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Cannabusiness Sustainability

Environmental Sustainability in Cultivation: Part 3

By Carl Silverberg
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Part 1 in this series went into a discussion of resource management for cannabis growers. Part 2 presented the idea of land use and conservation. In Part 3 below, we dive into pesticide use and integrated pest management for growers, through an environmental lens.

Rachel Carson’s book Silent Spring in 1962, is often credited with helping launch the environmental movement. Ten years later, VP Edmund Muskie elevated the environment to a major issue in his 1972 Presidential campaign against Richard Nixon. 57 years after Ms. Carson’s book, we’re still having the same problems. Over 13,000 lawsuits have been filed against Monsanto and last month a jury in Alameda County ruled that a couple came down with non-Hodgkin’s lymphoma because of their use of Roundup. The jury awarded them one billion dollars each in punitive damages. Is there a safer alternative?

“Effectively replacing the need for pesticides, we use Integrated Pest Management (IPM) which is a proactive program designed to control the population of undesirable pests with the use of natural predators, a system commonly known as “good bugs (such as ladybugs) fighting bad bugs”, states the website of Mucci Farms, a greenhouse grower. While this applies to cannabis as well, there is one major problem with the crop that isn’t faced by other crops.

Rachel Carson’s Silent Spring- often credited with starting the environmental movement of the 20th century.

While states are moving rapidly to legalize it, the EPA is currently not regulating cannabis. That is in the hands of each state. According to a story in the Denver Post in 2016, “Although pesticides are widely used on crops, their use on cannabis remains problematic and controversial as no safety standards exist.” Keep in mind that it takes a lot more pesticides to keep unwarranted guests off your cannabis plant when it’s outdoors than when it’s in a controlled environment.

We’re accustomed to using endless products under the assumption that a range of governmental acronyms such as NIH, FDA, OSHA, EPA, USDA are protecting us. We don’t even think about looking for their labels because we naturally assume that a product we’re about to ingest has been thoroughly tested, approved and vetted by one of those agencies. But what if it’s not?

Again, cannabis regulation is at the state level and here’s why that’s critical. The budget of the EPA is $6.14 billion while Colorado’s EPA-equivalent agency has a budget of $616 million. According to the federal budget summary, “A major component of our FY 2019 budget request is funding for drinking water and clean water infrastructure as well as for Brownfields and Superfund projects.” In short, federal dollars aren’t going towards pesticide testing and they’re certainly got going towards a product that’s illegal at the federal level. That should make you wonder how effective oversight is at the state level.

What impact does this have on our health and what impact do pesticides have on the environment? A former Dean of Science and Medical School at a major university told me, “Many pesticides are neurotoxins that affect your nervous system and liver. These are drugs. The good news is that they kill insects faster than they kill people.” Quite a sobering thought.

“We have the ability to control what kinds of pesticides we put in our water and how much pesticides we put in our water.”Assuming that he’d be totally supportive of greenhouses, I pushed to see if he agreed. “There’s always a downside with nature. An enclosure helps you monitor access. If you’re growing only one variety, your greenhouse is actually more susceptible to pests because it’s only one variety.” The problem for most growers is that absent some kind of a computer vision system in your greenhouse, usually by the time you realize that you have a problem it’s already taken a toll on your crop.

Following up on the concept of monitoring, I reached out to Dr. Jacques White, the executive director of Long Live the Kings, an organization dedicated to restoring wild salmon in the Pacific Northwest. Obviously, you can’t monitor access to a river, but you certainly can see the effects of fertilizer runoff, chemicals and pesticides into the areas where fish live and eventually, return to spawn.

“Because salmon travel such extraordinary long distances through rivers, streams, estuaries and into oceans they are one of the best health indicators for people. If salmon aren’t doing well, then we should think about whether people should be drinking or using that same water. The salmon population in the area around Puget Sound is not doing well.”

We talked a bit more about pesticides in general and Dr. White summed up the essence of the entire indoor-outdoor farming and pesticides debate succinctly.

“We have the ability to control what kinds of pesticides we put in our water and how much pesticides we put in our water.”

If you extrapolate that thought, the same applies to agriculture. Greenhouse farming, while subject to some problems not endemic to outdoor farming, quite simply puts a lot fewer chemicals in the air we breathe, the water we drink and the food we eat.

Flooring Tips for Cannabis Growing Facilities

By Sophia Daukus
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In the burgeoning cannabis market, grow facilities are facing more and more competition every day. New indoor cultivation enterprises are often being set up in formerly vacant industrial buildings and commercial spaces, while in other cases, companies are planning and constructing new grow facilities from the ground up. For all these establishments, continually lowering production costs while supplying the highest possible quality in ever-increasing yields is the way forward.

Whether in existing or new structures, concrete floors are ubiquitous throughout the majority of cannabis growing facilities. With the right treatment, these indoor concrete traffic surfaces can greatly contribute to a company achieving its operational objectives. Alternatively, insufficiently protected concrete floors can create annoying and costly barriers to accomplishing company goals.

Challenges in Cannabis Grow Facility Construction

As with any emergent industry, mainstream acceptance and market growth is bringing regulation to cannabis cultivation. Local governments are paying more attention to how cannabis growing facilities are constructed and operated. In addition to the standard business matters of building safety, employee working conditions and tax contributions, elected officials are increasingly under pressure from constituents to analyze the overall effect of grow facilities on their communities at large.

High consumption of energy for grow room lights and high water usage are just part of the equation. The temperature and humidity needs of a grow facility can be similar to that of an indoor swimming pool environment. While warmth and moisture are ideal for cannabis growth, they also provide the ideal conditions for the growth and proliferation of fungi and other undesirable microorganisms. Therefore, to help preserve plant health in the moist indoor climate, fumigation often comes into play.

Carbon dioxide (CO2) enrichment of grow room air, a common practice proven to increase crop yields, presents another set of safety and health considerations in dense urban environments.

Adding to these challenges, many cannabis grow facilities are producing plants destined for either pharmacological or nutritional use. This in itself demands scrutiny by regulators for the sake of the consuming public.

As a result, grow room managers and owners must stay informed about the evolution of the industry in terms of local and federal agency regulations concerning their facilities, their overall operation and their products.

Bare Concrete Floors in Grow Rooms

As a foundational construction material, concrete continues to lead the way in commercial and industrial construction. Despite the many advantages of concrete floors, when left unprotected they can present significant challenges specific to cannabis grow rooms.

  • Untreated, bare concrete is naturally porous, easily absorbing liquids and environmental moisture. Substances found in grow rooms, such as fertilizers, fungicides and other chemicals, can leach through the porous concrete floor slab into the soil and ground water. Whether organic or synthetic, concentrations of such substances can be highly detrimental to the surrounding environment.
  • Whether in an existing or newly constructed facility, it is not uncommon for the under-slab vapor barrier to be compromised during construction. When this occurs, moisture from the soil beneath the floor slab can enter the concrete and move osmotically upward, creating a phenomenon known as Moisture Vapor Transmission (MVT). The resulting moisture and moisture vapor tends to become ever more alkaline as it rises upward through the concrete slab. MVT can result in blistering, bubbles and other damage to floor coverings.
  • The warm temperatures, regular watering of plants and high relative humidity maintained within many grow rooms can contribute to a weakening of the structural integrity of unprotected grow room slabs.
  • Within the confined space of a grow room, the warm, moist air invites microbe proliferation. Food and pharmaceutical plants are high on the priority list when it comes to facility hygiene levels, as demanded by code.

Public health guidelines for cannabis cultivation facilities in various parts of the country are increasingly mirroring those of food processing. Typical requirements include having smooth, durable, non-absorbent floor surfaces that are easily cleaned and in good repair, possessing proper floor slope towards a sanitary floor drain, with no puddling, as well as an integral floor-to-wall cove base. These directives cannot be met with bare concrete alone.

Optimal Grow Room Flooring Performance

In some locations, cannabis growing facilities are already subject to strict building codes and regulations. This will no doubt be spreading to other regions in the near future. For example, the Public Health Agency of Los Angeles County publishes construction guidelines to ensure cannabis facility floors meet standards mirroring the food processing and pharmaceutical manufacturing industries, where sanitation, facility hygiene and safety are paramount. In these types of facilities, bare, unprotected concrete floor slabs are not allowed as a general rule, due to the material’s innate porosity and absorbency.

Flooring in grow rooms, like in their food and pharma industry counterparts, should optimally:

  1. Provide a monolithic and virtually seamless surface to help eliminate crevices, grout lines and other dark, damp locations where soil and pathogens tend to hide
  2. Be impervious and non-porous, providing a surface that can isolate toxic materials on the surface for proper clean-up where needed
  3. Enable correction or improvement of the floor slope for proper drainage, with no low spots to help avoid puddling
  4. Be installed with integral floor-to-wall cove options for easier wash-down and sanitizing
  5. Have the strength and thermal shock resistance, plus the tenacious bond, to undergo steam-cleaning and/or hot power washing, where needed
  6. Enable seamless, continuous surface installation over concrete curbs and containment areas
  7. Offer antimicrobial options for highly sensitive locations
  8. Demonstrate high compressive strength and impact resistance for durability under heavy loads
  1. Display excellent abrasion resistance, allowing the system to perform under grueling daily wear-and-tear
  2. Present customizable slip-resistance options that can be balanced with easy clean-ability
  3. Facilitate the use of floor safety markings, such as color-coded traffic and work area designations
  1. Be formulated with low odor, low-VOC chemistries that meet all EPA and similar regulations
  2. Be able to contribute LEED Green Building Credits, where desired
  3. Include options for refurbishing old or damaged concrete surfaces to allow reuse of existing facility resources, as opposed to having to be demolished, thus unnecessarily contributing to landfill waste
  4. Withstand and perform in continually damp grow room conditions, without degrading
  5. Be compliant with FDA, USDA, EPA, ADA, OSHA, as well as local regulations and/or guidelines
  6. Include MVT mitigating solutions where Moisture Vapor Transmission site issues are present
  7. Provide waterproofing underlayment options for multi-story facilities
  8. Demonstrate excellent resistance to a broad range of chemicals, fertilizers and extreme pH substances

Finding an affordable floor system with all the above features may seem like a tall order. Luckily, innovative manufacturers now offer cannabis facility flooring that meets sanitation, regulatory compliancy, durability and budgetary needs of growers.

Resinous Flooring Value for Cannabis Facilities

Choosing the right floor solutions for a given cultivation facility may be one of the most important decisions an owner or manager makes. Since floors are present throughout the structure, poor selection and compromised protection of concrete slabs can end up wreaking havoc with profits and yields over time.

Few facilities can afford the inconvenience and expense of an otherwise unnecessary floor repair or replacement. Having to suddenly move cumbersome plant beds and heavy pots in order to give workers access to the floor area can be headache. In addition, the unscheduled downtime and overall juggling of resources that invariably must take place make a strong case for investing in optimal grow room flooring from the start.

An excellent long-term value, professional-grade resinous floor systems present cannabis growers with a unique set of solutions for cultivation rooms. Not only does this type of flooring offer all the desirable features listed above, but also furnish a host of added benefits to grow room operations, including:

Very High Gloss Finish

  • Highly reflective floor surfaces enable light entering the space from overhead to bounce back upward, exposing the underside of leaves to the light and potentially increasing yields
  • Exceptionally high gloss floor finishes in light colors help make the most of your existing lighting sources, significantly increasing room illumination
  • Achieving greater illumination without adding fixtures helps reduce energy consumption and associated costs

Virtually Seamless Surface

  • Fluid-applied resin-based flooring provides an impermeable, monolithic surface that is exceptionally easy to clean and maintain
  • The virtually seamless finish of resinous coated floors greatly reduces the number of locations for soil, pathogens and microbes to gather
  • Resinous floors, by incorporating integral cove bases to eliminate ninety degree angles, correcting floor slope to eliminate puddling, and allowing for a virtually seamless surface, provide an optimally sanitary flooring solution

Outstanding Moisture Tolerance

  • Designed specifically for use in wet industrial environments, cementitious urethane flooring is a top choice for humid grow rooms
  • Also called “urethane mortar”, this type of floor can help mitigate certain undesirable site conditions, such as Moisture Vapor Transmission (MVT)

Chemical, Acid and Alkali Resistance

  • Whether organic or synthetic, many soil enhancers and substances used to eradicate undesirable fungi and pests can damage concrete and shorten the usable life of foundational slabs
  • Protecting concrete slabs with monolithic, non-absorbent and appropriately chemical resistant coating systems allows concrete to perform as designed, for as long as intended
  • A proper barrier coating on the floor allows spilled or sprayed substances to be properly cleaned up and disposed of, rather than allowing the liquids to seep through the porous slab, and into the surrounding natural environment

Added Safety

  • Resinous coating systems’ slip-resistance is completely customizable at the time of installation, enabling growers to request more traction in pedestrian walkways and less slip-resistance under raised beds.
  • Epoxy, urethane and polyaspartic resinous flooring systems accommodate the installation of safety and line markings, as well as varying colors to delineate specific work areas
  • The antimicrobial flooring options available from some manufacturers offer further hygiene support in highly sensitive facilities
  • Today’s industrial resinous floor coatings from reputable suppliers are very low to zero V.O.C. and compliant with EPA and other environmental regulations

Resinous coating systems provide ideal value to informed growers who require durable, reliable and long-lasting high performance flooring for their facilities.

Support from the Ground Up

From incredible medical advances to high tensile fiber in construction materials, the expanding cannabis industry is bringing exciting opportunities to many areas of the economy. As more and more growers enter the market, so increases the pressure to compete.

By choosing light reflective, seamless and moisture tolerant resinous flooring that meets regulatory guidelines for grow rooms, managers can help reduce their overhead costs on multiple fronts — and get a jump on the competition.

Cannabusiness Sustainability

Environmental Sustainability in Cultivation: Part 2

By Carl Silverberg
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The first article of this series discussed resource management for cannabis growers. In this second piece of the series on how indoor farming has a reduced impact on the environment, we’re going to look at land use & conservation. There are really two aspects and we have to be up front and acknowledge that while our focus is on legal cannabis farming, there’s a significant illegal industry which exists and is not subject to any environmental regulation.

“Streams in Mendocino run dry during the marijuana growing season impacting Coho salmon and steelhead trout who lay their eggs in the region’s waterways.” One biologist reported seeing “dead steelhead and Coho on a regular basis in late August and September, usually due to water reduction or elimination from extensive marijuana farming.” The quotes are from an extensive article on cannabis land use by Jessica Owley in the U.C. Davis Law Review.The concept that land will stay in its natural state is a mixture of idealism and reality.

This is going to continue until it’s more profitable to go legit. For this article, we’re going to focus on the legitimate cannabis grower. On the land use side, we usually hear four main reasons for indoor growing: remaining land can stay in its natural state, fewer space usually translates to fewer waste, you conserve land and natural resources when you don’t use fossil fuels, greenhouses can be placed anywhere.

The concept that land will stay in its natural state is a mixture of idealism and reality. Just because someone only has to farm five acres of land instead of one hundred acres doesn’t necessarily mean they’re going to leave the rest in its pristine natural state. Granted the footprint for automated greenhouses is significantly less but the key is what happens to that extra space. Assuming that it will all be preserved in its natural state isn’t realistic. What is realistic is the fact that a developer may not want to build tract houses abutting a commercial greenhouse operation. If they do, likely there’s going to be more land set aside for green space than if a farm was sold outright and a series of new homes were plunked down as if it were a Monopoly board.

Combined with workforce development program funding, urban indoor farming is getting more attractive every day.That’s not the same kind of issue in urban areas where the situation is different. Despite the economic boom of the past ten years, not every neighborhood benefitted. The smart ones took creative approaches. Gotham Greens started in Greenpoint, Brooklyn and has expanded to Chicago as well. “In early 2014, Gotham Greens opened its second greenhouse, located on the rooftop of Whole Foods Market’s flagship Brooklyn store, which was the first ever commercial scale greenhouse integrated into a supermarket.”

Green City Growers in Cleveland’s Central neighborhood is another example. “Situated on a 10-acre inner-city site that was once urban blight, the greenhouse—with 3.25 acres under glass–now serves as a vibrant anchor for the surrounding neighborhood.”

The beauty of greenhouse systems even those without greenhouse software, is they can be built anywhere because the environmental concerns of potentially contaminated soil don’t exist. The federal government as well as state and local governments offer a myriad of financial assistance programs to encourage growers to develop operations in their areas. Combined with workforce development program funding, urban indoor farming is getting more attractive every day.

As for the argument that greenhouses save energy and fossil fuels, I think we can agree that it’s pretty difficult to operate a thousand-acre farm using solar power. To their credit, last year John Deere unveiled a tractor that will allow farmers to run it as a fully autonomous vehicle to groom their fields while laying out and retracting the 1 kilometer long onboard extension cord along the way. It’s a start although I’ll admit to my own problems operating an electric mower without cutting the power cord.

In a 2017 article, Kurt Benke and Bruce Tomkins stated, “Transportation costs can be eliminated due to proximity to the consumer, all-year-round production can be programmed on a demand basis, and plant-growing conditions can be optimized to maximize yield by fine-tuning temperature, humidity, and lighting conditions. Indoor farming in a controlled environment also requires much less water than outdoor farming because there is recycling of gray water and less evaporation.”

The overall trend on fossil fuel reduction was verified this week when the Department of Energy announced that renewables passed coal for the first time in U.S. history.  And on the water issue, Ms. Owley had a salient point for cannabis growers. “The federal government will not allow federal irrigation water to be used to grow marijuana anywhere, even in states where cultivation is legal.” That’s not a minor detail and it’s why outdoor farming of cannabis is going to be limited in areas where water resources and water rights are hotly debated.

Cannabusiness Sustainability

Environmental Sustainability in Cultivation: Part 1

By Carl Silverberg
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Core values often get wrapped into buzzwords such as sustainability, locally sourced and organic. In the first part of a series of four articles exploring greenhouses and the environment, we’re going to take a look at indoor vs. outdoor farming in terms of resource management.

Full disclosure; I love the fact that I can eat fresh blueberries in February when my bushes outside are just sticks. Is there a better way to do it than trucking the berries from the farm to a distribution plant to the airport, where they’re flown from the airport to a distribution center, to the grocery store and finally to my kitchen table? That’s a lot of trucking and a lot of energy being wasted for my $3.99 pint of blueberries.The largest generation in the history of the country is demanding more locally grown, sustainable and organic food. 

If those same blueberries were grown at a local greenhouse then trucked from the greenhouse directly to the grocery store, that would save diesel fuel and a lot of carbon emissions. People who can only afford to live near a highway, a port or an airport don’t need to ask a pulmonary specialist why their family has a higher rate of COPD than a family who lives on a cul-de-sac in the suburbs.

Fact: 55% of vegetables in the U.S. are grown under cover. The same energy saving principles apply to indoor cannabis and the reasons are consumer driven and producer driven. The largest generation in the history of the country is demanding more locally grown, sustainable and organic food. They want it for themselves and they want it for their kids.

The rapid proliferation of greenhouses over the past ten years is no coincidence. Millennials are forcing changes: organic fruit and vegetables now account for almost 15% of the produce market. A CNN poll last month revealed that 8 of 10 of registered Democrats listed climate change as a “very important” priority for presidential candidates. The issue is not party I.D.; the issue is that a large chunk of Americans are saying they’re worried about the direct and indirect impacts of climate change, such as increased flooding and wildfires.

So how does the consumer side tie into the cannabis industry? Consumers like doing business with companies who share their values. The hard part is balancing consumer values with investor values, which is why many indoor growers are turning to cultivation management platforms to help them satisfy both constituencies. They get the efficiency and they get to show their customers that they are good stewards of their environment. The goal is to catch things before it’s too late to save the plants. If you do that, you save the labor it costs to fix the problem, the labor and the expense of throwing away plants and you reduce pesticide and chemical usage. When that happens, your greenhouse makes more money and shows your customers you care about their values.

The indoor change is happening rapidly because people realize that technology is driving increased revenue while core consumer values are demanding less water waste, fewer pesticides, herbicides and fertilizers.Let’s add some more facts to the indoor-outdoor argument. According to an NCBI study of lettuce growing, “hydroponic lettuce production had an estimated water demand of 20 liters/kg, while conventional lettuce production had an estimated water demand of 250 liters/kg.”  Even if the ratio is only 10:1, that’s a huge impact on a precious resource.

Looking at the pesticide issue, people often forget about the direct impact on people who farm. “Rates in the agricultural industry are the highest of any industrial sector and pesticide-related skin conditions represent between 15 and 25% of pesticide illness reports,” a 2016 article in The Journal of Cogent Medicine states. Given the recent reports about the chemicals in Roundup, do we even need to continue the conversation and talk about the effects of fertilizer?

I’ll finish up with a quote from a former grower. “The estimates I saw were in the range of between 25%-40% of produce being lost with outdoor farming while most greenhouse growers operate with a 10% loss ratio.”

The indoor change is happening rapidly because people realize that technology is driving increased revenue while core consumer values are demanding less water waste, fewer pesticides, herbicides and fertilizers. Lastly, most Americans simply have a moral aversion to seeing farms throw away food when so many other people are lined up at food banks.

A Case for Digital Cultivation Management in the Cannabis Industry

By Allison Kopf
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The steady destigmatization and legalization of medical and recreational cannabis at the state level continues to propel a large and fast-growing industry forward. In 2018, the legal cannabis industry grew to $10.4 billion in the U.S., employing more than 250,000 people according to New Frontier Data. 

The mass production of anything that humans consume is invariably accompanied by an increased concern for safety and accountability—especially in the case of cannabis, which the federal government still deems a Schedule I substance. Each U.S. state has its own mix of laws based on the will of its voters, spanning the spectrum from fully legal to fully illegal.  

While the mix of legality in states can be hard to keep up with, all states with any form of cannabis legalization have one thing in common: the need to regulate this new industry. Last year, the federal government issued a Marijuana Enforcement Memorandum that allows federal prosecutors to decide how to prioritize enforcement of federal marijuana laws, so states are at risk.

If you are a public official involved in state cannabis regulation, or anyone involved in the supply chain from cultivator to dispensary, chances are you are using some kind of seed-to-sale tracking technology to monitor things like plant inventory, sales volume, chain of custody—and to hedge against federal encroachment by having a legitimate form of accountability.

Mandatory Request For Proposals (RFPs) issued by states for compliance solutions have spawned an entire sub-industry of seed-to-sale tracking, and point-of-sale hardware and software vendors, with large multi-million dollar contracts being awarded. Metrc’s RFID (Radio Frequency Identification) plant and packaging tags are gaining wide usage, and 11 states plus DC have adopted the technology.

While states are taking the right steps to keep their legal cannabis industry legitimate and accountable, there is actually a major gap that existing systems don’t cover: cultivation management. Most of the existing RFPs and platforms focus on the post-harvest side of the business (processing, packaging, distribution) and may have some cultivation management capability, but are not geared for the cultivation operation, which is where a lot of the risk actually lies for both growers and state regulators. 

As a state official or a cultivator, what could be more damaging to business than a massive product recall—especially after the product has been distributed and consumed? This is the fastest way to get shut down or audited by the state as a grower or invite federal investigation if you’re a state. And these recalls cost growers millions of dollars and possibly their license. There is massive risk involved by not addressing the cultivation side.

PlantTag
A plant tagged with a barcode and date for tracking

With current tracking systems, it’s possible to see where the product came from in the event of such a recall, but nearly impossible to pinpoint and see what actually happened and when the recall happened. This makes it almost impossible to stop the same problem in the future and puts consumers at unnecessary risk.

The reason most seed-to-sale systems are difficult for growers to use is because they were designed for regulators to address the most obvious regulatory questions (are growers abiding by the law? Who is selling and buying what and how much? Is the correct tax amount being levied?). They were not designed for growers and in many cases, cultivation teams are using two systems—their own ERP and/or spreadsheets and seed-to-sale tracking mandated by regulators.

This means there is a huge missing link in data that should be captured during the cultivation process. In many cases, growers are tracking crop inventory during the growth stage with pen and paper, or at best, in Excel. Cultivators need a tool designed for them that helps both run better operations and identify hazards to their crop health before it’s too late, and regulators need complete traceability along the supply chain to reduce risk to consumers.

To fill this critical data gap, there is a strong case for states in their RFPs and ongoing regulatory capacity, to adopt and encourage cultivators to use Cultivation Management Platforms (CMPs) alongside any existing seed-to-sale and ERP solutions for complete traceability.

As more states move to legalize medical and recreational cannabis, mitigating risk as part of a larger regulatory framework will only become more important. Adopting and using a CMP empowers growers to focus on not just tracking data, but making that data accessible and functional for growers to drive efficiency and profits all while ensuring security and regulatory compliance in this rapidly evolving industry.

Cannabusiness Sustainability

Climate Change Drives Cannabis Indoors

By Carl Silverberg
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This is not a discussion of climate change, it’s a discussion of the impact of weather on the agriculture industry. The question for the cannabis & hemp industry, and basically the entire specialty crop industry, is what will be the impact? According to the U.S. National Climate Assessment, “Climate disruptions to agriculture have been increasing and are projected to become more severe over this century.” I’m sure that’s not much of a shock to anyone who owns a farm, orchard or greenhouse.

Every national newspaper for the past two weeks has published at least one article a day about the flooding in the Midwest, while industry newsletters and blogs have contained more in-depth stories. The question is, what can agriculture professionals do to mitigate these problems?

Relying on state and national legislators, especially heading into a presidential election year is likely to be frustrating and unrewarding. Governments are excellent at reacting to disasters and not so good at preventing them. In short, if we depend on government to take the lead it’s going to be a long wait.Instead, many farmers are looking at the future costs of outdoor farming and concluding that it’s simply cheaper, more efficient and manageable to farm indoors.

Instead, many farmers are looking at the future costs of outdoor farming and concluding that it’s simply cheaper, more efficient and manageable to farm indoors. Gone are the days when people grew hemp and cannabis indoors in an effort to hide from the police. Pineapple Express was a funny movie but not realistic in today’s environment.

Today’s hemp and cannabis growers are every bit as tech savvy as any other consumer-oriented business and one could argue that given the age of their customers (Statista puts usage by 18-49-year-olds at 40%), distributors must be even more tech savvy to compete effectively. Some estimates put the current split of cultivation at about one-third indoors/two-thirds outdoors. To date, the indoor focus has been on efficiency, quality and basically waiting for regulators to allow shipping across state lines.

A major driver in the indoors/outdoors equation is that as the weather becomes more unfriendly and unpredictable, VC’s are factoring climate disruption into their financial projections. When corn prices drop because of export tariffs, politicians lift the ban on using Ethanol during the summer months. It’s going to be a while before we see vehicles running on a combination of gasoline and CBD.

Leaving aside the case that can be made for efficiency, quality control and tracking of crops, climate change alone is going to force many growers to reassess whether they want to move indoors. And, it’s certainly going to weigh heavily in the plans of growers who are about to launch a cannabis or hemp business. Recently, one investment banker put it to me this way: greenhouses are the ultimate hedge against the weather.

Why the Central Chiller Isn’t So Central to Grow Room HVAC

By Geoff Brown
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There’s a better way to design HVAC for cannabis grow rooms, and it may seem a little odd at first.

Central chillers are a tried-and-true solution for projects requiring large refrigeration capacity. They’re found in college campuses, hospitals, office buildings and other big facilities.

While central chillers are a good default for most large-scale applications, they fall short in this industry. Grow rooms, with their need for tight, variable conditions and scalable, redundant infrastructure, have HVAC requirements that the central chiller model simply can’t deliver on.

Let’s unpack the shortcomings with the central chiller in this niche and explore some possible solutions.

What’s Wrong With Chillers?

Building a scalable HVAC system is essential for the cannabis industry as it continues to ramp up production in the U.S. and Canada.

Many growers are building their large facilities in phases. In Canada, this is common because growers must have two harvests before they can receive a production permit, so they build just one phase to satisfy this requirement and then build out the facility after the government’s approval.

This strategy of building out is less feasible with a central chiller.

solsticegrowop_feb
Indoor cultivator facilities use high powered lights that give off heat, requiring an efficient air cooling system.

A chiller and its supporting infrastructure are impractical to expand, which means it and the rest of the facility needs to be built to full size for day one, even though the facility will be in partial occupancy for a long time. This results in high upfront capital costs.

If the facility needs to expand later down the road, to meet market demand for example, that will be difficult because, as mentioned, it’s expensive to add capacity to a central chiller.

Additionally, the chiller creates a central point of failure for the facility. When it goes down, crops in every room are at risk of potentially devastating loss. Grow rooms are unusual because of their requirement for strict conditions and even a slight change could have big impact on the crop. Losing control due to mechanical failure could spell disaster.

One Southern Ontario cannabis grower met with some of these issues after constructing their facility, which uses a central chiller for cooling and dehumidification. The chiller was built for full size, but the results were disappointing as early as phase one of cultivation. While sensible demands in the space are being easily met, humidity levels are out of control – flowering rooms are up to 75% RH.

Humidity is one of the most important control aspects to growers. Without a handle on it, growers risk losing their entire crop either because there’s not enough and the plants dry out, or there’s too much and the plants get mold disease. This facility has fortunately not yet reported serious crop issues but is mindful of the potential impact on harvest quality.

By going unitary, capital costs scale on a linear basis.If tight control over humidity is what you need, then a chilled water system needs very careful consideration. That’s because typical chiller system designs get the coils cold enough to lower the air temperature, but not cold enough to condense water out of the air as effectively as a properly designed dehumidifier coil.

A chilled water system capable of achieving the coil temperatures needed for adequate dehumidification in a typical flower room will also require full-time reheat to ensure that air delivered to the plants isn’t shockingly cold — either stunting their growth or killing them altogether. This reheat source adds complexity, cost and inefficiency which does not serve growers well, many of whom are under pressure from both utilities and their management to minimize their energy usage.

How Do Unitary Systems Solve These Problems?

Compared to central chillers, a unitary setup is more agile.

A facility can commence with the minimum capacity it needs for start-up and then add more units in the future as required. They’re usually cheaper to install than a central system and offer several reliability and efficiency benefits as well.

The real business advantage to this approach is to open up the grower’s cash flow by spreading out their costs over time, rather than a large, immediate cost to construct the entire facility and chiller for day one. By going unitary, capital costs scale on a linear basis.

Talltrees
One of the flowering rooms in an indoor set up (Image: Tall Trees LED Company)

Growers can have more control over their crop by installing multiple units to provide varying conditions, room-by-room, instead of a single system that can only provide one condition.

For example, flowering rooms that each have different strains of crop may require different conditions – so they can be served by their own unit to provide variability. Or, rooms that need uniform conditions could just be served by one common unit. The flexibility that growers can enjoy with this approach is nearly unlimited.

Some growers have opted for multiple units installed for the same room, which maximizes redundancy in case one unit fails.

A cannabis facility in the Montreal area went this direction when building their HVAC system. Rather than build everything in one shot, this facility selected a unitary design that had flowering rooms served independently by a series of units, while vegetation rooms shared one. The units were sized to provide more capacity than currently required in each room, which allows the grower to add more plants and lighting in the future if they choose.

This facility expects to build more grow rooms in a future phase, so it was important to have an intelligent system that could accommodate that by being easy to add capacity to. This is accomplished by simply adding more units.Multiple, small systems also have a better return-on-investment.

The grower, after making a significant investment in this facility, was also averse to the risk of losing crop due to mechanical failure, which is why they were happy to go with a system of independent grow room control.

Multiple, small systems also have a better return-on-investment. Not only are they easier to maintain (parts are easier to switch out and downtime for maintenance is minimal) but they can actually be more efficient than a large, central system.

Some units include heat recovery, which recycles the heat created by the dehumidification process to efficiently reheat the unit’s cold discharge air and keep the space temperature consistent, without needing expensive supplementary heaters. There’s also economizer cooling, which can be used to reduce or even eliminate compressor usage during winter by running the unit on dry outside air only.

Demand for cannabis continues to increase and many growers are looking to expand their businesses by adding new facilities or augmenting existing ones. Faced with the limitations of the traditional chiller system, like the lack of flexibility, scalability and redundancy, they’re looking for an intelligent alternative and the unitary approach is earning their trust. It’s expected this option will soon become the leading one across North America.

Illinois Governor Announces Plan to Legalize Adult-Use Cannabis

By Aaron G. Biros
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Last weekend, Illinois Governor J.B. Pritzker announced the introduction of a bill that would legalize adult-use cannabis, allowing medical dispensaries to begin sales for anyone over the age of 21. According to the Chicago Sun Times, the major focus for Governor Pritzker on legalizing cannabis is on things like social equity and criminal justice.

Illinois Governor J.B. Pritzker

Rather than touting the tax dollars that could be raised, like other state governments are often eager to highlight, Governor Pritzker’s announcement was about racial equality and helping those disproportionately affected by the drug war. “We are taking a major step forward to legalize adult use cannabis and to celebrate the fact that Illinois is going to have the most equity-centric law in the nation,” Governor Pritzker told members of the media during a press conference. “For the many individuals and families whose lives have been changed, indeed hurt, because the nation’s war on drugs discriminated against people of color, this day belongs to you, too.”

The legislation includes a provision for automatically expunging about 80,000 convictions related to cannabis, allowing those with convictions to work in the newly-legal Illinois cannabis industry. It also includes a provision for license applicants to be designated as social equity applicants, where lawmakers are hoping to encourage minority-owned business growth. They plan on waiving fees as well as helping social equity applicants get better access to capital and business loans.

This is not the first time that Democrats in the Illinois state legislature have attempted to legalize adult-use cannabis. Back in 2017, state Representative Kelly Cassidy and state Senator Heather Steans, the two lawmakers sponsoring this bill, sponsored a legalization bill that failed to garner support. Back in late January of 2019, Governor Pritzker, Rep. Cassidy and Sen. Steans announced their plans for legalization. Introducing this bill to the legislature this week takes their plans and the state of Illinois one step closer to adult use legalization.

During the press conference, Sen. Steans mentioned they want to make sure revenue from the new market will benefit residents of Illinois. According to the Chicago Sun Times, the bill allows for 25% of tax revenue would go to helping those disproportionately affected by the drug war and 20% would go to mental health and substance abuse treatment.

That revenue, an estimated $170 million, will mainly come from licensing fees in 2020. Cannabis products with less than 35% THC content would be taxed at a fixed 10% rate, while products with more than 35% THC would be taxed at 20%. The bill would also allow people in Illinois to grow up to five plants at home.

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How Germany Gets Its Cannabis

By Marguerite Arnold
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german flag

The German cannabis cultivation bid may be mostly done and dusted (although the last four lots are now up for legal challenge) but the drama is only intensifying on the ground in Germany. Namely, where is the cannabis being consumed on the ground now actually coming from?

For the past several years (in fact since 2016 when a Frankfurt-based start-up called Medcann imported the first Canadian medical cannabis into the German market in partnership with Canopy Growth), the conventional wisdom has been that Holland and Canada were the only two countries allowed to import medical cannabis into the country.

Canopy_Growth_Corporation_logoAs is usually the case in the cannabis industry, when it comes to such things, there were also multiple and highly creative explanations about this strange state of affairs that sounded oddly exotic enough to be plausible. This is after all, the international cannabis business.

These explanations also usually referenced conventional industry “lore” including such tall tales as these two countries were not signatories to an international drug treaty (not true), to being European (nope) or even a member of the EU (also completely false).

Yet there was always something strange with such urban legends – perpetuated by insiders across the German industry. Starting with a deliberate vagueness about details. Especially as in the summer of 2017 when Tilray announced grow facilities in Portugal, and by the end of it, Canopy was moving into Spain, and later by early 2018 Denmark and more. Italybegan to appear on the radar of multiple big Canadian companies. Clearly all these big companies seemed to know something that those outside did not. See Greece. Not to mention the teeth-gnashing of the Israelis– repeatedly shut out of the German market by not being allowed to export by their own government until Christmas Day, 2018.

The mystery deepened in March in fact, as a furore rocked the German-based cannabis industry over the last weeks. Farmako, a new, Frankfurt-based distributor, not only announced that it was importing 50 tonnes of cannabis into the country– and from Poland (where production of such bulk has not even been seeded) – but then gave additional details on a Bloomberg appearance that appeared to indicate that in fact the medical cannabis they were already selling (sourced from other places) had come from Macedonia. 

Certification, and most certainly paperwork are the name of the gameIn fact, no such transfer of cannabis had occurred from the Macedonian side (yet), although the firm in question at the other end of the deal was subjected to considerable harassment in the German canna-specialty press in the meantime.

The news, that occurred right at a time when Tilray is clearly training pharmacists for the German market, the first bid is concluding, Greece issues even more cultivation licenses, Canadian companies are clearing still stepping up their production game, and South Africa is also getting into the formal licensing act, with all sorts of interesting things afoot in Uruguay, also set off what appears to be an official investigation of the firms involved at the governmental level.

Insiders are tight lipped and nobody is willing to talk on record. However, the distribution firm, Farmako, has subsequently reported that in the month of March, they became the top selling cannabis specialty distributor in Germany. And since they are not out of business, it is also clear that while their PR may have been a little premature if not easily misunderstood, the broader message is very obvious.

What is also very clear at this point, in other words, is that the German door for cannabis and the international industry appears to be opening to product sourced from many places. Further by extension, the German government is in the process of recognizing foreign GMP certification processes from multiple countries all over the world as being equal to its own – at least on the cannabis front.

In fact, this has been going on relatively quietly for the past six months or so.

What Are The Standards, Certifications, and Qualifications?

A press release from January of this year, issued from an Australian firm called MCA, announced they had accepted the first letter of intent to ship to a German firm (in 2020). The company is currently accepting pre-orders as it finishes construction and achieves EU GMP certification. The same (female founded) firm was also present at the ICBC in Berlin this year in March, reporting that German demand from a universe of local distributors was already greater than they could fill. The news that their first sale went to German firm Lexamed, the controversial German wheelchair distributor who helped bring down the first German bid, was also largely unremarked upon at the time by most of the industry press and in fact, ever since.

GMPIn truth, it appears that the countries and companies that have the right to import to Germany must first have their own national GMP certification recognized as being equal to German standards – or a so-called Mutual Recognition Agreement (or MRA) must exist between the importer and exporter nations. It still means that to be really EU-GMP compliant, inspectors have to walk your cultivation floors. But first your country has to have the MRA. And that is a matter for lawyers and regulators to decide.

In the Australian case, the GMP equivalence for cannabis production apparently became reality within the last six months although no one is giving exact dates. In the case of Macedonia, this is pending, with German inspectors now apparently scheduled to begin inspecting domestic cultivation facilities within the next month to six weeks.

The biggest news, of course, which makes even more sense on the heels of Canopy’s latest “record breaking” U.S. acquisition, is that the EU and the U.S. will enter into an MRA in July that was finally agreed to in February of this year. This will also mean that cannabis “medicines” potentially even beyond CBD, produced via U.S. GMP processes, will be allowed to enter Europe if not Germany in the near future – and from the U.S. for the first time. Ahead of federal legalization in the U.S.

It also means that Israeli and American firms will be allowed to enter the European and thus German market for the first time (on the ground with product) by at latest, the third quarter of this year.

Caused By The Bid….and Likely Shorter Term Outcomes

What the events of the last several weeks make clear is that the bid is not only insufficient for demand, but the authorities are officially, if quietly recognizing the same. There are already rumours about the next cultivation tenders in Germany, and there is a high likelihood that other countries (see Poland in particular) may also follow suit shortly.

Further, the difficulties in making sure that not only countries but the companies based in the same remain compliant with EU and further German sanctified EU- GMP processes (for one) is likely to be an issue that continues to bubble. Why? It is a problem already in the broader pharmaceutical market here.

The Plusses and Minuses of The News

The first thing that is also obvious is that even Wayland cannot source the entire German market with the product it has begun to grow here no matter who ends up with the last four cultivation licenses this time around. Further, that the other winning bid firms (Aphria and Aurora as known at this point) without cultivation on the ground, are sourcing from somewhere that is also probably at this point, not even Canada. No matter how much expansion is going on in Canada, in other words, what is now entering the German market may bear a Canadian brand but could just have easily been sourced from almost anywhere in the world.

That also means that enterprising firms (see Australian MCA) can skip the Canadian introduction to the German market and sell directly to local producers before they even have crops on the ground, as well as the burgeoning German cannabis distributors across the country.

For such firms now wanting to enter the market, however, it is not all clear sailing. The events of the last few weeks clearly show that the government is watching, including reading English language industry press, and willing to pursue any firms it deems are breaking the rules on both sides of national borders.

Certification, and most certainly paperwork are the name of the game, as well as greater accuracy in company intentions (even if in the near term).


Disclaimer: Nysk, the Macedonian firm referred to in this story, is a sponsor of the MedPayRx pilot to market program

Georgia Governor Signs Medical Cannabis Cultivation Bill Into Law

By Aaron G. Biros
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On Wednesday, April 17, Georgia Governor Brian Kemp signed HB 324 into law, closing a loophole that has been around for years, which prevented the cultivation of cannabis in-state. Before the signing of this bill, possession of medical cannabis was technically legal, but the cultivation of it was still illegal under state law, preventing legal patient access entirely.

Georgia Gov. Brian Kemp
Image: Georgia National Guard, Flickr

Back in 2015, Georgia’s legislature legalized medical cannabis with less than 5% THC, as well as CBD oil for a number of qualifying conditions. Since then, the state has added more qualifying conditions such as chronic pain and PTSD, bringing the total to sixteen types of illnesses that would qualify patients for medical cannabis.

Governor Kemp signing HB 324 into law sets in motion the process to establish a regulatory framework for six growing licenses in the state. According to WSB-TV Atlanta, the new law goes into effect on July 1, but it could take up to two years to establish legitimate cultivation operations in the state. The law gives a state commission the authority to investigate and establish the regulations further.

That state commission will give priority to pharmacies for distributing cannabis, but reserves the right to establish licenses for independent retail locations as well. According to ABCNews, “The commission can also attempt to legally obtain the oil from other states. Two universities will be allowed to seek federal approval to research and produce the oil.”