Marijuana Growers Now Qualify For Energy Discounts In California

Agricultural Cannabis Growers Now Eligible for PG&E Ag Rate and Programs

Release Date: March 01, 2017
Contact: PG&E External Communications (415) 973-5930

SAN FRANCISCO, Calif. — While recreational marijuana cannot be sold in California until January 2018, existing medical marijuana growers and future recreational marijuana growers will be eligible as of March 1 for PG&E’s agricultural energy rate.

The passage of Proposition 64 in November 2016 allows the state to license and regulate recreational marijuana cultivation and businesses.

“Cannabis is a legal crop in our state, like almonds and tomatoes. Agricultural growers now will be eligible for the same rate and energy efficiency programs as farmers of other crops,” said Deborah Affonsa, vice president of Customer Service at PG&E.

PG&E customers are eligible for agricultural energy rates if they have received a permit from their local jurisdiction for the cultivation of cannabis and if 70 percent or more of the annual energy use on the meter is for agricultural end-uses such as growing crops, pumping water for agricultural irrigation or other uses that involve agricultural production for sale which do not change the form of the product. The agricultural energy rate applies to both customers who grow cannabis outdoors and those who grow indoors in commercial greenhouses.

The agricultural energy rate does not apply to residential customers who can legally grow up to six marijuana plants inside a private residence per the state Adult Use of Marijuana Act.

Previously, medical marijuana was not considered an agricultural product by PG&E, and growers were not eligible for the agricultural energy rate. Because medical marijuana can be grown and sold in California currently, licensed growers of medical marijuana are immediately eligible for the agriculture energy rate.

Cannabis growing operations can use an extremely large amount of electricity and are considered to be equivalent to other energy-intensive operations such as data centers.

“We’ve met with representatives of the emerging legal cannabis industry and listened to their needs. We are here to help our customers make smart, efficient and affordable energy choices. Now that cannabis is in California’s future, our next step is to work with these new agricultural customers and make this industry as energy efficient as possible,” said Affonsa.

PG&E’s agricultural rates are under the jurisdiction of the California Public Utilities Commission and the state of California.

Agricultural customers with questions about rates, rules and energy efficiency programs can learn more at or contact PG&E’s dedicated Agricultural Customer Service Center at 1-877-311-3276.

Measuring your energy performance to mitigate the threat of cost pressures and regulations

Sustainability is a broad topic with deep engagement in a variety of industries, though it is a relatively new conversation in cannabis. That said, in today’s rapidly scaling and globalizing market, intelligent cannabis investors and operators are beginning to contemplate how sustainability can add value to their ventures.

Personally, after two decades of sustainability experience in a variety of industries, I prefer the term “resource efficiency” over sustainability because it is more clear and ties directly to the bottom line.

With impeccable timing given the state of today’s competitive market, Arcview hosted the first major cannabis investor discussion on sustainability a few weeks ago in San Francisco. I was honored to speak alongside Emily Paxhia of Poseidon, Frederick Schilling of Klersun and Francis Priznar of Arcview.

The Arcview speakers borrowed from their experiences in other sectors as they laid out the reasons why sustainability—or resource efficiency—matters in cannabis:

  • Mitigating cost pressures through improving the efficiency of operations
  • Enabling brand differentiation in a crowded marketplace
  • Protecting the industry’s reputation (i.e., ensuring the entire sector is not tarnished by the image of inefficient indoor energy hogs that disrupt electricity grids)
  • Attracting investor interest
  • Enhancing valuation
  • Getting ahead of oncoming regulations on natural resource use (Massachusetts recently mandated use of LED lighting in indoor grows and California will soon be writing its rules setting targets on efficiency and renewables.)

One question from the audience, while seemingly simple, was particularly insightful and generated an inspired response from the panel. “How do you get started on a sustainability journey?”

The responses essentially advised:

  1. Evaluate your business activities
  2. Take an inventory of your natural resource impacts
  3. Dive into the process of determining how to reduce one of your significant line items
  4. Take the savings you mined and plow them into additional profit-maximizing activities

Energy expenses generally range from 25 to 50 percent of an overall cost structure of a cultivation operation that incorporates controlled environments (indoor or greenhouse). I recommend starting there. We at the non-profit Resource Innovation Institute created a free, peer-reviewed energy benchmarking tool called the Cannabis PowerScore to point the way to an efficient industry future.

More than 100 cultivation facility operators have contributed data about their energy consumption, technology use and production output. In return, they receive an instant benchmark that compares their energy performance to their peers, while identifying operational weak points and resources to drive energy savings. All farm-identifiable data is kept confidential.

Resource Innovation Institute then uses the aggregate, anonymous data to inform governments, utilities and manufacturers how to shape policies, incentives and R&D to drive conservation and establish industry standards. In essence, we are playing a role much like the federal government does with the Energy Star label.

It’s critical that industry leaders take an initial step toward sustainability not just for their own benefit, but also to enable the industry to establish baselines and figure out the most efficient pathways forward so that geographies know how to compete in the global marketplace. We need to move away from our history of secrecy and elevate crowdsourced best practices.

We can only do this through objective analysis of data. After all, literally no one knows with a significant level of confidence how to optimize efficient techniques and technologies across a range of cultivation settings and climate zones. For example, running an efficient operation in Arizona is vastly different than doing so in Massachusetts.

Last week, we announced that RII will produce a Cannabis Energy Report in partnership with New Frontier Data and Scale Microgrid Solutions. This groundbreaking report will be the definitive guide to support investors, operators, policymakers and others to make decisions on how best to create a profitable, resource efficient future for cannabis. The analysis will be based on the crowdsourced Cannabis PowerScore data.

Start your sustainability journey and get your instant energy performance benchmark by encouraging one of your team members to invest a few minutes engaging with the Cannabis PowerScore. If you participate by August 31, your data will be incorporated into the analysis for the Cannabis Energy Report and will give you the best understanding of how competitive your facility is.

With your valuable input, we can simultaneously chart the best course for industry efficiency and help boost your bottom line.


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A Greener Green Part 2: Water Consumption And Innovation

As legalization is on the rise in the US, water consumption has become a concern for the cannabis industry, especially in Western states.

In the first part of this series, we explored the looming environmental issues of energy consumption that surround the cannabis industry.  More recently, however, the ecological impact of water consumption and sustainability has also arisen for the cannabis industry.  Due, in part, to the recent and expeditious westward expansion of the industry, the question of water consumption is on many minds, as both legislators and cultivators proactively seek out sustainable water consumption practices.


Water Usage Red Flags

As previously covered in this series,  some believe the answer to reducing the environmental impact of the cannabis industry is through legalization.  Full legalization would allow for more government agricultural regulations as well as legally incentivize producers to become more sustainable in their practices. Legalization would allow grant money for research and improvements, which are currently available to other agricultural departments, to be offered to the cannabis industry.

Due to the lack of research, an ongoing issue throughout the industry, no one knows the exact impact that the industry will have on the environment.  However, in the case of water, especially in California, legalization has become key in protecting the environment.  California’s north coast region,  known as the  “Emerald Triangle,” has been plagued with outdoor illegal grows for decades, which have proved detrimental to the local environment.  These illegal grows are most often on public land, where water is typically irrigated from surrounding bodies of water, such as streams.  Runoff water is also an ecological issue, as the use of certain pesticides and fertilizers are harmful to the environment.

In 2015, the California Department of Fish and Wildlife published a study stating that cannabis grows in the Emerald Triangle average as much as 6 gallons of water per plant, per day.  Multiply that by the massive scale of California’s grows, and it becomes easy to see how in a state plagued by drought, water consumption has become a headline issue.  These numbers, however, could also be a gross overestimate, as NORML has cited that the average water consumption is closer to 2.6 gallons per plant per day, however, due to the lack of research in this area, the actual water consumption and usage has yet to be determined.


Water Regulations And Proactivity

With the recreational legalization of cannabis in California came strict regulations and expectations for growers.  Growers that pull from water sources such as rivers and streams will be responsible for having their own stored water supply.  By enforcing growers to have a water supply, water collected throughout the year will alleviate consumption during the winter months, when water is scarcest in California.  Although some growers may only implement the regulations for initial inspections and licensure, the majority of growers are meeting, and exceeding regulatory demands.

Outdoor cultivators, not just in California, are motivated to implement sustainable practices.  Whether it be to meet regulations, lessen their environmental impact, or marketability, cultivators are invested in their crops and seek to make it a cutting-edge industry that exceeds the practices of other agricultural practices.

Indoor grows make water consumption and waste significantly easier to control, and many cultivators are already leading the way in reducing water usage.  Creative irrigation practices are eliminating the ability to over-water and reducing evaporation; there are also ways to recycle and reuse runoff water.  Cultivators are also starting to collect the condensation from the humidity produced by plants and store it for use.  Brandy Keen, co-founder and senior technical advisor at Surna, a company that creates and distributes water-efficient indoor cultivation equipment, boasts that indoor water use could be a net-zero consumption.  As water-efficient practices are becoming more common, and consumers in specific markets, such as California, are starting to become more educated on environmental issues surrounding cannabis, cultivators are proactively seeking out new and improved watering methods.

Endless Opportunities For Improvement

While the primary purpose of this series is to highlight the environmental footprint of the cannabis industry in the US, one other take away should be that in the cannabis industry, there is an overwhelming necessity for improvement, and that is not a bad thing.  With the need for improvement comes endless opportunities, for businesses as well as the entire industry.  Development and advancements of environmentally sustainable practices in the cannabis industry have the potential to put cannabis on a par with other agricultural and showcase how the industry’s technological advancements can drastically lessen the environmental impact and gain industry support and acceptance.

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