In an effort to raise efficiency standards for indoor cultivators in California, the California Energy Commission (CEC) has proposed a new mandate that would require all cultivators currently using supplemental lighting to switch to LED lights by 2023. This costly requirement has put many California cannabis cultivators on edge, knowing that this transition may not be possible in an industry that's heavily taxed and already expensive to operate compliantly in. Most cultivators who want to produce cannabis outside of the regular season, like within a greenhouse or indoor facility, don't have the monetary means to support such a costly transition so soon.
This mandate comes as part of a Codes and Standards Enhancement (CASE) program report that will force indoor cultivators to transition from low-efficiency growing lights (like the commonly used high-pressure sodium, or HPS, lights) to more efficient lights like LEDs. On the surface, this seems like a move in the right direction, but LEDs are significantly more expensive. The upfront costs that these cultivators will face are a critical aspect of this mandatory shift to consider.
LED lights are about five times as expensive as the typical fixture in use. While LEDs are more efficient, HPS lights offer a significant reduction in upfront costs. And even with the increased efficiency, growers won't see a return on their LED investment for at least two years. It's estimated that this transition could cost cultivators up to $62,000 per 1,000 square feet of growing space, costing NorCal growers alone an estimated $5.6 million to make the switch, and all of California's indoor cultivators roughly $255 million. This mandate would most likely halt the current LED incentive programs in place, and make it nearly impossible for small farmers to transition to greenhouses in the future, diminishing their opportunity to produce more cannabis throughout the year. The lights are only one part of this transition - infrastructure upgrades will be needed to support the change, as will the time and effort required to alter cultivation operations to keep yields from suffering.
Calfornia cannabis cultivators already comply with strict environmental requirements, like adherence to the California Environmental Quality Act (CEQA) at both the state and local municipality levels that require growers to report their environmental impact-mitigation efforts by 2022. These cultivators also face expensive compliance requirements, like batch testing, annual licensing fees, high taxes, and more. Adding additional costly compliance requirements adds fuel to the illicit market, pushing small cannabis farmers to sell their crop illegally to keep from going out of business. Because LEDs currently power only ~4% of indoor facilities and only ~2% of greenhouse facilities, this mandate would require about 95% of California cultivators to make this lighting switch. Adding these additional layers of compliance costs makes illegal approaches to cannabis cultivation more appealing to those cultivators that rely on this crop to pay their bills. Illegal operations don't pay taxes or comply with any environmental guidelines, pushing the industry's advancement in the wrong direction. Without any financial assistance, many of these cannabis farmers will face a hard decision: going out of business or switching to the life of an outlaw.
Instead of forcing this change, many think the alternative is incentivizing cultivators to reconsider the type of grow-lights they employ. Bob Gunn, founder of the Seattle energy consulting firm Seinergy, told MJ Biz Daily, "Instead of forcing an expensive new technology on 95% of California's farmers and running the risk of expanding the illegal market, the CEC should take this opportunity to use a proven methodology that supports both one of the state's foundational industries and its clean energy goals: incentivizing markets until there is a higher saturation of a new technology."
What are your thoughts on this new mandate? Let us know in the comments! As a sustainably-focused farm, we understand the importance of energy conservation. However, we also understand the need for a financially-secure avenue that allows the small farmer to make their passion their profession.
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