A proposal released by the California Energy Commission (CEC) may require all indoor cannabis operations to switch exclusively to LED lights by 2023. The state hopes to curb the industry’s expanding energy consumption, but critics say the requirement goes too far and may serve to further encourage illegal growing operations. Let’s breakdown the language of the CEC’s new proposal and its potential consequences for California’s legal cannabis industry.

Energy Use in the Cannabis Industry

With cannabis going mainstream, the industry’s expanding environmental footprint represents an important concern. Many cannabis grow operations are set up indoors. While this means a more consistent and higher quality yield, the energy consumption of indoor grow operations can be staggering as they require near closely regulated temperature control, ventilation, lighting, and irrigation.

As the demand for cannabis in legal states rises, so have the number of indoor growing facilities. In 2018, 45% of Denver’s increase in energy demand was attributed to electricity needed to power new cannabis facilities.

Curbing Energy Consumption

In response, states are starting to take action to control the expanding energy needs of indoor-based cannabis businesses. In 2020, the California Energy Commission released a report from its California Statewide Codes and Standards Enhancement (CASE) Program.

Although the report is not specific to cannabis, the industry falls within the report’s scope of controlled environment horticulture (CEH), an agricultural method used to manage growing conditions in an indoor warehouse or greenhouse. The report also specifically calls out the increase in energy consumption experienced by the state after the legalization of recreational cannabis in January 2018 and attributes the increase to an expanding number of urban CEH cannabis operations.

The report recommends three significant changes for CEH facilities in the state’s energy code:

  • Horticultural lighting minimum efficacy
  • Efficient dehumidification and reuse of transpired water
  • Greenhouse envelope standards

Criticism from the Cannabis Industry

Among the proposed code changes, the minimum standard for lighting efficiency has caused most controversy including a strong backlash from those in the cannabis industry. That’s because the proposed standards in effect require all indoor grow operations to switch from lower-efficiency grow lights such as metal halide or high-pressure sodium to LEDs.

LED lighting consumes less energy but represents a significant upfront cost for cannabis business owners. In an op-ed for the industry publication MJ Biz Daily, Bob Gunn, founder of the energy consulting firm Seinergy in Seattle, estimates that the proposal could cost growers across the state $255 million. “It’s somewhat akin to requiring everyone in California to buy an electric vehicle in the next two years without any financial assistance,” commented Gunn.

Critics of the proposal argue that this cost could end up benefiting the already dominant illegal market by driving smaller cannabis growers underground. It also fails to consider environmental mandates already in effect for cannabis growers.

So what’s the alternative? Gunn suggests using incentives to encourage the use of LEDs instead of mandating them across the board, a tactic that has been successful with solar photovoltaic panels. “Instead of forcing an expensive new technology on 95% of California’s farmers and running the risk of expanding the illegal market, the CEC should take this opportunity to use a proven methodology that supports both one of the state’s foundational industries and its clean energy goals: incentivizing markets until there is a higher saturation of a new technology.”