Thirty-three U.S. states have now legalized marijuana in some form. But, an issue less discussed is the massive amounts of energy required for indoor marijuana production and the pressure this puts on the electric grid. For example, after Oregon legalized recreational marijuana, Pacific Power in Portland experienced seven blackouts caused by marijuana production facilities. Portland General Electric also had similar experiences from marijuana cultivators overloading existing facilities.
Energy Impacts
According to a 2011 study, the U.S. marijuana cultivation industry uses US$6 billion in energy per year. A 2012 Energy Policy Article also estimated that marijuana cultivation may compose as much as 1% of U.S. electricity use. Colorado has seen a significant amount of new demand for power with nearly half of the increase in energy demand from marijuana production facilities. In Xcel’s Colorado territory, sales to marijuana facilities have been growing by 40-60% each year. Other states have also reported similar effects.
While outdoor marijuana production is much less energy intensive, this leaves crops more vulnerable to seasonal elements. Many facilities choose to grow indoors to increase crop production. Additionally, some states, such as Colorado, forbid outdoor cultivation. Indoor growing systems sometimes operate 24 hours per day and consist primarily of lighting, air conditioning, ventilation, dehumidification and climate control measures. The lights themselves are typically 600-1200 W each, produce a significant amount of waste heat and make up about 80% of the electricity consumption in a cultivation facility.
The electricity consumption associated with marijuana production is high compared to typical business or residential usage. The load profile of marijuana production facilities is on par with that of a hospital or data center, which are 50-200 times more energy intensive that the typical office building. In 2015, the average electric consumption of a 5,000 sq. ft. facility in Boulder County, Colorado, was 41,808 kWh per month, while the average household in the same area was 630 kWh. It is estimated that finished marijuana products have an energy cost of $2,500 per kilogram. In other words, this means that the energy to produce one marijuana cigarette is roughly equivalent to the amount needed to produce 18 pints of beer.
There is a lot of uncertainty about the energy impacts of the marijuana cultivation industry, and utilities don’t have good data for several reasons. Cultivators often don’t want to share usage data because in many states the industry is just now transitioning from being illegal to legal and because it may also give away their trade secrets. This makes it hard for utilities to predict the energy impact of marijuana cultivation facilities on the grid. While some states have greatly underestimated the amount of marijuana needed to meet demand, other states ultimately haven’t seen the increase in electricity consumption they expected from these production facilities. Overall, estimating the energy impacts of the industry is a guessing game that doesn’t put electric utilities in a great place to prevent localized outages.
Utility Initiatives
Some utilities are considering charging different rates to marijuana production facilities due to reliability concerns and to incentivize energy management. Because marijuana cultivation is not sanctioned under federal law, businesses associated with marijuana often have decreased access to capital and some federal tax deductions. This reduces their incentives to invest in energy efficiency and energy management systems. Oregon utilities direct marijuana cultivation facilities to the Energy Trust of Oregon, which offers cash incentives and technical advice to customers interested in reducing their energy usage. In some cases, utilities have been able to incorporate cultivation facilities into their energy efficiency programs, such as upgrading to LED lighting. But, the adoption of more energy-efficient lighting has been slow because there is a lack of information on how LED lighting will affect productivity. Some marijuana cultivators say a grow cycle takes an extra four weeks using LED lights, so the switch to more energy-efficient lighting doesn’t make sense financially.
State and Federal Policy Implications
As more states legalize marijuana for recreational or medical purposes, marijuana energy consumption is increasingly becoming a state policy issue. For example, Colorado has created the Retail Marijuana Code that addresses electrical codes and Maine now requires cultivators operating in residential buildings to be permitted by electrical inspectors. Boulder County, Colorado, has passed sustainability goals in which facilities must either use renewable energy or pay per-kWh charge. The fees are applied to the Energy Impact Offset Fund used to educate and finance sustainable cultivation in the county. Arcata, California, has a 45% tax on residential customers who use more than 60% of an energy consumption baseline.
There are no federal laws regulating electricity consumption at marijuana production facilities because it is still illegal under federal law. As the previous examples highlight, energy consumption by marijuana cultivation facilities is a perfect example of a disconnect between federal law and energy policy. If marijuana cultivation is ever legalized at the federal level, the increase in electricity usage could really be a major concern for utilities.
