High Stakes, Higher Standards: Cannabis Industry's ESG Revolution

In recent years, the cannabis industry has emerged from the shadows of prohibition into a realm of legality and potential profitability. However, as this nascent sector grows, so do the concerns regarding its impact on the environment and society at large.

Environmental and Social Governance (ESG) principles are now taking center stage as the industry seeks sustainable paths forward.

Cultivation's Carbon Footprint

Cannabis cultivation is notorious for its high energy consumption, primarily due to indoor growing operations that require extensive lighting, temperature control and ventilation.

See Also: Environment In The Cannabis Industry Is So Bad, It's Good, Says Jason Wild Of TerrAscend

A study published in the journal "Nature Sustainability" highlighted that indoor cannabis production has a carbon footprint comparable to other energy-intensive industries like data centers. According to New Frontier Data, the electricity required for cultivation accounts for about 80% of the industry's carbon emissions.

In response, some companies are adopting innovative approaches to reduce their carbon footprint. Vertical farming, which involves cultivating plants in vertically stacked layers offers potential energy savings and increased crop yield.

Additionally, outdoor and greenhouse cultivation methods can harness natural sunlight, substantially lowering energy requirements. By adopting these methods, the cannabis industry can take strides toward achieving ESG goals.

Social Equity And Inclusivity

The cannabis industry's growth brings with it opportunities for social equity and inclusivity, but it also risks perpetuating existing inequalities.

A report by the American Civil Liberties Union (ACLU) reveals that despite nearly equal usage rates, Black individuals are 3.6 times more likely to be arrested for cannabis possession than their white counterparts. As the industry gains legitimacy, addressing these disparities becomes crucial.

Several companies are actively addressing this issue by implementing social equity programs. For instance, California's "Equity Program" provides support and resources to individuals from communities disproportionately affected by the War on Drugs, helping them participate in the legal cannabis market.

Moreover, some cannabis businesses are collaborating with organizations to offer job training and employment opportunities to individuals with prior cannabis-related convictions, aiming to create a more inclusive industry.

Waste Management And Packaging Sustainability

As the cannabis market expands, so does the concern over packaging waste.

Research by BDS Analytics and Arcview Market Research estimates that the global legal cannabis market could generate around 1 billion pounds of waste annually. Excessive packaging and single-use plastics are culprits that contribute to this environmental challenge.

In response, companies are exploring eco-friendly packaging options and waste management solutions. Some are adopting biodegradable packaging materials, reducing plastic use, and encouraging recycling programs.

Additionally, initiatives that facilitate the return of used cannabis packaging for proper disposal or recycling are gaining traction. By prioritizing sustainable packaging practices, the cannabis industry can align itself with ESG goals and contribute to reducing environmental harm.

As consumers increasingly value companies that align with their ethical and environmental beliefs, integrating ESG principles into cannabis businesses isn't just a choice – it's a strategic move that can enhance brand reputation, foster long-term growth, and drive positive change within the industry.

By embracing sustainability and social responsibility, the cannabis sector can prove that profitability and environmental and social governance are not mutually exclusive, but rather essential partners in a thriving and conscientious industry.

Discover innovative solutions to cannabis waste management at the "Strategies for a Circular Economy and Environmental Stewardship: Cannabis Waste Management" panel.

Featuring industry pioneers like Will Bowden of Grasshopper Farms, Barbara Fox from Cannabiz Supply, and moderated by Ben Russell of Thompson Hine, this panel will take place at the Benzinga Cannabis Capital Conference & Awards in Chicago on September 27-28.

Join us to explore how the cannabis industry can adopt sustainable practices and contribute to a greener future.

See Also: How Climate-Positive Cultivation Is Growing Greener Cannabis

Benzinga Cannabis Capital Conference

The most successful cannabis business event in the world, the Benzinga Cannabis Capital Conference is happening on Sept. 27-28 at the Magnificent Mile Marriot Hotel in Chicago.

SEPT. 27-28TH, 2023. This is the place where DEALS GET DONE, where money is raised, M&A get started and companies meet investors and key partners. Don’t miss out.

Secure your tickets now before prices go up.