Seyfarth Synopsis: The continued efforts of federal, state, and local governments to legalize cannabis, both in medical and recreational uses, leaves many potential impacts, including environmental law and regulatory issues in the manufacturing, processing, and distribution of cannabis products.

As cannabis use for medical and recreational purposes, including products containing THC and CBD, becomes more ubiquitous across the United States, business sectors from farming to processing to distribution may be required to navigate complicated regulatory landscapes that are sometimes contradictory. From odor issues to waste and water recycling and disposal, below is a broad overview of some of the regulatory areas of which any Future Enterprise in the cannabis industry needs to be aware, with a sampling of specific instances where states or local governments have provided guidance.

Air Quality Impacts

State air quality odor regulations could apply to hemp production and processing operations, involving hemp drying. For example, the Pennsylvania Department of Environmental Protection (DEP) recently ordered a hemp drying and storage facility to cease operations due to pungent odors creating a nuisance in the surrounding area. Pennsylvania law prohibits “the emission into the outdoor atmosphere of any malodorous air contaminants,” and DEP found that the facility was using ineffectual generators and scrubbers. Other states have similar prohibitions.

Cannabis oil extraction, which typically relies on the use of solvents, may emit VOCs from the process. Common solvents utilized in cannabis processing include propane, butane, ethanol, and isopropyl alcohol. VOC emissions from extraction activities may be subject to state air quality regulations, and subject to controls.

Importantly, cannabis growing operations (as opposed to processing and extraction) are not currently subject to federal air quality regulations, due to exemptions currently in place for agricultural operations. However, a recent study conducted in Nevada and California has identified the potential for grow operations near urban centers to contribute to atmospheric Ozone formation.

The industry should remain vigilant in monitoring regulatory developments in air pollution control, and ensuring compliance with existing requirements.

Land Disturbing and Use Permits

Agricultural activities to cultivate cannabis may disturb areas regulated by state or local governments and may require permits for site preparation or construction of a cannabis farm. For example, New Jersey regulates such areas as “special areas.” “Special areas” in New Jersey are “areas that are either so naturally valuable, important for human use, hazardous, sensitive to impact, or particular in their planning requirements, as to merit focused attention and special management rules.” N.J.A.C. 7:7-9.1(a). Other states have similar protected lands.Examples of “special areas” in New Jersey are: shellfish habitat, dunes, riparian zones, wetlands, and critical wildlife habitat, among others. The presence or absence of “special areas” may significantly impact the proposed facility, and so all such areas should be identified early in the planning stages. Special areas within a project site may affect the type of authorization that would be required. Be sure to closely examine a proposed activity relative to any “special areas” that may be impacted by agricultural activities associated with cannabis cultivation.

In addition, impacts on downstream properties should also be evaluated for potential issues, such as impacts to streams, rivers, lakes, ponds, flood plains, flood ways, and riparian zones. If a cannabis operation is upstream of a “special area” or may otherwise affect such an area, it is also possible permits may need to be acquired for these secondary effects.

Water Use Impacts

In some areas, such as in the West, water sourcing, usage, and quality are considered a big issue for cannabis cultivation. In California, for instance, the various state Water Boards have put together a Cannabis Cultivation website to help inform the cannabis industry as to requirements for cannabis cultivation. In a recent cannabis program report, the Water Boards found that

Cannabis cultivation can result in significant and long-term environmental degradation. Construction activities associated with clearing cultivation sites and road development can cause sediment discharges to high-quality surface waters. Inappropriate chemical handling (particularly of pesticides and fertilizers) can result in degradation of both surface and groundwater quality. Unregulated water diversion can cause stream depletions that negatively affect aquatic ecosystems and riparian habitat. Industrial waste discharges from indoor cultivation operations can negatively impact groundwater or receiving publicly owned treatment works.

To prevent these impacts, the Water Boards require all cannabis operations to be permitted by the Water Boards. The Water Boards also provide online cannabis permitting workshops to assist in this process.

In Colorado, some local governments, in conjunction with the state, have prepared a “Cannabis Environmental Management Best Practices Guide,” which recognizes the potential impact cannabis cultivation has on water availability and quality. As California, Colorado, and other states continue to develop laws on cannabis cultivation, water volume usage and waste water discharge will become larger legal issues that must be monitored.

Waste Handling

Cannabis waste can take many forms, from nonflower plant material to residual methane and butane used to extract oil for certain products. Regulation of this waste depends on the jurisdiction, but there are some common regulatory schemes.

Waste from plants grown indoors can end up in the facility’s wastewater stream, so growers must be aware of local water authority or sanitary district limits on such material, discharges in rural areas may require NPDES permits.

Leftover plant material may pose a disposal issue, as many states require it to be ground up and destroyed so that it cannot be used again. Cannabis cultivators must ensure that leftover plant material is disposed according to local and state requirements.

Manufacturers that make products such as edibles and vape pens have an entirely different set of concerns, as they may use compressed carbon dioxide or other gases to extract oils from the plant. In the process, they also remove significant amounts of plant waxes and fats, which still contain tetrahydrocannabinol, or THC, and other cannabinoids and solvents. The resulting waste can qualify as hazardous or flammable, which is strictly regulated.

Electronic waste from vaporizer cartridges and pens are considered hazardous because they contain lithium batteries, small metal components, and heating elements made of a number of complex metal components. Any non-consumer wastes produced by cannabis operations may be required to be managed by electronics recyclers, such as in California, though most states do not yet have such programs.

Energy Usage and Efficiency

Indoor cannabis growing operations can be heavily energy dependent. From high-powered lightbulbs that consume large amounts of electricity, to heavy-duty heating, ventilation and air-conditioning systems that control a grow room’s climate, power bills can be large.

Packaging Issues

Cannabis packaging generally is difficult to recycle because it is required to be child-resistant, potentially utilizing a zipper or multilevel packaging consisting of heavy plastic, double lining, or including cardboard or paperboard. While some companies have tried to create all-cardboard packaging, such measures can increase the cost of packaging, which is already expensive because of the child-resistant issues.

Limits on Pesticides and Other Chemicals

Many states have not allowed the use of pesticides and other chemicals on marijuana plants, while some allow a few natural pest-control methods such as predator insects or neem oil. Not surprisingly, every state’s rules are slightly different, which can create issues for large cannabis companies that have operations in several states. The business managers often would prefer a universal method of controlling pests, weeds or fungi.