Water as Investment Opportunity

According to Emily Paxhia, Founding Partner & Director of Relations at Poseidon Asset Management, LLC, marijuana investors look for opportunities that are:

  • ancillary, meaning that they do not touch the plant itself
  • scalable, or capable of replication or expansion, especially outside of the marijuana industry and
  • environmentally friendly.

So, what is ancillary, scalable and green? The answer for many may be water management technology.

The marijuana industry is unique in a number of ways. For one, according to a report recently prepared by Kristin Fox, editor in chief of Marijuana Investor News, the potential is more about conversion from illegal to legal use than about overall expansion. Put another way, there is probably a natural ceiling for expansion once marijuana is broadly legalized. This makes technology that has an application beyond marijuana particularly appealing in the long run.

Secondly, marijuana is thirsty. A single plant may use up to 900 gallons of water in a growing season. The drought in the western U.S. is at historic levels, and shows no signs of abating. Some suggest that in light of global warming, this is likely to be a more or less permanent state of affairs. The technologies and training that focus on the capture, conservation and re-use of water in indoor agriculture may thus be the next new thing for marijuana investors.

 

Water Harvesting

Farmers have harvested rainwater in arid climates for millennia, and much of the technology is quite simple. However, think beyond rain barrels and cisterns. Larger scale water collection systems and products can be used not only to capture rainfall, but to manage storm water and re-use gray water from sinks, showers, tubs and washing machines.

Plumbing contractors have long recognized the business potential of water management, but the bigger projects are often dependent on government financing. Green plumbing still represents a significant investment for many businesses, but as the marijuana industry becomes legal and begins to mature, it seems like a natural match.

 

Water Conservation

With an indoor grow, there is no obvious reason to lose water, either through runoff or evaporation. Some growers have switched to more water-retentive growing media or cooler lights to reduce evaporation. Overhead watering systems are the most wasteful, especially coupled with less-frequent, heavier watering.  In response, many growers have experimented with sealed hydroponic systems that re-circulate water through the roots of marijuana plants, or with “wicking” technology or drip irrigation that uses less water and reduces runoff. Others re-collect water lost to the air through evaporation with dehumidifiers.

The challenge with either a re-circulating system or the re-use of water captured from the air is that salts or other toxic compounds may build up over time, vital nutrients may be lost and root borne diseases may spread quickly. The quality of the water may deteriorate without filtering or the addition of new nutrients.

 

Water Re-Use

Most literature about water re-use appears to come, at this point, from experience with other commercial greenhouse crops, such as the flower industry, where the emphasis has been on the construction of holding tanks and various treatment systems. Hardly on the scale of a municipal water treatment system, greenhouse upgrades can still provide opportunities in the plumbing industry. One innovative idea, beyond filtering and re-enriching is selling “used” water for outdoor crops that are less sensitive.

For the cautious investor, what is green, expandable and capable of application beyond the marijuana industry?  As we learn to expect drought, it is hard to argue with the steady growth potential of greenhouse water management.

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