Fortune Magazine Misunderstands Cannabis Industry Energy Issues

Greenhouses, like this one in Canada, can dramatically reduce energy consumption

Fortune writer Tom Huddleston, Jr. rightly points to how energy-intensive cannabis production can be, but he fails to realize that legalization is the solution not the problem. Black market cannabis is no less energy-efficient than legal cannabis, but legal cannabis producers have plenty of incentive to produce as efficiently as possible, as energy costs can represent more than 25% of the cost of production.

The article points to tax surcharges as a tool that is being employed by local governments:

The increase in power consumption by the growing legal marijuana industry has led some lawmakers to demand that pot growers pay various types of special fees or taxes to balance the strain their high-consuming ways put on the environment. Last year, lawmakers in Colorado’s Boulder County said they would charge marijuana growing facilities a little more than 2 cents per kilowatt hour consumed. A similar tax has been put in place in Arcata, California, where Bloomberg notes “officials are banking $300,000 a year from an ‘excessive energy use tax’ that went into effect in October 2013.”

Legal producers will respond to these initiatives, whether they are fair or not.  One trend already taking place is the move to greenhouse or hybrid facilities and even outdoor production in some locations.  Additionally, companies are increasingly employing HVAC and lighting solutions to help reduce energy consumption. It is certainly a fallacy to conclude that cannabis legalization is responsible for an added energy use by the overall industry when one factors in the black market. In fact, stomping out the black market by legalizing will help conserve our society’s use of energy.

Read Tom Huddleston, Jr.’s “The Booming Pot Industry Is Draining the U.S. Energy Supply”:

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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