Richard G. Lorenz
1001 SW Fifth Ave., Suite 2000
Portland, OR 97204
(503) 224-3092
rlorenz@cablehuston.com
www.cablehuston.com
Legalization of Recreational
Marijuana
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Washington = I-502 (2012)
Colorado = Amendment 64 (2012)
Oregon = Measure 91 (2014)
Alaska = Ballot Measure 2 (2014)
Washington D.C. = Initiative 71 (2014)
California?
Medicinal Marijuana is legal in about 20
other states.
How this affects the Electric Industry
• Could trigger an increase in power
demand.
• Still illegal under federal law and in
other states.
• Raises questions about the availability
of federal power marketed by BPA.
• Raises questions about retail ratemaking and service obligations.
• Creates low-hanging fruit for
conservation. But are they forbidden
fruit?
Power Demand
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Marijuana production is a power intensive activity.
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Consumes about 200W per square foot.
On a square foot basis, energy consumption is the same as a data
center.
A single joint is the equivalent of running a 100 Watt light bulb for
about 30 hours.
The industry is estimated to have the annual carbon emissions of a
million cars.
Growing four marijuana plants uses as much energy as running 29
refrigerators.
Industry reports put power consumption for marijuana at 1%-3% of
total usage. Between $5 and $15 billion.
The Northwest Power and Conservation Council issued a report
estimating total marijuana-related load in the Pacific Northwest at
250MW by 2035.
Pacific County PUD has received a request for service for 20aMW
for a single facility.
Will the legalization of marijuana production lead to more
efficiency in power consumption?
Marijuana Usage and Possession
Remains Illegal Under Federal Law
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Marijuana is listed as a Schedule 1 controlled substance under
the federal Controlled Substances Act of 1970.
For the most part, the federal government has not enforced the
law in States where recreational marijuana has been legalized.
U.S. Department of Justice has issued guidelines to states that
have legalized marijuana. For example, the DOJ is not
prohibiting financial institutions from serving the industry.
Legislation that has been introduced to allow the Federal
government to accommodate state marijuana laws has been
unsuccessful.
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Respect for State of Marijuana Laws Act.
Local governments may also regulate marijuana businesses.
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Supported by Washington Attorney General Opinion and Oregon
implementation statute.
Supreme Court Challenge Pending
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Lawsuit has been filed by Nebraska and Oklahoma against Colorado
arguing that state legalization violates the Supremacy Clause of the US
Constitution.
The US Supreme Court has original jurisdiction over the case.
The Supreme Court has asked the federal government to state its
position on the issue.
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U.S. Attorney General Loretta Lynch is not a proponent of the legalization of marijuana
and has told Congress that the “law is her lodestar.”
The legal question is whether State legalization is “passive” or “active”
regulation.
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Colorado argues that it is not required to mimic or enforce federal law, and
that federal government remains free to enforce federal law.
The counter argument is that States are not just decriminalizing marijuana,
they are actively regulating a market for a commodity that is illegal under
federal law.
Bonneville Power Administration
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The Bureau of Reclamation announced that it would not sell federal water to
marijuana grow operations. Utilities have been asking whether BPA will
refuse to sell power to growers?
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The U.S. Department of Energy has provided “guidance” to all Federal Power
Marketing Agencies concerning states that have legalized marijuana:
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They may continue to sell to utilities even if some of the power will be resold to
consumers for purposes of marijuana production.
They may not provide power, transmission or other benefits directly to any consumer
that is using it for an activity that is illegal under federal law.
The “guidance” provided by the U.S. Department of Energy is subject to change with
a change in administration or a change in law.
BPA will not provide residential exchange payments for marijuana
businesses.
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June, 2013 Customer Load Eligibility Guidelines: “Farms growing any type of agricultural crop not
recognized as ‘legal’ by the Federal Government (including marijuana and hemp) are not eligible
for REP benefits.”
Retail Service Policies
• Can utilities provide service to activities that
are illegal under federal law?
• Can utilities refuse to provide service to
activities that are illegal under federal law?
• Should utilities adopt policies concerning
cash payments?
• Should utilities require additional financial
security for service costs?
• Should utilities offer amnesty for customers
that were stealing power in the past?
• Can or should utilities require an indemnity
from marijuana-related customers?
Retail Rates
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Should utilities have separate retail rate for marijuana production?
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Any significant load growth could exceed contract period highwater mark.
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Pacific County PUD adopted a new commercial and Industrial rate
schedule for anticipated load growth in the marijuana industry.
Mason County PUD approved a rate classification for marijuana
growers and processors.
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Would allow for better tracking of usage and costs.
Would allow for time of day and other rate incentives for usage.
Would allow for utilities to shift legal and financial risk to consumer.
The rate falls between commercial and industrial and includes a
demand charge that reflects the peak capacity needs of the facilities.
Boulder County in Colorado—which does not operate a utility—is
imposing a “charge” of 2.16 cents per kWh on all electricity
consumed by marijuana growers. Money will be used on efficiency
education programs.