Marijuana growers stare down costly, burgeoning environmental regulations

Chris Jennings, owner of Lakeside Herbal Solutions, hired a handful of consultants and spent tens of thousands of dollars to fulfill California’s environmental impact requirements for marijuana cultivation applicants.

The result was a 126-page report describing his planned South Lake Farms growing and processing operation in the Northern California city of Clearlake, the environmental findings and the steps that would be taken to ensure minimal impact on the environment.

Marijuana growers like Jennings face a slew of requirements under California’s environmental regulations, with applicants spending tens or even hundreds of thousands of dollars to meet requirements, industry watchers reported.

But California cultivators aren’t the only ones bracing to deal with the financial load surrounding environmental rules. Growers in other states are experiencing it as well.

Increasingly, states and municipalities across the country are issuing stiffer requirements, especially in the use and management of pesticides, energy, water and waste.

Not only is the trend likely to continue amid concerns about climate change and development pressures on natural resources, but the regulations are ever-changing, creating a financial burden and uncertainty for growers operating on tight margins.

“Since (regulators) get to design these requirements from scratch, you are seeing each subsequent state pick up things they like from other states … and upgrade them,” said Charlie Bachtell, CEO of Chicago-based Cresco Labs, an integrated marijuana company with operations in six states across the country, including California.

Golden State in context

California is historically known for having a progressive environmental culture, and its regulations are the toughest in the country, according to MJ business executives and consultants.

The state’s priority is to protect the environment from the “individual and cumulative effects” of marijuana cultivation operations, according to Rebecca Forée, communications manager for CalCannabis Cultivation Licensing, an agency  that licenses and regulates cultivators.

Hezekiah Allen, executive director of the California Growers Association, said it’s typical for small cultivators to spend $40,000-$60,000 on environmental analysis and impact reports.

He noted the association has members with bigger projects that have spent several hundred thousand dollars on the process – and sometimes much more.

Is there grumbling?

“Of course. Where it’s really challenging is when a small grower has to do this,” he said.

California’s environment impact report requires growers to disclose how they plan to mitigate potential adverse environmental issues, including their effect on:

  • Surface and groundwater quality
  • Water and energy use
  • Air quality
  • Wetlands, rivers, fisheries and plants
  • Pesticide use
  • Agricultural discharge
  • Cultural resources

Jennings suggested growers need to be wary when it comes to selecting consultants, and he even called some “snakes.”

One he contacted wanted $7,500 for a required archaeological study of his property, he said. Jennings instead hired someone off a county list who charged $800.

Jennings ultimately found a handful of consultants he liked working with, but completing the entire process will still cost him roughly $45,000. He paid another $15,000 in licensing and other fees to Clearlake, which helped prepare the initial environmental impact study.  

His report included comments from various government agencies that reviewed the site management plan and environmental-impact analysis.

For example, Yuliya Osetrova, a water resources engineer for California’s Lake County, expressed concerns in the report about potential groundwater contamination, questioned water-usage estimates and said the initial solid-waste management plan was inadequate to mitigate the amount of cannabis refuse that would be generated by the project.

The report shows that her apprehensions were alleviated partly by a site runoff-mitigation plan, which included ensuring at least a 100-foot setback between groundwater wells and the processing facility.

Stringency in other states

Kris Krane, president of 4Front Ventures that has offices in both Phoenix and Boston,  noted that Massachusetts put in place strict energy regulations earlier this year pertaining to cultivation lighting that growers “are figuring out how to comply with.”

Other examples:

How MJ business can save costs

In California, some counties provide environmental-impact reports, so one way a cultivator can lower costs is to operate in one of those jurisdictions,  said Allen of the California Marijuana Growers Association.

But even if the county has taken care of the basic requirements, applicants still face a handful of potentially costly requirements, he said, such as registering water rights and commissioning environmental surveys of their properties.

He noted the association encouraged small growers in an area to form cooperatives and share the costs of environmental analysis and reporting. That approach can yield significant savings, he added.

Because regulations are constantly changing, consultants are scrambling to keep up to date, so MJ cultivators must be cautious when selecting them to do environmental analysis, Allen observed.

“We see a lot of cannabis consultants who might be good at setting up financial models but don’t necessarily have experience in the regulations,” Allen said. “So, we have seen a lot of messy consultant-licensees relationships.”

And what about potential gouging, as Jennings reported?

“Absolutely,” Allen said. “There’s the really damaging myth that cannabis owners are rolling in money, and that’s simply not true. The margins have been thin for many, many years.”

Growers should approach the process of choosing consultants as they would go about hiring a home repair person, he advised: Talk with friends and get referrals.

Jeff Smith can be reached at [email protected]

9 comments on “Marijuana growers stare down costly, burgeoning environmental regulations
  1. Pat on

    If the state is soooo concerned about the environment; why doesn’t it have a listing of state certified environmental consultants ( thus drastically reducing the snake oil factor ) to assist the small cultivator in assuring licensure in this part of the process? It would save the licensee hopeful time and money, and potential heart ache. It would streamline the process. It would create more accountability for the state. And, of course, and most importantly to the state, do much better in protecting the environment and the public’s health. But, the state would have done all this by now. They haven’t, because they don’t care. They want to keep this game loosey-goosey as much as possible ( the current levels of arbitrariness/good ‘ol boy ) to minimize opportunity for the state’s citizen’s ( by having the ability to throw large wrenches into the works ), thus disrupting/halting the individual licensing process. This manner of conducting state business increases its power via a corrupted control and also increases it’s revenue at the expense of the ordinary taxpayer ( not to mention the prospective licensee’s money going toward the effort ), who is likely unaware that this is happening. In ca. there are a “ton” of all ready preexisting environmental regs by which a fraction of would easily address any of the cannabis cultivating concerns. No need to come up with news ones. But the state does come up with new bu**sh*t regs, to make it look like it’s doing something about mitigating the “marijuana growing problem.” Govt. workers are getting hired and paid full time at the state level to engage in this kind of corruption and call it work.

    Reply
    • Norton from downstairs on

      Well said, Pat. The State exists only to ensure the survival of the State, its bureaucracies and its powers to screw-up the citizens ordinary lives and interfere with the success of business all while grabbing at every conceivable source of revenue along the way. Who gives a rip if it happens to “accidentally” end up pricing those businesses into oblivion with added regulation and costs that have to be passed on, right?

      Reply
  2. Angela Ellis on

    If the state of California is so concerned about the environmental impacts, why are conventional farming practices not having to face the same? This is an opportunity to clean up California, reduce the use of chemicals, and ensure public safety from the unknowns. Equal practices for any growing operation.

    Reply
    • Pat on

      Angela, that’s because almonds and walnuts = “tomatoes” and cannabis = “tomahtows.” Tomahtows are the step-children of the ca. ag industry and must be dealt with accordingly ( harshly )…

      I have to ask: Why aren’t any good attorneys suing the state over this crap? Or are too many of them opportunists waiting on the sidelines to shake prospective cannabusiness folks down; like spiders laying in wait for something to get caught up in their web?

      Reply
  3. Linda on

    If growers grew ORGANICALLY, there wouldn’t be such a negative effect on our environment. Also using toxic chemicals is harmful whether you smoke it, vape it or use edibles! It’s not rocket science or reinventing the wheel to grow organically. I live in Washington State where they use the USDA’s list for allowable pesticides in marijuana plants…..the list is over 350 pesticides! That is outrageous to say the least!! Hopefully, just like the food industry, more states will start certifying for organic marijuana. This is especially important for people with weak immune systems, that actually use pot for medical reasons. Again, growing organically is not rocket science or reinventing the wheel!

    Reply
  4. Mark on

    Analysis and reports is one thing; interested to see the oversight state will attempt with visits, reviews and reinforcement of actual operational practices that needs to be in place to meet environmental regs
    Think preparing reports is costly! Wait til have to implement and sustain practices in addition to anything else that comes along.
    Industry needs not only legitimate knowledgeable advisors but companies that beinf forward cost conscious environmental protection/renewable energy and resources solutions.

    Reply
  5. Norton from downstairs on

    One company that may be of help to the industry, Micron Waste Technologies, recently deployed a “cannabis waste digester” to Aurora Cannabis.

    So intrigued by the potential of this technology, the Canadian Senate asked the company to testify about its applicability back in March ’18.

    Perhaps if the various state and local governments were truly concerned about waste water and ground water resources, they might take a serious look at Micron Wastes Technologies and their product and, require it’s use at all processing facilities.

    Reply

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