Will the Cannabis Industry Wreck Sustainability?

The cannabis production wave is going large scale fast and furiously at an incredible growth rate of almost 40% worldwide.

According to CNBC,  analysts have already determined that marijuana tax revenues exceed alcohol tax revenues in the states of Colorado, Washington, and Nevada.

Estimates of the future value for the industry are compelling. According to The Motley Fool, 2018 annual global sales for marijuana products reached $12 billion, with 2019 sales projected to be $17 billion, an astonishing growth rate of 38%. Future values of the industry vary anywhere from $28 billion by 2028 to $166 billion.

Wall Street companies Canopy Growth and Aurora are part of the new breed of marijuana companies. Both have cash and good balance sheets with Canopy having $3.7 billion on its balance sheet. As reported by Sean Williams,  Aurora is poised to produce almost 800,000 kgs of cannabis this year.

What’s Wrong with This Picture?

So what’s not to like? How are industry emissions, production residues or complicated regulations? We can quickly get into an interesting sustainability challenge.

It appears that Wall Street and its heavy hitter darlings in the cannabis industry are heavily focused on top-line metrics such as annual production and productivity. For example, Aurora is reporting production rates has high as 142 grams per square foot which is admirable. The underlying questions are, “What are the costs in terms of $ per gram?” or “What are the resource footprints per gram?”

Sustainability is an often misused and misunderstood term. Too often, it is a tagline and fodder that is used for vapid conversation by pseudo-intellectuals who strive to appear relevant.

The reality is that sustainability is about the environment and the economy as both are inexorably interlinked.

Ultimately, resources and their availability will dominate. In order to operationally appreciate sustainability, it’s helpful to consider a three-way confluence addressing the relationship of the activities of human society, the economy, the environment, and resources.

There is a need for environmental and economic sustainability and economic expansion which are also linked to resources. Given that conventional resources are finite, society, with a prodigiously increasing appetite, is forced to fend from an ever-dwindling pool of these finite resources.

Consequently, a resource-based approach which is termed, “SRC”, or Sustainable Resource Centricity is useful to provide conceptual operational guidance. Since human activities are linked to resources, SRC will be essential for large scale cannabis production.

What About Green Cannabis Products and Emissions?

Let’s love the Earth and do something for the planet! Not so fast if you are in cannabis production. Here is what you need for green production at a minimum:

• Green energy
• Green water
• Green fertilizer

Resources must all must be certified as green and one must be able to show that they are made with green processes that use renewable feedstocks. There is little or no mention of green cannabis products from the listed public companies.

Another consideration for centralized cannabis production facilities are emissions. Given that CBD oil is about 15% of the cannabis plant by mass, that leaves about 85% of the plant as material that requires disposal or re-processing.

For small scale operations, this is not problematic.

For large scale operations, it creates a hot button issue for regulators. It is likely that cannabis regulation will be similar to those that govern the pharmaceutical industry. Consequently, cannabis production residuals will be tightly regulated. It behooves large scale manufacturers to consider residuals issues BEFORE manufacturing operations are started and, preferably, include residuals considerations in engineering efforts that occur in the planning and design phases, not after the fact.

Having a facility shut down to address critical issues such as emissions control is very painful and often fraught with unpredictable and unexpected consequences.

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Stay tuned for future stories about how industry can try to tackle these problems.