The energy policies for indoor cannabis cultivation facilities continue to expand and tighten, introducing new challenges – and opportunities – to growers across the country. These take the form of carrots or sticks: mandates or incentives. So, what’s the energy landscape out there right now?

Energy codes and mandates

Operators in any industry must always comply with building codes. Most building codes reference energy standards or international energy codes that require equipment to meet a minimum level standard of energy performance. Some state cannabis regulatory agencies adopt policies that add rules impacting cannabis businesses, like energy efficiency requirements or rules for reporting energy use. 

“Policymakers know how much energy that cannabis cultivation requires, and want the cannabis industry to reduce carbon emissions alongside other big energy users. Energy efficiency regulations are intended to help states meet their environmental goals,” shares Gretchen Schimelpfenig, Senior Energy Engineer with Energy Resources Integration (ERI), who helped state agencies craft cannabis regulations affecting cultivators.

Massachusetts regulations state that growers must use a horticultural lighting design with a lighting power density (LPD) of no more than 36 W per square foot of canopy for facilities with over 5,000 ft² of canopy. In essence, the maximum wattage of that fixture on a 4×4 grid is 576W. Alternatively, a licensee can agree to exclusively use lighting fixtures that are both on the DLC Horticultural Qualified Products List and have photosynthetic photon efficacy (PPE) 15% above the DLC’s minimum threshold. As of this writing, the DLC’s Hort V3.0 PPE threshold is 2.3 μmol/J, so the CCC’s threshold is 2.6 μmol/J (micromoles per joule). A little over 1,000 fixtures qualify for use under these strict criteria. 

To enforce efficiency requirements, the Cannabis Control Commission requires all cultivation license applicants to submit a signed letter from a licensed professional engineer (PE), licensed architect, or certified energy auditor. Many clients turn to consultants such as Enlighten Your Grow from Climate Resources Group or Energy Resources Integration to deliver the required energy compliance letter.

Illinois has similar lighting rules to Massachusetts, with the exception that it applies only to adult-use cannabis cultivators. Illinois stands out from other states by having specific HVAC requirements for cannabis growers. Depending on the size of the operation, growers there must use ductless split HVAC units, variable refrigerant flow HVAC units, or other “more energy-efficient” HVAC equipment. Illinois also requires the use of automated watering systems and condensate recapture, rules not yet seen elsewhere.

California’s energy code for all “controlled environment horticulture” dictates that all indoor horticultural lighting fixtures must perform at 1.9 μmol/J or better, and greenhouse fixtures at least 1.7 μmol/J. For the 2025 cycle, code proposals are exploring a minimum efficacy of at least 2.3 µmol/J. For HVAC and dehumidification, growers must either use an integrated HVAC system with on-site heat recovery for reheating dehumidified air, a chilled water system with on-site heat recovery for reheating dehumidified air; a desiccant dehumidification system for system designs that require a 50°F dewpoint or less, or standalone dehumidifiers that deliver energy factors of at least 1.77-2.41 L/kWh. Greenhouses must also meet envelope thermal performance.

Some other states with commercial cannabis markets have energy requirements affecting licensees. Vermont crafted energy regulations for cannabis businesses very similar to California’s energy code New York’s Office of Cannabis Management mirrored California’s HVAC and dehumidification requirements, and its lighting rules go even further, increasing the lighting PPE minimum requirement to 2.2 μmol/J.

Nudges and incentives

As we have seen, some states mandate to force cultivators to use equipment that meets a performance standard. Yet, these and other states are also trying other methods to nudge growers to use less energy by less forcible measures. 

For example, New Jersey and Oregon, in addition to all of the states already mentioned, require cultivation licensees to submit a plan describing how they will address their energy and water needs, water needs, and waste management. In addition, some municipalities such as Grand Rapids, MI, Boulder, CO and Beverly, MA also require cultivation permit applicants to submit sustainability plans.

Massachusetts and Vermont both go one step further and require license applicants to demonstrate that they have considered onsite renewable energy generation, strategies to reduce electric demand and consumption, and have engaged with utility energy efficiency programs. 

Annual reporting requirements are also becoming increasingly common. Massachusetts, Vermont, and New York license renewal applicants must submit an annual report showing their energy, water, and gas use. Some of these states encourage the use of the Resource Innovation Institute’s Cannabis PowerScore or EPA ENERGY STAR Portfolio Manager

Every year more energy utilities are also getting into the incentive game. Electricity and gas utilities have, for many years, offered cash incentives to residential and commercial customers to help them afford the higher upfront costs of installing energy-efficient equipment in their buildings. 

These programs have proven extremely valuable for those operators who navigate them successfully. Many cannabis operators can net cash incentives worth 50% or more of the cost of installing new energy-efficient grow equipment, such as LED horticultural lighting, custom HVAC systems, or efficient stand-alone dehumidifiers. Reputable equipment vendors should provide growers with information about incentive eligibility for their products in your project location. 

Sam Milton, Founder of Climate Resources Group, a company that helps growers tap incentives through its Enlighten Your Grow program, points out that many growers can take advantage of these programs regardless of their size or longevity in the marketplace. “The challenge operators face is having the bandwidth to navigate their local utility programs and package their project in a way that doesn’t accidentally undermine their eligibility and gives them maximum payout. By removing the risk and effort associated with applying for these funds, we save our clients countless hours of staff time and deliver them large incentive checks so they can grow their crops and business.”