By Grant Gilzean & Gerald Hincka
Congratulations! Your company has completed the permitting process for your cannabis business. You understand and have managed the operational and commercial risk in your particular state, and have likely immersed yourself in necessary zoning laws, tax abatement districts, occupant density within fire codes, and other regulations within the local community. Your regulatory risk profile has been identified and addressed from all angles . . . or has it?
Often overlooked in the process of bringing your business from concept to reality, is an understanding and adherence to Environmental, Health and Safety (EHS) regulations. EHS regulations in themselves are as complex as the permitting and operational regulations your company has already addressed – with varying standards by state, unique nuances by municipality, and Federal regulations forming the backbone and direction of what is enforced by state and local agencies.
“Wait a minute”, is often the first reply. “We have a small operation; this doesn’t apply to us, does it?” Or, “Cannabis is federally illegal, so OSHA and EPA regulations don’t apply to us.” Think again – as sure are you are responsible for complying with 280(e) federal tax guidelines, you are on the hook for federal employee and environmental protection regulations, regardless of the size of your operations[i].
By law, and by any measure, EHS regulations do apply to the cannabis industry. EHS regulations are about environmental, health and safety protection. Regulations the industry must comply with include those which protect employees and the public from health and safety risks of the operation, like potential injury, or noise, or exposure, and protect your community’s environment (air, water, soil) from hazards associated with the materials a company uses or disposes of.
Why comply? Because the relatively new cannabis industry is a target for state enforcement of all applicable laws. Protecting your business from liability associated with employee injury, litigation, or regulatory fines is essential and will remain an ongoing concern. These regulations do apply in the cannabis industry, though maybe in ways that are always not top of mind. For example, repetitive motion stressors in a packaging cultivation operation can be very similar to stressors found in an automobile parts manufacturing facility. Despite the wide variance in business, Health and Safety regulations address these stressors in the same way. And whether you are cultivating a small number of plants in one location, or growing thousands of acres of wheat, things like pesticide and chemical storage, wastewater disposal or removal of used solvents, are subject to the same environmental regulations designed to protect air, soil and water from contamination.
Since states began legalizing recreational marijuana in 2014 (Colorado, 1/1/15 and Washington 7/1/14), five main environmental challenges have been emerging for the cannabis industry: wastes, pesticides, packaging, water use and energy use.
Cannabis operations generate solid waste and wastewater, which are subject to regulatory requirements. For example, manufacturers of cannabis products that use gases to extract oils from plants typically generate process waste containing solvents and cannabinoids. Such waste may be subject to recordkeeping, storage, transportation and disposal requirements due to its ignitable and hazardous characteristics. A further complication is that some states do not have licensed facilities to receive such waste for disposal, but shipping it to an out-of-state disposal facility is not an option because it is not currently supported under federal law. In such states, it would be necessary to invest in post-processing procedures to reduce chemicals in the wastes to non-flammable levels.
Other common waste issues arise from operations and material storage leading to chemicals finding their way into process water and storm water discharges to sewers, subject to limits established by the local sewer authority and advance permit requirements. In addition, states are beginning to classify unused plant material as ineligible for composting and requiring the additional expense of destroying it by grinding so it is unable to be used. It is also noteworthy that vaporizer products themselves are subject to waste requirements because they may contain lithium batteries and other components made of regulated metals. Such used products would need to be processed by an appropriate electronics recycler or disposal facility, and states are trending toward requiring dispensaries to provide collection centers for such waste products.
Pesticide use on marijuana plants is typically prohibited by states in favor of natural pest-control options. However, rules vary from state to state, so multi-state cannabis operations (MSOs) lack regulatory uniformity on methods for controlling pests, weeds or fungi. Interestingly, there are pesticides approved for use on food products which cannabis growers are not allowed to use. While some loosening of pesticide restrictions is anticipated into the future, the present course is strictly regulated.
The child-resistant element of cannabis packaging makes it difficult to recycle because of the presence of multiple layers of plastic and cardboard or a zipper. Efforts to enhance recyclability through the use of hemp plastics and all-cardboard packaging are proving to be costly alternatives.
Another challenge stems from large-scale water usage by growing operations, particularly in water sensitive regions. Drought-prone states like California have restrictions on drawing from surface water for outdoor irrigation and require groundwater usage subject to advance permitting at the state and local levels. If irrigation or process water is being discharged, it is subject to state and municipal discharge limits, and if discharged to the environment it could be subject to Clean Water Act permitting.
Lastly, indoor growing operations are large energy consumers due to usage of high-powered lightbulbs and heavy-duty heating, ventilation and air-conditioning systems. In response, states are beginning to require cannabis operations to identify how they can reduce energy use and have a plan in place for how to implement those opportunities and their utility providers’ greenhouse gas emissions requirements. Conducting energy audits and using LED lights with colors tied to stages of plant growth are some of the planning tools being implemented.
EH&S compliance is an important element in managing regulatory risk. These EHS regulations apply to the cannabis industry and related businesses as much as any other. A proactive approach to EHS not only manages risk for your business, it can enhance a positive workplace culture with your team and strengthen your business profile within the local community. The next installment in this series will explore ways that cannabis companies can get started with a strong EHS Compliance Program – even with limited resources or EHS experience.
Gerald Hincka is a Senior Consultant with EHS Support, LLC. He has more than 30 years of experience, specializing in the diagnosis, strategic evaluation and complete solution of environment-related business problems for clients around the world.
[i]That said, businesses with 10 employees or fewer are exempt from OSHA’s injury and incident reporting as well as programmed inspections by OSHA employees. State worker-protection laws vary.