Business

LED Mandate Proposal Outrages Calif Pot Biz

By Willis Jacobson
Oct 22, 2020

Jerred Kiloh has spent the past 18 years refining and perfecting the “recipe” of his cannabis plants.

If California moves forward with a proposed new set of energy regulations, the longtime Los Angeles cultivator may have to start again from scratch.

The California Codes and Standards Enhancement (CASE) program drew the ire of many of the state’s indoor growers this summer when it proposed that the California Energy Commission (CEC) require all indoor cultivators to use only LED lights by 2023. The move is aimed at raising energy efficiency standards. Several of the operators likely to be affected raised a litany of concerns with the proposal – from the anticipated high cost to comply, to the lack of research put into the plan – during a public comment period, but the document under review by the CEC remains largely unchanged. It could be adopted as soon as early 2021.

At 9 a.m. on Oct. 27, the CEC will host a virtual public workshop (info here) that will mark the first opportunity for those in and around the industry to comment directly to the CEC. Kiloh and others are hopeful their voices are heard.

“It changes everything,” Kiloh said of the proposal.

The LED mandate is the most significant of the changes recommended in the proposal, which would apply to all indoor horticulture operations. (Clarification: The proposal states that the lighting rule will apply to all new construction, additions and alterations that change the classification of a facility or involve replacing 10% or more of lights in an enclosed space.)

Switching to LED lights, which are more expensive than the lower-efficiency lights commonly used in grows, would not only pose a significant financial burden on operators, but could also materially change the plants they produce. Compounding that, a report by the state’s energy department suggested that roughly 95% of the state’s indoor growers will be affected (the remainder already use LED lights). 

Kiloh, who owns the Higher Path MED Collective and is president of the United Cannabis Business Association, said he has been testing various LED lights in his grow for the past seven years and has been unable to get the LED lights to produce plants at the same quality as his other high-intensity bulbs.

Given that the state has provided no research or studies into the short- or long-term effects that the conversion could have on grows, particularly large-scale operations, Kiloh said he felt the proposal was “short-sighted.”

“I realize we’re trying to reduce energy consumption, but we don’t know what the unintended consequences are of just moving to LED lights,” he said.

“Show me some stats,” he later added.

The issue has galvanized many of the state’s indoor growers.

The complaints they have raised include that it will bring an undue financial burden on social equity operators, in particular, and that it will disadvantage all legal cultivators to the benefit of their illicit competitors.

Bob Gunn, the founder of Seinergy, an energy consulting firm in Seattle, estimated in an op-ed for mjbizdaily.com that the required upgrades, based on the state’s reported square footage of indoor grows in 2019, could collectively cost growers up to $255M. 

“All indoor agriculture would be affected, but the lion’s share of burden would fall on California’s important but already struggling legal cannabis industry, which relies heavily on indoor growing,” he wrote.

Kiloh said he was particularly concerned about the impacts the proposal could have on the battle between the legal and illegal operators. His business is in Los Angeles, where all legal grows are indoors and would be subject to the new regulations.

He noted that the legal industry would likely face reductions in quality and quantity, due to the trial-and-error that will come with switching to new systems. Meanwhile, he said, the illegal growers will be able to continue producing their highest-quality buds and offer them at cheaper rates.

Under that scenario, it would make sense for people to turn to the illicit market, he acknowledged.

“The legal industry won’t be able to compete,” he said. “That tipping point might come sooner than we think.”

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