The passage of Bill C-45, the Cannabis Act, with Royal Assent in June 2018 put Canada on track to be the first G-7 country to legalize recreational cannabis. With the Cannabis Act and its regulations slated to come into force on October 17, 2018, attention is now turning to the business of cannabis.
According to “A society in transition, an industry ready to bloom: 2018 cannabis report”, Deloitte estimates that the total cannabis market in Canada (including medical, legal and illegal recreational products) is expected to generate up to $7.17 billion in total sales in 2019. The legalization of cannabis will not only mark a significant transition for Canada at a societal level, but also create a dynamic new market for a broad range of consumer products.
So far, much of the focus of cannabis legalization has been on public health and safety, however, there are increasing calls for policy makers to assess the environmental impacts of cannabis cultivation.
On a commercial scale, cannabis is grown in specially designed indoor facilities or in greenhouses. Regulators have indicated that cannabis facilities will be treated like other industrial facilities, meaning that they will be subject to applicable federal, provincial/territorial and municipal laws as they relate to environmental matters. This includes contaminated sites management, water use, effluent management, fisheries impacts, odours and air quality, energy use and greenhouse gas (GHG) emissions.
As cannabis production ramps up across Canada, producers will need to be mindful of the following environmental concerns:
• Contaminated sites management: In a number of jurisdictions, producers are re-purposing former industrial facilities (such as former mill sites) for cannabis cultivation. Where a producer is looking to acquire a former industrial site and convert it into a cannabis facility, careful due diligence will be required to assess the scope of any remediation requirements to address any historical contaminants on the property.
Depending on the nature of historical activities on the property, remediation costs could be potentially significant. Likewise, at the end of the life of a cannabis facility, remediation of the site may be required, particularly where the operations used or produced hazardous substances.
• Water use: The production of cannabis requires large volumes of water, particularly where cannabis is cultivated outdoors, when water use may increase due to weather conditions. Industry estimates indicate that a marijuana plant needs approximately 22 litres of water a day; in comparison, a wine-producing grape plant uses approximately 12 litres a day.
In California, studies have suggested that irrigation for outdoor grow operations is having significant impacts on local watersheds as a result of the diversion of water for cannabis production. Where water permits are required to divert water from either surface water or groundwater sources, regulators will be looking closely at impacts to local watersheds (particularly in areas prone to drought) and considering potential environmental flow needs in the region.
• Effluent management: Depending on production methods, cannabis grow operations may generate effluent containing growth nutrients and pesticides, which could have potentially adverse environmental impacts on local ecosystems.
Producers with facilities near fish-bearing habitat will also need to monitor the potential impacts of their operations on fish and fish habitat to ensure compliance with Fisheries Act requirements, in particular sections 35 and 36 of the Fisheries Act, which prohibit activities that result in serious harm to fish and the deposit of deleterious substances into fish-bearing waters, respectively.
• Odour and air quality: The production and processing of cannabis may generate odours and volatile organic compounds, which could potentially impact air quality and cause off-site nuisances to neighbouring properties. As a result, producers will need to consider the applicability of local air quality requirements, which may include registration, permitting or reporting requirements.
• Energy use and GHG: Until now, the vast majority of cannabis cultivation has occurred indoors. This is primarily because the illegal cultivation of cannabis necessitated indoor grow operations.
The indoor cultivation of cannabis is energy intensive, owing to the need for high-intensity lamps, air conditioners, and dehumidifiers to regulate humidity and temperature. The greenhouse cultivation of cannabis is much less energy intensive, resulting in a smaller carbon footprint.
Whether the crop is grown indoors or outdoors, producers may benefit from measuring the carbon footprint of their operations to find opportunities for reducing energy use. In addition, it is worth exploring whether any government-sponsored energy efficiency programs or incentives have been made available for industrial facilities to encourage the transition to less energy intensive modes of operation.
As regulators have indicated, it is expected that cannabis facilities will be subject to existing environmental laws. While some jurisdictions such as Washington state have established a licensing regime specifically for commercial cannabis production and processing facilities, Environment and Climate Change Canada has said that it is not planning any industry-specific regulations for cannabis facilities.
That said, producers should monitor the development of any industry-specific environmental requirements that may be imposed by provincial/territorial and municipal governments.
As governments grapple with the regulatory implications of growing cannabis on a commercial scale, regulators may look for guidance in environmental regulations that have already been established for greenhouse crops such as green peppers, tomatoes, and forestry seedlings.
In addition, the use of certification and eco-labeling programs may help not only to create an industry standard that consumers can rely upon, but also to incentivize environmental best practices.
Selina Lee-Andersen practises environmental and aboriginal law at the Vancouver office of the national law firm McCarthy Tétrault LLP. Selina can be reached at (604) 643-7964 or by e-mail at firstname.lastname@example.org.