I thought - though I already knew where I would spend my time. There were two workshops on the schedule for day one that seemed to directly address growing practices: one in the morning on greenhouse system design, and Rice and co.'s four-hour afternoon panel on directing the cannabis industry toward environmental sustainability.

About eighty people attended the first workshop on greenhouse systems, filling out the eight long rows of tables and chairs that faced the panel's stage in a dimly lit conference room. They came from all over the country - Hawaii, Arizona, Michigan, and Pennsylvania were all represented - and a man sitting next to me in the front row came all the way from Australia. The title of the three-hour workshop - "Complete Cultivation System Design Process" - sounded about as thrilling as pencil lead; fortunately, the panelists had many interesting things to say and the audience didn't seem to lose interest. Panelists included three reps from a greenhouse company - the company's founder, a thermal environment specialist, and a water systems specialist - a  lawyer, and a greenhouse construction consultant.

Some highlights from workshop #1

Zev Ilovitz, founder of Evirotech Greenhouses, said greenhouses can be 30-50% more efficient than growing indoors.

 1) Legally growing pot for money is not as easy as it sounds

"Compliance  should inform every single decision you make," advised Charles Smith, an attorney from New York who has plenty of experience with grower-clients. "This is by no means a get-rich-quick scheme. The idea that there are marijuana millionaires popping up all the time is just a farce, and has been promoted, I think irresponsibly, by the media."

After a Google search turned up this, this, this, and this, it's pretty hard to argue with Smith's last point. The hype and media attention gleaned by a handful of successful cannabis entrepreneurs obscures the reality: the cannabis industry is hyper-competitive, hyper-regulated, and comes with a 40 percent chance of failure - about 10 percent higher than new businesses in other industries.

2) Greenhouses require an insane amount of startup money - but are worth it in the long run

If you want to build your own cannabis greenhouse, you're gonna need about $4 to $5 million. That's because unlike warehouse growing, where the grower rents or buys an existing structure on  previously developed land, a modern, large-scale greenhouse operation is literally built from the ground up: growers need to find an empty piece of land with the right water and electric hookups, and then either build their own greenhouse or have one built on top of it.

However, because it is more energy efficient, the greenhouse is guaranteed to be more financially sustainable than a warehouse grow, which is cheaper to start up but comes with electric bills that can soar to tens of thousands of dollars per month.

3) Greenhouses appear to be the solution to environmentally degrading cannabis growth

The efficiency of greenhouses is going to force cannabis out of basements and warehouses, possibly for good. "As people move to greenhouses, the industry will have to move to that to compete," said Zev Ilovitz, founder of Envirotech Greenhouse Solutions and a former cannabis farmer himself. "I don't see what the future is for indoor cultivation."

Greenhouses do require supplemental lighting to keep the plants on the 12-hour light cycle during the flowering phase. However, Kurt Parbst, Envirotech's thermal environment expert, said that the amount of necessary supplemental lighting depends on climate - dry, sunny climates such as Colorado's require far less lighting than say, Seattle's or Albany's. This suggests that if the industry does move to greenhouse grows, growers in some states may have a slight advantage over others. Indoor growers all have access to the same lighting technology, so this is currently not the case.

Energy isn't the only area where greenhouses are superbly efficient. Eric Labatte is a Canadian water systems guru based in Ontario, an area with the highest density of vegetable greenhouses in North America. He explained in mind-numbing detail the workings of a high-tech, closed-circuit irrigation system that amounted to damn near 0 percent runoff.

I thought of all the water wasted by growers who illegally divert streams in Northern California, and realized that not only is it important for growers to adopt these new systems, but it's also imperative that politicians create subsidies and other incentives to shunt the industry in that direction. If the industry keeps flourishing the way it is now, the future of the parched western American landscape may depend on it.

...and that was lunch. I'll have more from my day at the NCIA expo soon.

Sunday, July 5, 2015

Greenhouses will solve Denver's pot-related energy woes

The Denver Post's Cannabist section reports that cannabis growing facilities, most of which are indoor, are responsible for 45 percent of an annual 1.2-percent increase in the city's electricity use since 2012:
Denver's indoor cannabis grows are using too much electricity.
"Colorado’s marijuana sector, in particular, is growing rapidly, relying on electricity to run lights that stimulate plant growth, as well as air-conditioning and dehumidifiers. The lights emit heat, raising demand for air conditioning, which requires more electricity."
 And how do Denver officials plan on solving this problem?
"Southwest Energy Efficiency Project director Howard Geller said new adjustable light-emitting diode (LED) lights have emerged that don’t put out heat. Companies installing these wouldn’t require so much air-cooling and could cut electricity use, Geller said."
Mr. Geller's proposed solution of unplugging inefficient lights just to plug in less inefficient lights may indeed help warehouse growers cut costs, but as the director of a regional energy efficiency program he should be pushing to have this crop grown under the sun. A simple Google search using the  words "cannabis greenhouses efficient" will turn up all the evidence any official needs to start guiding the industry in that direction.

Cannabis growing in a greenhouse with supplementary lighting.
And if recent trends continue, the industry won't need much of a push; just last week at the National Cannabis Industry Association's annual expo in downtown Denver, there were multiple workshops and talks pushing greenhouses and environmentally sustainable cultivation as the next big move for the industry.

It's not just about high energy bills. Plants that receive intense heat and direct light from inefficient lighting are more stressed out and are more vulnerable to insect infestations, which ups the need for pesticides, another costly input for cannabis farmers. This is what greenhouse engineer Eric Brandstad, of Forever Flowering Greenhouses, calls "growing against the grain," or growing methods that run counter to the plant's needs. Greenhouses, by contrast, diffuse the direct rays of the sun across an entire crop, encouraging healthy photosynthesis.

Many NCIA members support sustainable cannabis growth.
"When plants are grown healthy, not against the grain, they actually will resist pests," said Brandstad, speaking as part of a panel on environmentally sustainable cannabis cultivation at the NCIA expo on June 29.

So far, the only downside to greenhouse grows is the high startup cost, as purchasing and prepping land for a highly efficient greenhouse is more expensive than renting or buying an old warehouse.

Most greenhouse growers also use supplementary lighting to keep their plants on the 12-hour light cycle required to induce faster flowering; here is where Geller's suggestion of using more efficient lights would be most useful. In addition, according to greenhouse expert Zev Ilnocki of Envirotech Solutions, Colorado's sunny climate minimizes the need for supplementary lighting, so growers in the Centennial State stand to save more on those costs than growers in cloudier regions such as the Pacific Northwest.

Colorado already has several greenhouse grows in operation, and if the current pulse of the industry is any indication, there will be many more to follow. The reason is simple: greenhouses are better for the plants, better for the growers, and better for the environment.

Wednesday, July 1, 2015

Highlights from Oregon's Cannabis past

Today cannabis is officially legal in Oregon. Before today, the only Oregonians who could legally use cannabis were those registered with the state's medical cannabis system, which was approved in 1998; they could possess up to six plants and 24 ounces of dried cannabis. Now, possession and growth of the herb are legal, but there is not yet a legal way to buy it.

The full legalization initiative, Measure 91, was approved by 56 percent of Oregonians in the midterm elections on November 4, 2014; similar measures made cannabis legal in Alaska and Washington, D.C. The Oregon state legislature has spent months developing regulations for the new industry, and just yesterday sent a bill to Governor Kate Brown's desk that does the following:
  • Limits the size of existing medical cannabis grows beyond cities to 96 plants and grows in urban neighborhoods to 24 plants. New growers in both locations will only be allowed to grow half as many. Under the medical cannabis system, growers could only grow enough cannabis to supply four patients, which amounted to 24 plants, 72 seedlings, and six pounds of the dried product.

  • Allows city and county governments in eastern Oregon, where Measure 91 received the least support, to shut out the cannabis industry altogether. In the rest of the state, voters have to approve any attempts to ban the industry.

  • Bans edible packaging that is deemed attractive to children

  • Establishes mandatory standard testing procedures for pesticides, molds, and mildews

  • Restricts industry employment to residents who have lived in Oregon for at least two years, but allows out-of-state investors.

  • Tracks the product of retail growers from seed to sale and requires growers to file reports on their inventory
As Oregonians shake off the shackles of prohibition and take a toke or two in celebration, here's a look back at some interesting moments in Oregon's cannabis history:

1876 - The drug importer Craddock & Co. places an ad for "Cannabis indica" in Hillsboro, Oregon's Washington Independent. The Philadelphia-based firm calls the herb "the Great East India Remedy" and claims it is "warranted to cure Consumption, Bronchitis and Asthma." Price per bottle: $2.50.

1895 - In a public call for supplies, the board of trustees for the Oregon state insane asylum requests "1 pound granulated cannabis indica" under "Drug Supplies."

1915 - Hashish in Portland

Although it wasn't too popular, drug cannabis was imported from Great Britain (which imported it from India) and sold in drugstores throughout the United States in the late nineteenth century. On March 3, 1915, The Morning Oregonian ran a story about four drug stores in Portland's business district that were found to be selling "hashish" to youths between the ages of 11 and 18.

On May 22, the Oregonian ran a news brief that discussed an "ordinance prohibiting the sale of hashish, an opiate said to have found its way to the Portland market." Though the newspaper incorrectly identified cannabis as an opiate, it at least gave the proper official name, "cannabis indica."

1920 - A Mrs. Dolores "Fernands" - likely a misspelling of "Fernandes" or "Fernandez" - is arrested in Portland after plucking "a large fruit box"'s worth of cannabis from a plant that apparently sprung up near Union Station. She then sold a small quantity of it to a "Maxinieno Mendez" for $1.35. The police told The Morning Oregonian that the weed gives the smoker "a laughing jag."

1966 - This happened:

1973 - Oregon becomes the first state to decriminalize cannabis, reducing the penalty for possession of up to one ounce to a $100 fine.

1998 - 54 percent of Oregon voters approve medical cannabis via Ballot Measure 67.

Oregon readers may know of more events that should be included here; if you are one of those readers, please let me know in the comments what else I should add!