Farming, in general, is pretty resource intensive. Cannabis farming can be even more so. One study from 2012 estimated that indoor cannabis cultivation accounted for 1% of the total electricity used in the United States, representing about $6 billion in annual expenditures. That study was done before the wave of legalization hit the US. In Denver in 2018, the city’s Department of Public Health and Environment data indicates cannabis cultivation accounted for nearly 4% of the city’s overall electricity use. Denver is an interesting case, as the city has targeted an 80% reduction in greenhouse gas emissions by the year 2050. The proliferation of indoor cannabis operations is not helping to meet that goal.
Water use is another issue. Consumption levels and estimates vary based on the systems used, ranging from 2 to 6 gallons per day per plant. Outdoor grows have higher usage, due in large part to evaporation, than indoor operations. In addition, there is also the issue of grey water and how it is treated. The use of pesticides and fertilizers leads to polluted effluent. Combining high water usage with contaminated waste water is basically the exact opposite of sustainability.
Meanwhile, as legal cannabis markets mature and more cannabis flower becomes available, prices tend to decrease. Bottom lines get pinched, and growers become even more motivated to cut expenses. This concern for the bottom line is probably more responsible than anything else for the efficiency movement in the industry. LED lights and more efficient, computer-controlled cooling and ventilation systems are a couple of the more prominent trends. These techniques and technologies pay off the investment required over a long period of time, but do little to balance out the big picture of a resource-intensive industry expanding at breakneck speed.
Hybrid Greenhouse Growing is Part of the Answer
When comparing indoor vs. outdoor cultivation, each method has its own advantages and disadvantages. Indoor is great for climate control, providing a predictable environment for more ideal plant growth, but comes with high energy costs and a large carbon footprint. Outdoor utilizes natural sunlight to mitigate energy consumption, but uses more water while losing the ability to control the climate. Hybrid greenhouses combine the advantages of each system while minimizing the disadvantages.
These hybrid greenhouses have been developed over many years for use in industrial-level agricultural operations and are now revolutionizing the cannabis industry. They allow cultivators to take advantage of natural sunlight while supplementing with high efficiency lighting systems to maximize yield. They limit evaporation and water loss while allowing growers to mimic natural airflow patterns that lead to more robust growth rates.
One Canadian Licensed Producer that has committed to these hybrid facilities is Rubicon Organics (CSE: ROMJ) (OTCQX: ROMJF). The company operates a 125,000 sq. ft. facility in British Columbia, and owns a 40,000 sq. ft. facility in the state of Washington which is leased to a licensed operator there. Rubicon is in production now after receiving its Canadian cultivation and processing licenses in early February, 2019.
The company is in the process of application for its organic certification from the Fraser Valley Organic Producers Association (FVOPA), with the site inspection having been recently completed. When certified, Rubicon would become just the 4th certified organic licensed producer in the country, and the one with the largest licensed footprint.
The story could end there, with an organic cultivator utilizing hybrid facilities to save costs and decrease resource use. But Rubicon’s commitment to sustainability goes much deeper than that, down to the very core of its corporate identity.
Unprecedented Commitment to Sustainability
Canada’s first organic cannabis producer, Whistler Medical Marijuana Corp., is an indoor operation located in its namesake town. Rubicon’s CEO, Jesse McConnell, co-founded Whistler Medical. When he left, he committed to finding the most sustainable and productive methods for growing cannabis. Rubicon’s Chief Science Officer joined him on this quest. Peter is a Professional Agrologist long involved in the British Columbia sustainable farming community as a consultant. He contributed to the Certified Organic Standard for Canadian Greenhouse Production of Vegetables and wrote the first draft for the BC’s only standard for organic cannabis certification under FVOPA.
After helping to guide Whistler Medical through its organic certification, the two embarked on several years of experimentation with organic greenhouse growing methods and materials. The result is Rubicon Organics, fueled by passion for and expertise in sustainable, organic, low-cost, high-quality cannabis. Rubicon uses its own proprietary soil mix in combination with the most advanced hybrid greenhouse technology to achieve its goals.
Further underlining Rubicon’s extraordinary commitment to sustainable farming is the fact that the company is the first and only cannabis operation in Canada to complete an Environmental Farm Plan. The plan ensures the application of best practices throughout Rubicon’s facility, including net zero energy and waste, 100% rainwater collection and recycling, and carbon capture/reuse. The level of detail required by, and the unwavering organizational commitment to, this comprehensive plan demonstrates Rubicon’s position as a leader in the movement toward sustainable cannabis production.
Sustainable Organics Could Equal Healthy Bottom Line
One of the company’s goals is interesting given its commitment to sustainable and organic practices. Those words are not often used in conjunction with a low-cost approach, but that is exactly the result for Rubicon. Many other companies are positioning themselves as low cost producers by targeting a cash outlay of about $1/gram of dried cannabis grown. Rubicon believes they will hit about $0.50/gram while maintaining consistently high quality in its certified organic product.
At the same time, prices for organic cannabis tend to be significantly higher than those for non-organic flower products. Earlier this year, Aurora Cannabis signed on to purchase Whistler Medical for $175 million. This Financial Post article outlining the deal highlights the organic premium price as a major reason for the purchase, with a gram of Whistler’s organic flower going for $17.99 on average in comparison to the national average price of $8/gram for non-organic flower. The willingness of a significant number of consumers to pay an organic premium for products has been proven across industries, and the cannabis market is no different.
Rubicon’s position as a sustainable cannabis leader could be written off, in error, simply as a noble pursuit, or as a marketing ploy, or as a waste of time and money. It should, however, be viewed as a shrewd business decision, rooted in the company’s DNA and a full expression of what makes Rubicon Organics unique and compelling. With full production levels expected at its British Columbia facility by the end of 2019, the coming quarters could serve as proof the company is onto something big.
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