OCTOBER 2020 Learn more about NCIA’s Policy Council TheCannabisIndustry.org/PolicyCouncil National Cannabis Industry Association TheCannabisIndustry.org ENVIRONMENTAL SUSTAINABILITY IN THE CANNABIS INDUSTRY IMPACTS, BEST MANAGEMENT PRACTICES, AND POLICY CONSIDERATIONS The NCIA environmental committee was formed to write a technical report on “Environmental Impacts, Best Management Practices and Policies for the Cannabis Industry” necessary to position the cannabis industry as a leader in environmental sustainability at the local, state, and national levels and to help inform environmental policy. TABLE OF CONTENTS 4 EXECUTIVE SUMMARY 13 LAND USE AND SOIL HEALTH Summary of Environmental Impacts 5 (continued) Importance of Displacing the Illegal Market 5 Best Management Practices - Land Use Soil Degradation Impacts 5 and Soil Health 15 Water Impacts 5 Land Use Management 15 Energy Impacts 5 Preventing Pollen Drift 16 Air Quality Impacts 5 Leveraging Soil Testing 16 Waste Impacts 5 Sustainable Soil 16 Summary of Best Management Practices 6 IncreasingOrganic Matter 17 Proper Land Use 6 Regenerative Agriculture 17 Water Conservation 6 Reducing Soil Erosion 18 Efficient Energy Use 6 Reduce Chemical Practices 19 Air Quality Controls 6 Integrated Pest Management 19 Waste Reduction 6 Indoor Cultivation Growing Media 19 Summary of Policy Considerations 7 Policy Considerations - Land Use and Soil Health 20 For a Sustainable Future Land Use Zoning Policies 20 Federal Legalization 7 Federal Cannabis Appellations 20 Land and Soil Sustainability 7 Testing Final Products 20 Improving Water Quality 7 Access to Existing Sustainable Energy Policy 7 Agriculture Programs 21 Air Quality Improvements 7 History Highlight 21 Regulating Waste 7 Organic Practices and Certification 21 Tool Highlight 21 8 KEY TAKEAWAYS 22 WATER Environmental Impacts - Water 22 PREFACE, LIMITATIONS, AND 9 Irrigation Impacts 22 ACKNOWLEDGEMENTS Water Use Impacts 22 Leading the Way 10 Indoor vs Outdoor Water Impacts 23 Pollutants and Erosion Impacts 23 Fertilizer Impacts 23 10 ILLEGAL MARKET THREATENS Pesticides and Monoculture Impacts 24 THE SUSTAINABILITY OF THE Heavy Metals Impacts 24 LEGAL INDUSTRY Wastewater Impacts 24 Driven by Economics 10 Best Management Practices - Water 24 Impacts of an Unregulated Market are Dire 10 Water Sourcing Best Practices 24 Minimizing the Illicit Market 11 Water Use and Quality Best Practices 25 Water Conservation Practices 25 Water Treatment Best Practices 25 LAND USE AND SOIL HEALTH 13 Optimization Irrigation 25 Linking Land Use and Soil Health 13 Water Recycling 26 Environmental Impacts - Land Use and Soil Health 13 Improving Wastewater Quality 27 Traditional Agriculture vs Cannabis Cultivation 13 Considering Climate Change 27 Soil Health 14 Policy Considerations - Water 27 Erosion 14 Water Use Policy 27 Fertility and Resilience 14 Additional Policy Considerations 28 Pesticides and Runoff 15 An Example of Regulatory Water Protections 28 Phytoremediation 15 Conclusion - Water 29 Environmental Sustainability in the Cannabis Industry: 2 TABLE OF CONTENTS Impacts, Best Management Practices, and Policy Considerations TABLE OF CONTENTS 30 ENERGY 37 AIR QUALITY (continued) Regulations Drive Indoor Cultivation 30 Education and Communication 43 Energy Impacts of Cannabis 30 Air Permitting Requirements 43 Data Availability 30 Interagency Communication 44 Power Supply 31 Cannabis Licensing Programs 44 Energy Intensity 31 Compliance and Enforcement Funding 44 Life-Cycle Impacts 32 Supporting Incentives 44 Energy Reduction 32 Cannabis Clearinghouse 45 Best Management Practices - Energy 32 Odor Control and Regulation 45 Lighting and HVAC Drive Energy Use 32 Lighting Best Practices 32 HVAC Best Practices 33 46 WASTE Designing Efficient HVAC 33 Environmental Impacts - Waste 46 LEDs Impact HVAC Design 33 50/50 Waste Rendering Rule 46 Converting to LED Lighting System 33 Plant Waste Impacts Future Energy Considerations 33 Single-Use Packaging Impacts 47 Policy Considerations - Energy 34 Recycling is Flawed 47 Pre-Market Policy Considerations 34 “Compostable” Packaging Impacts 48 In-Market Policy Considerations 35 Lab Waste Impacts 49 Policy Considerations for Hazardous Waste Impacts 49 Future Energy Improvements 36 Best Management Practices - Waste 49 Conclusion - Energy 36 Better Management of Plant Waste 49 Marijuana Plant Waste Mixing 50 Improving Consumer Packaging 50 AIR QUALITY 37 Promoting Reusable Packaging 51 Environmental Impacts - Air Quality 37 Consumer and Industry Education 51 Ozone and Secondary Aerosol Formation 37 Indoor Cultivation Waste 51 Cultivation as a Source of Air Emissions 37 Vape Waste Best Practices 51 Electricity Generation and Power Supply 38 Reducing Lab Waste 52 Cannabinoid Extraction 38 Policy Considerations - Waste 52 Transportation Impacts 39 Waste Mitigation through Extended Producer Carbon Dioxide (CO2 ) Responsibility (EPR): 54 Supplementation/ Generation 39 Non-Compliant Hemp Disposal 54 Climate Change 39 Hazardous and Universal Waste Policy 54 Odor Impacts 40 Best Management Practices - Air Quality 40 Control Technology for Reducing 55 CONCLUSION - VOC Emissions and Odors 40 ENVIRONMENTAL SUSTAINABILITY Activated Carbon 40 IN THE CANNABIS INDUSTRY Ozone Generators 41 Chemical Additives: Misters, Foggers, and Vaporizers 41 Mineral Filters 41 56 APPENDIX A - TERMS & DEFINITIONS Biofilters 42 Negative Air Pressure with Integrated Treatment 42 Cannabinoid Extraction Best Practices 42 Electricity Best Practices 43 58 APPENDIX B - LAND USE AND SOIL HEALTH Carbon Dioxide Best Practices 43 Policy Considerations - Air Quality 43 Environmental Sustainability in the Cannabis Industry: 3 TABLE OF CONTENTS Impacts, Best Management Practices, and Policy Considerations EXECUTIVE SUMMARY The cannabis industry continues to mature as cannabis green bonds to finance the development of sustainable legalization spreads across the country. Today thirty-three states technology, infrastructure, and waste reduction solutions4. have passed laws allowing for the production and sale of medical As consumers consistently demonstrate their willingness to marijuana. And eleven U.S. states have passed laws allowing pay more for sustainable brands, with 1/3 willing to pay 25% for the production and sale of adult-use marijuana. In December more for sustainable products in 20195, Environmental, Social, 2018, Congress passed the Agriculture Improvement Act of 2018 & Governance (ESG) strategies may even potentiate greater (the “Farm Bill”), significantly expanding the legal protections for retail taxes. a subset of cannabis plants defined Below, we provide a review of the as “industrial hemp.” Most recently, impacts cannabis has on soils and numerous states deemed cannabis land use, water, energy generation “essential” as other businesses were and consumption, air quality, and required to temporarily close due to NCIA suggests that forward- the challenges associated with the coronavirus pandemic (Spring thinking standard-setting waste. Each respective section 2020). This fast-growing and highly explores current and emerging best regulated industry (at the state bodies, self-regulatory management practices and their level) is poised to lead on evolving corresponding policy considerations. business challenges, including the organizations, and In many cases, existing policies can adoption of environmentally sound government regulators take be broadened or modified to include business practices that demonstrate the cannabis industry. However, the to the broader agriculture sector note and create workable cannabis industry is as unique as the that comprehensive environmental 1 plant itself, and particular growing, sustainability is achievable. standards with supporting processing, and packaging practices Some of the challenges facing the can- resources to set the may benefit from cannabis-specific nabis industry present opportunities policies outlined herein. Legalization to implement environmentally sustain- cannabis industry apart as of cannabis is an unprecedented able practices.2 Companies that focus a leader in environmental opportunity for environmentally on sustainable practices reduce their sustainable practices to be adopted resource dependence and associated sustainability. as the national industry standard from costs, positioning them to outperform the outset, positioning the cannabis competitors in the long-term. industry to emerge as a leader in Keeping pace with global sustainability environmental sustainability. goals may soon be necessary from NCIA suggests that forward-thinking an investment standpoint. In the coming years, municipal, standard-setting bodies, self-regulatory organizations, and state, and federal regulators may be required to demonstrate government regulators take note and create workable efforts to support Sustainable Development Goals, and standards with supporting resources to set the cannabis financing may be available to engage businesses that industry apart as a leader in environmental sustainability. Any specifically target them.3 Sustainable investing strategies such standards should take cost into account, as we don’t want over the past decade demonstrate that businesses should to further encourage illicit market actors by creating unfunded form collaborative coalitions to access municipal and federal mandates for state-legal operators. 1. While the National Cannabis Industry Association does not develop national standards and likewise does not operate as a “self regulatory organization,” we recognize that