Cannabis businesses that are ill-prepared for these regulatory requirements risk facing litigation, enforcement actions, fines or penalties, and negative publicity, while those taking a proactive approach to compliance may find opportunities to mitigate and even monetize those risks.
While pesticides are heavily regulated, including under the Federal Insecticide, Fungicide, and Rodenticide Act has a document that sets forth the requirements that must be met for a registered pesticide product to be used on hemp.
This can become important if the land is sold as part of a corporate investment: it will be important for the buyer to perform its due diligence to identify any legacy waste and/or pesticide issues and cleanup liabilities.
As seen with pesticide misuse, large illicit grow operations have caused or exacerbated land use and habitat issues in the areas where they are located.
This means requirements may vary greatly from jurisdiction to jurisdiction or facility to facility, and as such, it is important for cannabis businesses to properly assess and understand them so that investments and resources are strategically and effectively used.
Cannabis cultivators and processors generate a wide variety of waste streams and, therefore, are subject to a whole host of waste management regulations.
Additionally, municipal wastewater treatment facilities normally treat large cannabis grow operations as industrial dischargers, requiring them to pay surcharges related to increased costs from treatment volumes or monitoring costs arising from waste streams. For these reasons, it is important that a cannabis grow operation plan for both obtaining water rights and how wastewater will be disposed of to ensure their plans are logistically feasible and affordable for the business.
Indoor grow uses a variety of heavy-load electric devices, such as UV lights that can be on upwards of 16 hours per day, irrigation systems, HVAC systems, and air filtering to manage humidity and plant organic odors.
Cannabis grow and manufacturing operations can create both air quality impacts on local communities surrounding their facilities, as well as employees working inside the facilities.
These air quality issues mean that cannabis operations may need one or more air permits at different stages, such as construction of the facility, operation of the facility, or installation and operation of equipment.
And while it may be easy to focus on the ‘E’ in ESG, there is also an emphasis on achieving social justice in the cannabis industry through corporate responsibility and service-based measures, particularly in order to remedy the racial injustices associated with cannabis’ history so far.
As such, companies that wish to embrace and leverage ESG principles in order to enhance their goodwill, collect financial incentives, or achieve other goals should also ensure they remain aware of how such ESG programs are evaluated and regulated.
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