OR: Sustainable Practices Profit Cannabis Companies

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Ten years have passed since Justin Clapick and Travis Busack started growing medical marijuana in the two-car garage at Clapick’s former rented home in Bend.

“He had this loft space up there, and I moved up there with my cat,” Busack said Jan. 3. “I had my medical card, and I also had a buddy with terminal brain cancer. I was, like, hey, dude, we should grow weed in your garage.”

At a loss for space, they learned to be efficient, he said. They made three “rooms” for three phases of growing along with a general workspace.

“We were literally crawling around on our hands and knees in the middle of winter,” Busack said. “Pipes are freezing and electrical was sketchy and it was just crazy.”

The partnership has grown and so has the operation, Deschutes Growery, a familiar brand in local marijuana retail shops. Now located in about 8,000-square-feet of floor space in two warehouse buildings in a southeast Bend industrial park, the company has created a method of growing recreational marijuana rooted in energy efficiency.

Clapick and Busack on a tour Jan. 3 described sustainable growing techniques the company developed over time and the energy-saving incentives it has sought from Energy Trust of Oregon. Deschutes Growery is part of a rising number of indoor cannabis growers taking advantage of incentive programs to stem their production costs.

“If we didn’t come up with this idea and do it this way, we’d be dead in the water. Our profit margin would be super low. We wouldn’t be sustainable as a business,” Busack said. “We had to do it.”

Power costs represent a substantial expense for indoor marijuana growers. With the market for cannabis experiencing a glut, meeting profit margins means producers are looking for efficiencies wherever possible, said Derek Smith, executive director of the Resource Innovation Institute, an organization that promotes sustainable practices in the cannabis industry.

Energy, in the form of electricity and natural gas, ranks behind labor as an indoor grower’s greatest expense, he said.

“Some producers are going out of business and you can absolutely point to, if they had been paying better attention to margins and the affected parts of their operations in terms of energy efficiency,” Smith said Wednesday, “they could … be in a better position going forward.”

At Deschutes Growery, off American Lane, the business partners devised their own system of movable racks, LED lights and programmable monitors to multiply their growing space, trim their utility costs and reduce the time their plants take to flower. The company mixes and recycles its own growing medium and employs biological pest control, using nematodes, predatory mites and natural oils rather than chemical pesticides.

“Most people think cannabis is like a couple guys growing, smoking, not really trying to be organized and thoughtful … we’re just trying to do it our way, you know?” Clapick said.

The growing process starts in a nursery with tall mother plants that yield hundreds of clones, which join thousands more in a propagation room. There, on racks stacked four high on movable shelves, the plants grow under banks of LED lamps in a warm, moist environment. In the next phase, the room climate is changed to cool and dry and the hours of light changed to signal the plants to form the buds that later become dried flower sold by retailers.

“They’re basically only in this room for essentially 75 days max,” Clapick said in the flower room. “So, we go from clone to flower in less than 100 days, 90 days almost.”

Deschutes Growery, which started in a former auto repair shop and now occupies the entire property, will eventually have six flower rooms with rack space that will constitute about 10,000 square feet of area for plants, he said.

The company grows its cannabis only inches high and gives the plants only enough light to mature. That practice saves money on utility costs and produces a more consistent product in a shorter amount of time, Clapick said. The plants need only enough micromoles, a measure of light quantity, for photosynthesis.

“Why give the plant more light than it can process?” he said. “From now through the end of the harvest, we use a 300-watt (lamp) on average, … because the plant can’t use 600 watts of power. It can only use 300 because that’s the right micromole for the plant height.”

Deschutes Growery worked six months with Cylvia Hayes, who added cannabis consulting to her business, 3E Strategies. Deschutes Growery set a goal of becoming carbon-neutral — offsetting the energy it consumes with conservation measures — in three years.

“My mission is just to do what I can to help shape this industry into a more sustainable, positive direction,” she said during the Jan. 3 tour. “Not just to toot their horn, but to say it can be run better and here’s an example.”

In an unrelated development, also Jan. 3, the Oregon Government Ethics Commission released its findings that Hayes had violated state ethics laws during her time as adviser to her fiancé, then-Gov. John Kitzhaber. She benefited from her state position to benefit her private business, the commission reported. Hayes could face substantial fines.

“That’s her past,” Clapick said Friday. He said Hayes provides direction for the company. “She’s helping tell our story in a way that is conducive to this whole renewable concept. She’s director of sustainability.”

In addition to its cultivation technique, Deschutes Growery has sought savings through the Energy Trust incentive program for indoor cannabis growers. The program provides technical assistance and cash incentives to growers that install LEDs, which use less energy than incandescent or fluorescent light bulbs. Deschutes Growery applied for incentives based on their installation of LED lighting, according to an email Wednesday from Susan Jowaiszas, senior marketing manager for commercial and industrial programs at Energy Trust of Oregon. The company’s application is under review.

“This project would achieve the largest kilowatt-hour savings of any cannabis grow operation in Deschutes County and is also among the largest (to date) through our program,” Jowaiszas wrote. “It’s not the largest cannabis project completed through Energy Trust’s program; some metro areas have pretty large facilities.”

By switching 5,000 square feet of growing space to LED, the company expects to save about 1,400 megawatt-hours of electricity annually, Clapick said.

The company also installed rooftop solar panels, generating another 59 MWh in 2017 to offset its own power consumption. The wattage Deschutes Growery says it saves would power 132 homes for a year. It also claims to be the first solar-powered indoor cannabis farm in the state.

“This is all data driven,” Clapick said, “so we can now export data and be like, how much kilowatts did you use for a cycle? We can now start measuring everything and have actual data that before people didn’t know.”

Cannabis growers are required by the Oregon Liquor Control Commission to report annually on their power use. Pacific Power, which provides electricity to much of Central Oregon, does not track how many of its business customers are marijuana growers or how much power they consume.

At Central Electric Cooperative Inc., a smaller, member-owned, nonprofit that serves more than 33,000 accounts in Deschutes, Crook and Jefferson counties, along with parts of three other rural counties, marijuana growers are the fastest growing segment of business customers, said Jeff Beaman, member services director. The cooperative currently has 22 members in the marijuana business that it knows of, he said.

“That’s equal to about 10 megawatts of connected load,” Beaman said Wednesday. “Our peak is about 270 megawatts. (Ten megawatts) is not huge, but it’s significant.”

Customers of investor-owned utilities such as Pacific Power pay a small monthly fee on their bills to fund Energy Trust programs. Central Electric has similar incentives, but cannabis growers are ineligible for them, Beaman said.

That’s because the power Central Electric provides emanates from the Bonneville Power Administration, a federal agency. Because marijuana is considered an illegal drug under federal law, the cooperative may not offer those programs to growers.

“We are a public power customer of the Bonneville Power Administration,” Beaman said. The administration is “not looking at marijuana activities the same way the states are.”

Deschutes Growery is not alone among cannabis businesses pursuing sustainable methods. Yerba Buena, an indoor cannabis farm in Hillsboro, in July 2016 received the first incentive from Energy Trust for a cannabis company to install more efficient lighting, wrote company co-owner Rick McClish in an email Wednesday. Yerba Buena saved $68,000 annually and 783 MWh.

Energy Trust that year provided incentives to 15 indoor cannabis growers, primarily for installing LED lamps and fixtures, Jowaiszas wrote. The trust is reviewing 100 applications from cannabis growers for 2017 incentives, including eight from Deschutes County, she wrote.

“These projects, taken together, will save 13-14 million kilowatt hours. Those savings are equivalent to the amount of electricity used by more than 1,100 Oregon homes,” Jowaiszas wrote.

Yerba Buena received a second incentive package for installing LED lights in one of its grow rooms in May 2016 and third in July 2016, together worth $25,800 annually, McClish wrote. The company sought a fourth round of incentives last year, again for installing LED lamps, he wrote.

His business partner, Laura Rivero, on Wednesday said energy conservation is one part of a business model founded on sustainability.

“We do a lot of different things,” she said. Yerba Buena uses organic methods to grow its crop, recycles its soil and water, composts its company waste on-site and uses biological pest management, she said.

Its 30 employees, over half of whom are women and a third minorities, are given paid days to do volunteer work, she said. Turnover at the company, she said, is low. Yerba Buena pays a living wage and provides its employees health insurance and other programs, including wellness days, Rivero said.

“It’s not necessarily specific to sustainability, but in my mind labor practices are part of sustainability,” she said. “There’s a lot of little things you can do if you build things out from the get-go correctly. Sustainability translates to lower costs for energy and lower turnover rates. And it increases the bottom line and increases profits if done correctly.”