Oct 15, 2016 12:35 PM

Just Business: Marijuana Industry Faces Regulatory Challenges

Before the legalization, most growers, manufacturers, and sellers of cannabis products had operated outside the law. Many of them had been doing business illegally for decades, so they may not be familiar with what is legal and what is not.

Marijuana Industry Faces Regulatory Challenges

Now, marijuana business is a legitimate business. And as a legitimate business in the United States, it has to follow certain regulations. People have to learn how to work according to safety rules that govern such issues as fire safety, electrical safety, field sanitation, personal protective equipment, medical evaluations, and training.

Fire Safety

Since medical cannabis businesses began to be licensed and regulated in Colorado in 2010, the new industry has posed real challenges for the local fire departments. So, the National Fire Protection Association decided to develop first marijuana business guidelines.

This member-based nonprofit organization that elaborates codes and standards for fire safety has been working on a chapter on marijuana cultivation and processing facilities in Colorado for more than a year. If the technical committee accepts the second draft of the chapter, Americans will finally have a fire code with rules on cannabis cultivation and processing facilities. For that, one has to thank the fire marshals and industry members in Colorado.

Marijuana inspectors admitted that many states were caught off guard by the cannabis industry’s emergence. City fire officials stumbled across their first commercial grow operations during a general inspection, and within months found more than 150 enterprises that operated in violation of the laws and licensing rules. Office spaces and warehouses were found to be in a mess: fire inspectors were shocked to see a jumbled mess of wires, extension cords, hoses, plastic trap dividers, and non-compliant interior finishes. Powerful hot lights hanged close to plastic room dividers. Electrical circuits were often overloaded. Locks and bars over the windows and doors to keep burglars out also prevented firefighters from getting into a burning building. Many growers were using elevated levels of CO2 to increase plant growth and toxic chemicals to disinfect grow rooms from insects. Some growing facilities did not have a formal fire prevention plan that would address major hazards, like accumulation of waste materials in the building and maintenance of heat-producing equipment, and include all names and titles of employees responsible for the implementation of the plan.

Commercial production of marijuana concentrates and related products is equally (and sometimes, even more) problematic in this sense. The number of flash fires and explosions is sharply increasing among marijuana processors who use butane or propane as a solvent to extract cannabinoids from the plant. Only in 2014, Colorado saw more than three dozens of laboratory explosions and almost the same number of injury cases. By contrast, there were only twelve explosions and eighteen injuries in 2013.

Energy Use

The marijuana industry is one of the power-hungriest industries. It often demands 24-hour indoor lighting rigs, ventilation, and heating at multiplying grow sites.

A 2012 study by Berkeley Lab showed that in states like Washington and Colorado, where cannabis cultivation and sale were legalized for recreational purposes, marijuana industry can account for as much as one percent of national electricity use. That is almost half the energy consumed by data centers. According to a report by the Northern Power and Conservation Council in Oregon, an indoor grow system for only four plants needs as much energy as 29 fridges.

Most of the power is coming from burning coal, which causes irreparable harm to the environment. Without design standards and efficient equipment, marijuana businesses are responsible for greenhouse-gas emissions almost equal to those of New Hampshire. And the amount of emissions is growing every day.

What about renewable energy? The problem is that renewable energy is expensive, and to get access to loans or any other financing for renewable energy systems is really challenging for legal cannabis businesses. Moreover, on-site generation systems—community-scale energy projects and rooftop solar arrays—cannot produce enough energy to meet the growing needs of the marijuana industry.

What about eco-friendly LED lights? HPS and metal halide lights are less efficient because they convert a lot of energy into heat rather than light, and this is one of the major reasons why there is so much interest in LED grow lights. Lower temperatures also mean less air conditioning, water, and fertilizer use. The point is that while LED grow light systems are usually enough for ordinary plants, they often just do not work for growing marijuana plants.
With no industry-wide regulators, growers have no standards for energy-efficient design in their facilities, which creates tremendous energy waste. However, some states are trying to find a solution, although they prefer to implement taxes instead of providing energy efficiency regulations. Last year, Boulder County, Colorado implemented city and county licensing schemes that required indoor cannabis growers to use energy-monitoring technology and routinely report their energy consumption. The county has required marijuana cultivating facilities to either offset their electricity use with renewable energy or pay a two percent charge per kilowatt hour consumed. Oregon has established a task force to study energy use for marijuana production.

Occupational Safety and Health

Marijuana business needs to adhere to all laws and regulations as any other legal business does.

These include keeping employees safe according to the Occupation Safety and Health Administration (OSHA) guidelines.

Since 2011, marijuana businesses have experienced numerous OSHA inspections. Last year, there were ten check-ups in Colorado, and all of them have resulted in fines. Also, a medical marijuana company in New Mexico, where an explosion injured two workers, was fined $13,500. That sum, however, was argued insufficient, and the OSHA agreed to raise their fines that currently range from $7,000 to $13,000 per violation per employee.

OSHA ensures that each facility has a written Hazard Communication Plan describing how it achieves compliance with hazardous chemical training for employees, places labels on hazardous containers, and provides material safety data sheets for all chemicals and pesticides. All facilities must have a formal fire prevention plan. Furthermore, OSHA checks whether the required Personal Protective Equipment (PPE) is in place. Production of edibles can create problems if the workplace conditions are not acceptable, personal protective equipment is not installed, or chemicals are not labeled properly.

However, as cannabis remains federally illegal, OSHA cannot do random inspections. Once a citation from OSHA is received, businesses have 15 days to prepare for the inspection.

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