Marijuana and Its Energy Efficiency Crisis

When it comes to creating and implementing marijuana regulations for marijuana businesses, most state regulators focus on satisfying the eight federal enforcement priorities set forth in the 2013 Cole Memo. Their overriding goal is to create regulations “robust” enough to keep the federal government from intruding upon their state’s democratic experiment with marijuana. This has meant energy usage has been mostly ignored.

Until now.

As the legalization movement picks up across the United States, state and local regulators are increasingly delving into marijuana business energy consumption and how to handle the cost and provisioning of utilities to these businesses. We wrote about utilities and cannabis in the context of what happens if the Feds literally pull the plug or turn off the spigot for federally regulated utilities and on how a county in Washington State planned to continue providing electricity to marijuana businesses even if the federal government were to cut the power.

This post, however, is about how our federal laws make it difficult for marijuana businesses to be energy efficient, and by doing so, hurt those businesses, their surrounding communities and the environment.

Energy consumption by cannabis businesses is becoming a problem in some locales:

Earlier this month . . . Pacific Power experienced 7 localized outages due to demand overloads attributed to marijuana grow operations. And this week, a Seattle utility warned of a potential 3% load growth in coming months — just from marijuana operations. Earlier this year, we reported that 45% of Denver, Colorado’s load growth was coming from cannabis growing operations. Many utilities, due either to ideological aversion to the industry or fear of running afoul of the federal government, have taken a “don’t ask, don’t tell” approach to handling marijuana-related load growth.

This sort of head in the sand approach is waning as marijuana industry expansion is all but forcing serious debate over how states and municipalities should allocate electricity, water, and energy to marijuana businesses that are producing an indisputably energy-intensive crop.

Indoor grows, no matter their size, can consume large amounts of energy. We are aware of one large state-legal indoor grow that reportedly pays around a million dollars a month on its electricity bill. Though you would think that the cannabis industry would attract utility companies wanting to help marijuana businesses be more efficient with their power usage, that generally has not been the case. Part of the reason why is because the Bonneville Power Administration (BPA), a federally-owned transmission and generation utility, would normally be the platform through which utilities would run efficiency and market transformation programs for cannabis production but, because of federal cannabis prohibition, the BPA has stayed far away from cannabis. Federal drug laws also preclude the BPA from providing any financial incentives to make marijuana businesses more energy efficient.

The federal government’s hands off approach has led some utilities to charge a premium for the energy they provide to marijuana businesses. Most utilities charge marijuana businesses the same as their other customers, but make no real effort to work with them in resolving their special needs. Neither of these approaches do much at all to increase energy efficiency, which is a shame as the industry is only going to continue to expand.