Can the Power-Hungry Cannabis Sector Turn Over a New Leaf?

Article by Adria Vasil, Toronto Star

Can the power-hungry cannabis sector turn over a new leaf? By Adria VasilCorporate Knights

If you pass the goats grazing on the hillside, you’ve missed it. Up a long country driveway at a ranch-style farm house in Ancaster, Ontario, there’s no sign telling visitors they’ve arrived at Canada’s largest licensed producer of organic cannabis. Just a badminton net. “We’re trying to give it a Google-type feel,” says co-founder Ian Wilms on a tour of the grounds. “Employees keep asking if we’re going to start goat yoga soon.”

Wilms — a former IBM exec. and chair of the Calgary Police Commission — and one of his partners had launched an LED lighting business when they decided to scope out the lighting booths at a cannabis convention. That’s when they got the bright idea to start a cannabis company. One that would be free of chemical pesticides and powered by LEDs instead of the searing high-pressure sodium lights singled out for ravenously consuming anywhere from 1 to 3 per cent of the American grid (data is sketchy in Canada).

His company, the Green Organic Dutchman (TGOD), is so far one of only a handful of companies in Canada licensed to produce certified organic cannabis. But the publicly traded firm is part a budding movement among cannabis companies trying to prove to investors, as well as customers, that they’re taking sustainability seriously, and that delivering greener pot will grow their bottom line.

In the nine months since the sector was officially uncuffed, more and more cannabis companies have been coming out of the shadows of indoor grow-ops and capitalizing on free solar energy with hybrid greenhouses to cut energy use and curb costs. Companies like TGOD, Hexo, and even larger players like Aurora and Canopy Growth are shifting to high-tech, walled-in, glass-roofed greenhouses, as are brands explicitly promoted as “sungrown,” like Tantalus Labs and Aphria’s Solei.

Grow your pot in a greenhouse and you’ll use up to 90 per cent less electricity than the old school indoor variety. This means significant greenhouse gas (GHG) savings for those with grow-ops in, say, Alberta (like Aurora and Canopy), whose grid is nearly 50 per cent coal. And while Canada was recently accused of blowing its chance to be the world’s pot leader, B.C. and Quebec’s clean hydro-dominated grids could help us become a global centre for low-carbon pot.

One way or another, it looks like the sungrown label is on track to be the next “grass-fed” or “cage-free.” There’s a Certified SunGrown seal emerging out of California. The International Cannabis Farmers Association, Cannabis Conservancy and Certified Kind have come together to create the Sun+Earth certification (funded by Dr. Bronner’s soap company). Sun+Earth certifies small scale craft cannabis grown entirely outdoors by fairly-paid farmers (mostly in California, for now). North48’s Ontario-based Good Farm brand will be Canada’s first licensed cannabis producer that’s both field-grown and organic.

Organic or not, it’s fair to say much of Canada’s legal cannabis sector has been heavily focused on ramping up supply. But in the frenzy to deliver masses of pot and quell investor impatience, most cannabis corporations haven’t put much thought into tracking, disclosing and bettering the ESG (environmental, social and governance) indicators that are the norm in virtually every other corporate sector. Dig around for the kind of detailed corporate social responsibility and sustainability reports you’d even find on oil industry websites and you’ll be left wanting. At best, canna companies are coughing up blurbs here and there.

“We’re a little bit like awkward teenagers,” Aphria’s chief legal officerChristelle Gedeon told IdeaCity conference-goers in Toronto last month. “There’s some cost to growing up as teenager in front of world.”

Aphria should know. The Leamington, Ontario-based cannabis company became the poster-child for poor governance (the G in ESG) in late 2018 when it was accused of insider short-selling. Earlier this month, Vaughan, Ontario-based CannTrust acknowledged it hid unlicensed growing rooms from Health Canada. In 2016 and early 2017, OrganiGram, Aurora and a Canopy subsidiary recalled certified organic medical cannabis tainted with illegal pesticides. Since then, class action lawsuits seeking millions in damages have been launched against all three companies.

Fresh polling of 600 pension funds, endowments, and sovereign wealth funds with $21.5 trillion (U.S.) in assets around the globe has made it pretty clear that the majority of large investors see putting money into companies that ignore environmental, social, and governance indicators as a material risk to their portfolios.

The message to rapidly expanding cannabis corporations is loud and clear: if you want more of our green, you’d better show us how green you are.

Last month, a group called the Global Cannabis Partnership (45 cannabis-involved companies including TGOD, Aphria, Canopy, Hexo) released a Responsible Cannabis Framework that sets up basic corporate social responsibility standards for its members. It doesn’t offer guidance on hot button issues like plastic packaging (which is mostly nonrecyclable) or fair wages, but it does require that members track and disclose their GHGs, as well as develop ethical codes of conduct, the way, say, the apparel sector started doing way back in the 90s.

“Other sectors developed these types of standards after child labour scandals, explosions (at factories) in other countries or people chaining themselves to trees,” says framework author Rick Peterson. “This is the very first industry ever to commit to getting good corporate citizenship right out of the gates.”

Read the full article here.

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