Recreational marijuana market draws entrepreneurs working the land

Second in a three-part series. Click here for the first part.

RIVERSIDE, Wash. -- On a recent afternoon under a beating August sun, Brad Burse, whose grandfather established a homestead not far from here in 1902, was supervising the harvest at one of this rural area's newest farms, which unlike its neighbors was not growing alfalfa, peaches or apples.

No, Burse and his colleagues worked among row upon row of Afghan kush, ultra-lemon haze, candy skunk and about three dozen other varieties available at one of Washington's first legal marijuana farms.

Once they were cut down, the resplendent stalks -- more than 3,000 of which are growing on the farm -- went to a trimming room where a handful of twentysomethings with garden scissors trimmed the stalks and fed them into a mechanical trimmer to remove leaves and other excess material. In another room on the farm, a few other workers measured the buds into 2-gram packs, sealed them and affixed a CannaSol Farms label.

And to think, none of this might have come to pass if Jeremy Moberg hadn't bought a suit last year.

CannaSol is at the forefront of a transition away from growing indoors under hot, energy-sucking lights because of the lower production costs and reduced impacts on the environment. A variety of industry participants -- from state regulators to independent researchers to growers -- predict a shift to outdoor farms and greenhouses.

"I think that three years in the future, there won't be hardly any indoor [growing] at all, for economic reasons," said Dominic Corva, who runs a Seattle-based think tank focused on cannabis policy.

Moberg, CannaSol Farms' owner, has been growing marijuana for more than two decades -- mostly outdoors and mostly illegally. He quit for a few years when he was working as a wildlife biologist for an environmental consulting firm but started growing for the medical marijuana market about three years ago on land he owns not far from the farm here.

When Washington passed Initiative 502 legalizing marijuana two years ago, Moberg at first wasn't sure whether he wanted to transition from the relatively lax medical market to the new recreational one. Then he saw a draft set of rules from the state Liquor Control Board, which was in charge of implementing I-502, that would not have allowed recreational cannabis to be grown outdoors. He attributed the move to lobbying on behalf of indoor growers, who had thrived in cities like Seattle that had a welcoming political climate for medical marijuana.

"So I formed my association and bought a suit and went to Olympia and gave them a PowerPoint," Moberg recalled in a recent interview on his farm.


The Washington Sungrowers Industry Association persuaded the state regulators to allow outdoor growing.

"It took a bunch of lobbying, and it was really grass-roots lobbying, nobody gave us money ... but we're just on the right side of the argument, which credit to Washington for a couple underfunded east-siders being able to affect policy," he said.

But the group is still fighting for rules changes it says would establish parity with indoor grows. For example, marijuana grown outdoors can be harvested only once a year, whereas indoor growers can manipulate its growing cycles enough to bring in three crops over that time. So Moberg says state legislators should update the law to allow outdoor growers three times as much canopy space as the indoor growers get. Moberg is in the process of raising $15,000 to hire a lobbyist in the state.

CannaSol's crop will be some of the first outdoor-grown cannabis sold under Washington's new legal regime, Moberg said. He is one of a minority of about 20 growers who had secured a license to grow outdoors as of last month, according to data from the Liquor Control Board. Another nine growers planned to use a combination of greenhouses and outdoor grows, while 85 licensees planned at least some aspect of their operations to take place indoors.

A trained wildlife biologist and ardent environmentalist, Moberg says his product is the most environmentally friendly one can buy because it was nurtured by direct sunlight, not the powerful, electricity-hogging lights and elaborate HVAC systems required for indoor grows, which produce a product Moberg dismisses as "Franken-weed."

"If you like hothouse hydroponic tomatoes instead of heirloom, then fine, I guess," he said. "But let's at least be on equal footing, and right now we're not."

Indoor growers defend their product as more consistent and of higher quality than that available from natural sunlight.

"I have yet to see a super-high-quality outdoor product out of Washington state. ... We'll see how they do this year," said Boris Gorodnitsky, owner of New Leaf Enterprises, which supplies medical marijuana from a Seattle warehouse.

This year, indoor growers enjoy a definite advantage in Washington, where industry players complain the Liquor Control Board was too slow to hand out licenses for outdoor grows, leaving many prospective producers out of luck until they can plant a fresh crop next spring. Moberg credits his experience growing outdoors and his ability to maintain plants offsite that were in a vegetative state and nearly ready to flower by the time he was able to set up shop here.

Some are optimistic about potential advances in outdoor growing techniques and the cost advantage available, especially when growing weed that will be turned into oils for edibles or vaporizer cartridges because it does not need to be as high-quality. There's also the middle ground of growing in advanced greenhouses, which rely on sunlight most of the time but can be supplemented with artificial light as needed.

Of primary importance to the state regulators implementing I-502 was making sure the legal market in Washington did not become a conduit for black-market sales in other states and ensuring the products sold in state were safe.

The energy and environmental consequences of cannabis production were a lower priority for the regulators, but not for Moberg. He initially reached out to some environmental groups in the state, he said, but they worried about the possible "stigma" of joining up with a marijuana grower.

"Never in my life have I seen an opportunity to have such a huge environmental impact with so little work," he said.

Hard data are relatively sparse, but indoor grows are estimated to use at least as much energy as corporate data centers, and utilities around the country are grappling with how to accommodate the power demands of the new recreational and medical markets being established in many states (EnergyWire, Aug. 8).

The experiment in Washington is unique. It's the only state where outdoor grows are legally permitted and regulated, although California's Humboldt County supplies a sizable amount of marijuana to the gray and black markets from the farms dotted throughout its forested hills. But some of those Humboldt farms can sometimes drain or pollute rivers or otherwise despoil the landscape, and other growers will trespass in national forests or other protected lands.

Indoor grows in Washington, which gets most of its electricity from emissions-free hydro and nuclear and other renewable power plants and pays the lowest rates in the country, generally face fewer concerns around greenhouse gas emissions and higher prices. And even the reliance on hydropower, while not exacerbating climate change, raises its own concerns around wildlife that rely on the river habitats.

"The energy question in Washington is different from California because we're a renewable energy state," said Corva, founder of the Center for the Study of Cannabis and Social Policy. "But renewable doesn't necessarily mean good. Dams are a problem."

Beyond climate impacts, there's the question of potential supply constraints among small public utility districts in the state, some of which may "have to rebuild their whole infrastructure because of the amount of electricity that may be going through to a large grow," said Randy Simmons, who's overseeing the legalization effort for the Liquor Control Board.

Energy-related greenhouse gas emissions would be more of a concern as marijuana's legitimacy spreads. For example, states like Illinois and Nevada, which get most of their electricity from coal and natural gas, are implementing medical marijuana programs. Simmons said he has discussed outdoor grows with officials in Illinois and has assured them those operations can be secured just as well as warehouses.

"They estimate that 1 percent of the electricity in California is used for cannabis production. So what is that footprint?" asked Will Denman, president of Solstice, an indoor medical supplier that plans to launch an outdoor farm in eastern Washington next year. "And what other agricultural product is grown indoors? Nothing."

Recreational marijuana initiatives are on the ballot this fall in Oregon, which relies largely on hydro, renewables and natural gas, and Alaska, where supply is more heavily reliant on fossil fuels, including oil, as well as some hydro.

"From an environmental standpoint, it has to go outdoors, it has to go to greenhouses. Because we're not going to tolerate this as a commercial product to grow indoors," said Alex Cooley, Solstice's vice president, during a recent interview at the firm's 9,000-square-foot warehouse in an industrial part of Seattle.

Cooley estimates it costs between $400 and $500 per pound to grow indoors, compared to about half as much outside.

In addition to higher electric bills to keep those grow lights and air conditioners running, there are what Corva calls the "pain-in-the-ass costs" associated with trying to get all the building permits legal growers will need to set up shop in cities, such as complying with municipal building codes designed for warehouses or storefronts, not farms.

"You have different sorts of rural codes that are set up for agriculture already, whereas in an urban area you have to have special business licenses to be doing indoor agriculture," Corva said in a recent interview from his office. "It's just simply the space isn't set up for it -- the infrastructure isn't there."

Moberg's farm does not appear to operate much differently from his neighbors' -- aside from the 8-foot privacy fence topped with razor wire that surrounds the property. But when it comes to environmental impact, the difference is minimal. Moberg draws his water from a well on the property, and the electricity demand is no greater than an average house, although it will increase as production and ancillary activities scale up next year.

While Moberg's property is supplied by an on-site well, some parts of eastern Washington rely on the federal Bureau of Reclamation, which earlier this year clarified its policy to declare its water off-limits for marijuana farms. The order created confusion among growers and local officials in some counties, but it should not have much practical effect in the end, said Simmons of the Liquor Control Board.

The Reclamation policy makes clear the bureau "does not have a responsibility or designated role" in enforcing the Controlled Substances Act of 1970, which prohibits marijuana possession and cultivation, and says incidents would just be referred to the Department of Justice, which has indicated it will take a hands-off approach to growers who are complying with state law.

"That's an area [the Obama] administration needs to get its arms around and make sure all its players are reading from the same playbook," Simmons said in an interview from his office in Olympia last month.

There are local restrictions as well. For example, parts of one county restrict access to water because of concerns about impacts on salmon and shellfish, Simmons said, meaning growers have the responsibility to find out about any issues from city or county governments before they can set up shop.

Aside from water supply, there's a question of controlling the pesticides applied to marijuana crops in the field, and other Clean Water Act rules meant to prevent them from polluting rivers or wetlands. But Corva believes those will be manageable.

"Water issues are not that big of a deal right now as far as I can tell," he said. "The pesticide runoff situation is not going to be different from any other agriculture."

Following the passage of I-502, Washington State University updated its statewide database of pesticide labels to account for those that would be used in cannabis cultivation.

Indoor growers dispute the idea that they cannot be environmentally sustainable, although they acknowledge the dramatically lower energy required in ideal outdoor growing conditions.

Gorodnitsky, of New Leaf, says his company is experimenting with LED lights, which could reduce his energy use by as much as 40 percent. And he says outdoor grows face potential complications with weather because Washington state is so far north, and would produce smaller annual harvests than indoor grows. He says he is aiming for incremental improvements that would add up over time but is committed to expanding his warehouse to eventually serve the incremental market.

"If we make 10 percent improvement here, 20 percent there, it makes a huge difference," he said.

Cooley, on the other hand, is as skeptical of LEDs as Gorodnitsky is of outdoor grows. The Solstice exec questions whether LEDs will ever be able to produce as well as traditional lights but is convinced about the path his company is embarking on.

"It's not there, in our opinion," Cooley said of LED lighting. "Our goal is to go to the best light source there is, which is the sun."

Tomorrow: It's organic -- but it isn't.

Twitter: @nickjuliano | Email:

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