Industry Report: The State of Hemp and Cannabis Waste

By Eric Peterson | Nov 19, 2019

Cannabis & Hemp Supply Chain Colorado

With ever-growing legal harvests, entrepreneurs are bullish that hemp and cannabis waste streams can be a supply chain opportunity for the ages.

While demand for CBD and THC are driving the production of hemp and cannabis, that leaves mountains of biomass and other waste streams behind. Some estimates place the amount of hemp and cannabis waste at about 1 million tons in North America in 2019.

It's a big number, and a good amount of it holds value as a raw material outside of the cannabinoid markets. But to leverage the full potential of the waste stream will require a similarly big number in terms of infrastructure investment.

How it gets used is an open question. Several entrepreneurs in Colorado and California are working gamely to answer it as sustainably as they possibly can.

Hemp and Cannabis Waste Feature - GAIACA
Photo courtesy GAIACA

From compliance to recycling

After teaching science and math in Denver Public Schools, John Whiteside saw an opportunity for a new kind of waste management company when he started Industrial Hemp Recycling, or IHR, in Denver in 2011. He was exposed to waste management in graduate school at Southern Illinois University at disparate locations -- a cattle ranch and a hospital -- and saw a need back home in Denver.

"Whenever a new industry evolves like cannabis and hemp," says Whiteside, "it's probably going to be wasteful in the beginning."

Legal cannabis and a boom in hemp driven by CBD has led to a waste stream of thousands of tons in Colorado alone. "It's only going to grow," says Whiteside. "It's almost unlimited."

Whiteside notes that state and local regulations for cannabis tend to scare off the broader waste management and recycling industries in Colorado and other states with legal cannabis. Local regulations for his operation in Denver have changed and gotten increasingly stringent since IHR launched. "They went through all these changes year after year," he says. "I helped create the whole rubric for waste management [in Colorado's cannabis industry]."

With nine contractors, IHR now offers a variety of services, including a mobile service where grow houses, manufacturers, and labs bring the company in process waste and haul it away. Whiteside also offers consulting services with cannabis operations on how they can close the loop internally and repurpose hemp and cannabis waste as mulch or compost.

Since launching, IHR has worked with 800 customers, and now visits about 50 from Boulder to Denver to Evergreen on a monthly subscription basis. There's one principal goal in mind: "We've helped all of our vendors stay compliant."

Hemp and Cannabis Waste Feature - EcoWaste Services
Photo courtesy EcoWaste Services

And compliance tends to define the endpoints of hemp and cannabis waste management. Especially when it comes to psychoactive THC, policy tends to involve outright destruction of byproducts and waste first and foremost.

Of course, that's ignoring the long-touted utility of hemp and cannabis fiber in everything from paper to concrete. While industry investment in extraction technology continues to boom, the biomass that remains doesn't have a corresponding infrastructure play to convert it into usable raw material.

Biomass boom

"The two main waste streams from both hemp and cannabis are the plant waste and the packaging waste," says Kaitlin Urso, environmental protection specialist at the Colorado Department of Public Health and Environment. "We don't have a good handle on quantities."

Urso says Colorado officials are working with Cannabis Big Data on a self-reporting web portal that will allow for a better understanding of the volume and variety of waste from cannabis and hemp across the state. Once launched, the site will allow for individual growers and operators to anonymously self-report environmental metrics to gauge the sustainability of their operations.

Colorado's hemp and cannabis waste is just a sliver in a much larger stalk. Larger cannabis markets will have to deal with more cannabis waste.

Case in point: California is producing a lot more cannabis -- and a lot more cannabis waste -- than Colorado. While its hemp program is nascent, it's safe to assume that the Golden State will grow a lot of hemp in the future as well.

Hemp and Cannabis Waste Feature - GAIACA
Photo courtesy GAIACA

GAIACA, based near Monterey in Gonzales, California, became the first licensed cannabis waste management provider in the state in late 2017. Co-founder and CEO Jonathan Lee says it's also difficult to get good data on the amount of cannabis waste being generated in California, but notes that industry awareness is on the rise.

To that end, GAIACA now works with cultivators, manufacturers, labs, distributors, and retailers all over California. "A lot of operators are now cognizant of where waste is going," says Lee. "We're seeing an uptick in interest."

Lee says some jurisdictions consider anything with THC to be hazardous waste, while others do not. "We've seen both ends of the spectrum," he notes. "For those that consider it hazardous, we have the ability to take it as such."

Adds Lee: "Whether it's hazardous or non-hazardous, we make every effort to protect the environment."

To this end, the 16-employee GAIACA composts non-hazardous, organic cannabis waste at its 33-acre facility and recycles any waste deemed hazardous (as well as vapes) with partners. The goal is making the cannabis industry a "closed loop," with hemp and cannabis waste repurposed in the growing process or elsewhere in the supply chain.

The company's composting initiative is currently in its pilot stages with partner cultivators. "Bring it back to stage one with the growers," says Lee. "The possibilities are endless. Beyond composting, we're looking at paper products and other packaging products."

Hemp and Cannabis Waste Feature - EcoWaste Services
Photo courtesy EcoWaste Services

In Southern California, Burbank-based EcoWaste Services is a spinoff of sister company BioWaste, which has handled medical waste in the Los Angeles area since 2011. The company's original focus on food waste shifted to hemp and cannabis waste in 2018 due to market demand. "When the regulations came out, we started getting a lot of calls for cannabis waste," says co-founder and CEO Arman Zeytounyan. "We deal with cannabis companies primarily as a compliance service."

EcoWaste provides customers -- cultivators, testing labs, manufacturers, and retailers -- with 55-gallon containers for rendered cannabis waste and picks them up at locations from Santa Barbara to San Diego and east to Palm Springs. Pricing is variable and based on volume. After the hemp and cannabis waste arrives at the company's facility in North Hollywood, workers separate it and the organic material gets mulched.

Right now, the mulch is used internally or by clients as a soil amendment, but Zeytounyan says he hopes to package it as a marketable product in the future. "We're right now working on establishing those relationships for the output of commodities we make on the back end," he explains.

The non-organic waste, which can include plastics, glass, and vapes made of both materials, is tougher. "Vapes are ridiculously difficult to recycle," says Zeytounyan. "They're actually near-impossible to recycle. Right now we're talking to some people about the glass and the plastics. We really want to find some use for it." (Colorado is allowing dispensaries to collect used vapes and packaging as of January 2020 in pursuit of a "closed loop economy," says Urso.)

He says EcoWaste will likely expand to Nevada by the end of 2019, followed by Northern California. Zeytounyan says he expects business to "double or triple" in 2020.

These kind of growth metrics point to a supply chain bonanza on the back end, but stakeholders generally agree that it will only come with the right bet on infrastructure.

Hemp and Cannabis Waste Feature - 9Fiber
Photo by Hasnain Photography

"The promise of hemp"

9Fiber is a startup that might just have the inside track when it comes to that wager. CEO Adin Alai describes the aforementioned annual stream of hemp and cannabis waste material approaching 1 million tons in North America. Not all of it is usable; it can include root balls, soil, and even plastics. "It's mostly being burned or buried," says Alai. "Very little of it is being composted."

But for Alai and 9Fiber, that waste is a valuable commodity. Every acre of hemp harvested generates two to five tons of stalk waste, while every pound of cannabis harvested results in 1.5 to 4.5 pounds of stalk waste, according to Alai. He says he's looking to position 9Fiber's technology to recycle this hemp and cannabis waste into a variety of materials.

Alai's brother, Adam Powars, developed the "eco-friendly chemistry" that's behind the process when he worked as a grower during Colorado and California's "gray market days" in 2014. "He realized as an individual how much waste he was generating, just a stupid amount of waste," he says. "He stumbled upon the story of hemp -- the promise of hemp, the frustration of hemp, and the destruction of hemp."

Alai says Powars realized, "Nobody's ever done anything with marijuana waste before," and his inventiveness kicked in. "He literally locked himself in a garage and figured it out," says Alai.

Hindered by a criminal record from his black market days, Powars turned the patent-pending technology over to Alai to commercialize in 2016. "The only person he could trust who wouldn't steal it from him was me," says Alai, who has a background in sports medicine and health clubs. Thus, 9Fiber's social mission is to create "a pathway" back to the community for non-violent felons.

The status quo for processing hemp fiber requires 16 days and is "dominated by China," says Alai. Essentially, hemp stalks are left to rot for a week in the field before mechanical decortication, the removal of the outer shell from the woody core, or the hurd. "That's the choke point in the whole industry," says Alai of decortication. "Our chemical process takes the fiber off the hurd."

Hemp and Cannabis Waste Feature - 9Fiber
Photo by Hasnain Photography

Next comes multiple chemical processes to decontaminate, degum, whiten, and soften the material. "What our eco-friendly chemical process does is it compresses that process down from 16 days and multiple steps to two steps and 90 minutes," says Alai. "We're also not limited to the cultivars of hemp that decorticators are limited to, which are long, bamboo-like or pool stick-like. We can use all this hemp and cannabis waste that those machines can't use -- CBD, marijuana, hybrid plants, you name it. And that's what's here in the U.S."

The company's chemical process results in two distinct products: the fiber itself, branded 9Fiber like the company, and the powdered hurd. "We crafted up the name 9Fiber to look at the nine target markets," explains Alai, highlighting non-woven textiles, bioplastics, construction materials, and even supercapacitors. "We see things labeled 'Made with 9Fiber' and 'Powered by 9Fiber.'"

Reviving an industry

While woven fabrics and hemp clothing get the most buzz, such categories might not be the best match for the material. "There are applications that work and applications that don't work," says Alai. "It's not ideal for high-end textiles and clothing." Why? "Hemp wears in instead of wear out," he explains. "The handwoven market is great because it hides those imperfections, but for commercial applications, it's not there yet."

However, it takes two to tango. "It requires R&D from established companies that make the end product," says Alai. "They've got to to want to partner with us and test this material. When you look online, everybody says there are 2,500 applications for hemp, but when you really look around, nobody's doing anything."

Some uses are more cutting-edge than one might expect -- performance brake pads for Ferraris, batteries, and high-strength composites, for example. The pads perform better at two-thirds the price, says Alai. "Across everything, it performs better, it's cheaper, and it's sustainable," he says, adding, "Everybody wants to be sustainable until it costs them money."

After a $250,000 Advanced Industries grant from the Colorado Office of Economic Development and International Trade, 9Fiber is preparing to make the leap from a lab-scale system to an industrial-scale one; Alai says the company is on the cusp of closing a $800,000 seed round to build it in 2020. "At commercial scale, we would divert 35 million pounds of hemp and cannabis waste annually within a 200-mile radius of the plant," says Alai.

Hemp and Cannabis Waste Feature - EcoWaste Systems
Photo courtesy EcoWaste Systems

He says 9Fiber will then initiate a Series A financing round of $4.5 million to open a facility in the Pueblo area. If all goes to plan, the facility will hit the ground running due to the sheer volume of the waste streams. Alai says he estimates more than 65 million pounds of hemp waste and about 4 million tons of cannabis waste was produced within 200 miles of Pueblo in 2018.

Since 2016, Alai has commuted to Colorado from the company's headquarters in Maryland as he assembled a team of eight in Denver. He expects to hit about 25 employees when the company opens the Pueblo plant.

Alai says he envisions a nationwide network of facilities. "The key to reviving the U.S. hemp fiber industry is to start regionally and locally," says Alai. Each regional facility would work with key local industries, like timber in Montana and the Pacific Northwest, plastics in California, and textiles and furniture in the Southeast.

"There are two things preventing the market for this: One is the technology to decorticate at an efficient price point, and that's where we come in," notes Alai. "The second is the rest of the downstream infrastructure."

Another prerequisite: Compliance can't put a stranglehold on the ability to transfer and/or use the waste. Local regulations can inhibit the development of a secondary industry on the back end of cannabis and hemp.

Case in point: California jurisdictions that consider cannabis waste a hazardous material. "You've got to have hazmat suits and specific protocols," says Alai. "There's a legislative change that has to happen there." He says he expects hemp will be much easier for 9Fiber to deal with from a policy perspective in California.

Alai notes that Colorado retired rules that prohibited third parties from picking up unadulterated cannabis waste in 2019 with Senate Bill 18-187 (which he says 9Fiber helped spearhead), and other states have followed suit.

Colorado Marijuana Enforcement Division (MED) rules have required cannabis waste to be mixed equally with non-cannabis waste, essentially doubling the load to the landfill (or more than doubling, as compostable plant waste is often mixed with non-compostable waste), but the new policy allows cannabis waste to be mixed with other compost in the hauling vehicle.

"Now 18-187 at the state level aligns with the DEA position statement in 2001 that clearly stipulates that hemp and cannabis waste stalks sit outside the scheduled system as long as the end product doesn't become a consumable good," says Alai.

Photo courtesy EcoWaste Systems

IHR has composted hemp and cannabis waste in Bennett, 30 miles east of Denver, for much of its existence. The sheer volume of it overwhelmed the company's property there several years ago, so it turned to a local landowner for storage and composting.

Due to 18-187, this growing mountain of biomass is now a potentially marketable commodity. Whiteside likewise sees a massive opportunity to find end uses for the growing waste streams coming out of the hemp and cannabis industries, like a "high-end, eco-friendly particle board," or animal bedding, or hempcrete. "We're actively looking for processors and investors to get involved in trying to find different back-end products you can make," he says. "It's a whole other world."

While Whiteside sees plenty of higher and better uses for the material, he says a committed public-private partnership is necessary to get it off of the ground across Colorado. "We would just replicate the way the City and County of Denver is doing all the waste management and diversion, because it's already proven to work," he says, estimating implementation of a statewide program with transfer stations, landfill reduction centers, and processing and recycling equipment would cost $70 million or more.

"There's a lot of different things that can happen with the right equipment," says Whiteside. "Instead of being part of the problem, [the cannabis industry] could be part of the solution."

Eric Peterson is editor of CompanyWeek and its Cannabis Manufacturing Report. Reach him at rambleusa@gmail.com.