Indoor cultivation of cannabis, the preferred term for marijuana. Courtesy of Plantlady223.

This year’s General Assembly utterly failed to do anything about one issue before it: how to regulate the state’s legal cannabis market.

That’s what happens when you have a Republican House of Delegates and a Democratic state Senate – and a big, complicated issue to solve in a short period of time.

Virginia will now continue in a legal limbo: It’s legal for you to grow some marijuana plants in your backyard (some restrictions apply!) and you can smoke ’em if you got ’em, but for now you’re dependent on your friendly neighborhood black market dealer. There’s no retail market of licensed commercial growers, processors, sellers, which also means there are no taxes or regulations. (It’s a libertarian paradise!) It also means there’s no real economic development from legal cannabis, an industry that the Joint Legislative Audit and Review Commission (a state watchdog not known for hyperbole) estimates could create 11,000 to 18,000 jobs and bring in $31 million to $62 million the first year and $154 million to $308 million by its fifth year.

It’s not often that we get to see an industry created from scratch – one day it’s illegal, the next it’s not – so we shouldn’t be too hard on the General Assembly. We probably ought to get this right, eh? Of course, Democrats and Republicans have very different ideas about what “right” is. One of those is a basic philosophical difference about how much government should be trying to set the terms of this coming marketplace. Democrats see this as an opportunity for social equity – their preferred legislation would give an advantage in licensing to people who have been convicted of marijuana offenses, for instance, on the theory that they were charged with something that should never have been illegal in the first place. Republicans think that’s utter nonsense – why reward people who have broken the law? We will not resolve that dispute today.

The General Assembly’s inability to resolve those issues in the past session means that one interesting Republican bill died along with everything else. That was a bill from Del. Danny Marshall, R-Danville, that would have allowed anyone living in an “economically distressed” eligible to be a “social equity” applicant. This was a bill that would have had some pretty profound consequences. Most rural localities in Virginia officially qualify as economically distressed; some even qualify as “doubly distressed.” Across Southwest and Southside Virginia, only a few localities don’t qualify as distressed – working west to east, Roanoke County, Botetourt County, Salem, Bedford County, Amelia County and Isle of Wight County. That means the impact of Marshall’s bill would have been to give a leg up to applicants from Southwest and Southside, plus certain other places across the state – among them, the Alleghany Highlands, the Northern Neck and the Eastern Shore. Think of it as rural affirmative action.

There are a lot of political ironies with that bill – here was a Republican attempting to use the Democrats’ interest in “social equity” to the advantage of a lot of Republican-voting rural areas. Marshall was hopeful his provision would get rolled into a larger House Republican bill on cannabis regulation. However, in the end, House Republicans never even took up cannabis regulation, and then they swiftly voted down what Democrats sent over from the Senate.

Still, Marshall’s bill raises an important question: How much will legal cannabis benefit Southwest and Southside?

I hate to be the bearer of bad news but the answer is probably “not as much as you might think.”

We are not likely to see vast fields of marijuana.

We are not likely to see cannabis – the preferred scientific term, although they’re interchangeable – replace tobacco.

Here’s why: We now have 17 other states where recreational marijuana is legal, so we now have actual market data to go on. That data shows that most legal weed is grown indoors, not outdoors – and if it can be grown indoors, then growers are likely to grow it close to the market, which means much of it winds up being grown in cities, not rural areas.

This fits a trend we’re seeing with some other crops, where agriculture is moving indoors. In 2019, AeroFarms announced that it would build what it called “the largest, most sophisticated indoor vertical farm to date” in Danville. AeroFarms recently showed off its 150,000-square-foot facility and is in the process of hiring. Last year, a different company announced plans to build a 120,000-square foot (or 3-acre) greenhouse in Virginia Beach that will grow lettuce, with plans to expand it to 640,000 square feet and ultimately 1.2 million square feet – that’s 32 acres. I’m old enough to remember when we grew crops outdoors or not at all.

The advantage of indoor growing, be it lettuce or the devil’s lettuce, is that you don’t have to worry about the weather. Or pests. Or any of the other things that regular old dirt farmers have to worry about. You can grow crops year-round, regularly watered, and pumped full of whatever nutrients you want to pump them full of.

There’s also the matter of security, which matters more with cannabis than cauliflower. Not many people try to steal cauliflower and attempt to sell it on the black market.

None of that bodes well for the future of Southside or Southwest as one of transitioning from the golden leaf to the green leaf.

The Cannabis Business Times – yes, the pot business is now so big that there are multiple publications devoted to the money side of marijuana – reports that in 2020 only 12% of legal cannabis was grown purely outdoors. There’s no reason, of course, that indoor grows couldn’t be in Southwest and Southside, but if the marketplace is left to Adam Smith’s invisible hand, logic (and the bottom line) dictates they’ll probably be closer to where the buyers are. Cannabis could bring (indoor) farming back to Fairfax County!

We see this more specifically in some of the big cannabis-growing states.

Marijuana Business Daily – another one of those weed trade journals – reports that the top pot-growing county in California isn’t in the farming county of the San Joaquin Valley, it’s in mostly metropolitan Santa Barbara County, just north of Los Angeles.

In Washington state, the top pot-producing county is King County – aka Seattle. In second place is Pierce County, aka Tacoma. Marijuana is now Washington’s fourth-largest cash crop, but it’s a cash crop that’s not being produced in traditional agricultural counties.

In Colorado, Denver accounted for almost half of that state’s robust cannabis crop – 776,000 pounds of reefer. They sure aren’t growing that outdoors. In fact, Colorado Public Radio – not a cannabis trade journal – reports that nearly 4% of the electricity usage in Denver is for indoor marijuana operations. The National Conference of State Legislatures reports that at one point a few years ago, 45% of the new electricity demand in Denver went to marijuana operations. The summer after Oregon legalized marijuana, Pacific Power reported seven blackouts that were traced to marijuana operations, according to the NCSL.

None of this should give us any hope that Southwest and Southside will be able to monetize marijuana in any significant way – unless there’s some state intervention to somehow give an advantage to applicants from rural areas. There are some ways to do that. Marshall’s bill is certainly one of them. Another way would be to require that licenses for growers and processors be geographically diverse – so many per each GO Virginia region or some other distribution. State law already sets a cap of 450 growers, 60 manufacturers, 25 wholesalers and 400 retail stores. For our purposes here today, I’m more focused on those 450 growers and the related manufacturers and wholesalers than I am the retail stores. If those growing licenses were equally distributed through the nine GO Virginia regions, that would mean 50 apiece, so 50 growers in the region between Lee County and Wythe County; 50 more in the region from Pulaski County to Appomattox County; 50 more between Patrick County and Cumberland County, including Martinsville and Danville, and so forth. The lessons from other states suggest that would mean more growers in traditional farming country than the free market itself might produce. Of course, that would also require a role reversal for Republicans, mainly rural Republicans, who would need to argue for more market intervention and regulation than Republicans normally prefer.

Here’s an even more radical suggestion: If we want social equity, then let’s have some social equity. What if Virginia only allowed cultivation licenses in localities deemed economically distressed? Because the processors (the manufacturers) would naturally want to be close to the crop, that would indirectly lead those companies to distressed localities. Southwest and Southside – and rural localities in general – would be the big winners there, but not the only winners. A few central cities, such as Norfolk, Petersburg, Portsmouth and Richmond, also qualify as economically distressed. But it would mean we wouldn’t see marijuana greenhouses in the state’s most affluent regions – most notably, Northern Virginia, Charlottesville/Albemarle County, Virginia Beach/Chesapeake.

Here’s another way to think about this: The JLARC study on cannabis warned that the 11,000 to 18,000 jobs created by legal cannabis would “likely pay below Virginia’s median wage” of $42,000. However, there are lots of localities across Southwest and Southside where that would represent a wage increase. What if the General Assembly mandated that licenses for cannabis growers, manufacturers and wholesalers only be issued in counties where the median income is below that level? Is the General Assembly prepared to go that far?

We’ll see. In theory, this could be a bipartisan agreement: Republicans could get jobs in their localities, Democrats would get to claim – rightly – that they voted in favor of social equity. Everybody wins! Don’t hold your breath, whether you’re inhaling or not.

There are solid, bottom-line reasons why marijuana should be grown indoors, and, unfortunately for Southwest and Southside, closer to the market. But remember all those electricity figures I mentioned earlier? Cannabis grown indoors has a huge carbon footprint.

Evan Mills, a California-based energy and climate analyst, took part in a Nobel Prize-winning study of climate change. He’s also crunched the numbers on cannabis and carbon. Among his findings: “A decade ago, I estimated that indoor cannabis cultivation across the U.S. was inhaling $6 billion in energy each year while exhaling carbon emissions of 3 million cars. A recent study I conducted suggests the average smoker in Colorado, the country’s highest per-capita usage state, unwittingly increases their household’s carbon footprint by 60 percent.”

And then this: “The energy appetite of cannabis factories is already poised to outstrip all California’s wind energy production.”

So it turns out that the only thing green about cannabis is the leaf.

Here’s an opportunity for Republicans to be environmentalists: They could insist that Virginia’s cannabis crop be grown solely outdoors, which, by definition, would send jobs to rural Virginia. Or, if that’s too much, the legislature could require that all cannabis operations be 100% powered by renewable energy. Democrats should like that for obvious reasons. Republicans should like that for a different reason: The solar farm boom now taking place across Southside would make that part of the state a logical place for cannabis, be it indoors or outdoors.

Or do we want to let all those jobs go elsewhere?

Dwayne Yancey

Yancey is editor of Cardinal News. His opinions are his own. You can reach him at dwayne@cardinalnews.org.