Greening the Cannabis Industry [Special Content From CohnReznick]
Energy Gang
Wood Mackenzie
4.6 • 1.3K Ratings
🗓️ 9 July 2019
⏱️ 21 minutes
🧾️ Download transcript
Summary
This week, we present a special episode produced on behalf of CohnReznick.
There’s a bonanza sweeping across North America: cannabis.
As more states legalize marijuana, the industry is attracting high-profile investors and bringing in $6.5 billion in yearly sales.
But it also faces two major challenges: limited access to banking and high energy costs.
Because cannabis is still illegal at the federal level, traditional banks are unwilling to do business with the thousands of companies serving the market.
At the same time, the industry now eats up $6 billion in electricity costs. Growers are paying tens of thousands of dollars per month to power cultivation sites, and some utilities are worried about strain on the grid in certain locations.
Trying to slash that electricity use is very hard for cash-only companies that can’t get access to traditional financing.
“The capital you would most typically have to deploy if you wanted to site solar at a cultivation facility will end up being very expensive because you don’t have access to traditional bank financing,” explains Mark Hooley, a managing partner at CohnReznick.
In this episode, we talk with Mark about the intersection of cannabis and renewable energy. What will it take to green up America’s newest cash crop?
Learn more about CohnReznick’s cannabis practice.
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Transcript
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| 0:00.0 | There's a bonanza sweeping across North America. John Boehner is speaking up about it. |
| 0:05.0 | Mike Tyson is throwing his weight behind it and Peter Teal's investment fund is putting tens of millions of dollars into it. |
| 0:11.0 | We begin this morning with Pot in America, the legalization of pot. |
| 0:15.6 | So ready or not, welcome to Amerijuwanica. |
| 0:21.4 | Yes, it is the legal cannabis industry, and it brought in over six and a half billion dollars in sales last year in America. |
| 0:29.0 | There's just one problem. |
| 0:31.0 | But as long as marijuana remains a schedule one drug under federal law, banks don't |
| 0:36.1 | want to take any greenbacks made from the green leaf. |
| 0:40.1 | For an industry made up of tens of thousands of growers and dispensaries, and employing |
| 0:43.7 | over 200,000 people, no access to banking is a big problem. |
| 0:48.6 | You're talking about a lot of businesses that are largely cash-based. |
| 0:53.8 | It's one of these situations where it can actually be quite dangerous for our client base. |
| 0:59.2 | The problem? |
| 1:00.2 | No place to stash all that cannabis cash because the bank said sorry we're closed when it comes to marijuana money |
| 1:06.8 | You don't get the warm and fuzzies right when when this is a part of a practice that some businesses have had to deal with. |
| 1:13.6 | And for a guy like Mark Hooli, who audits and consults with high-growth companies in a lot of different |
| 1:18.4 | fields, inspecting finances and doing tax returns for cannabis isn't exactly business as usual. |
| 1:25.0 | You know, we've talked to prospects and we've talked to clients that at some point in time |
| 1:30.6 | have carried hundreds of thousands of dollars in their trunk, have kept hundreds |
| 1:36.1 | of thousands of dollars in their homes, and the larger those cash balances get, we'll need to |
| 1:42.4 | physically inspect. |
| 1:44.0 | That is just one of the many curiosities of a new and legally complicated industry like cannabis. |
... |
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