Tony Beman on Cannabis Energy Costs, Grow Lighting & Minnesota’s Infrastructure Challenge

The cannabis industry in Minnesota is evolving quickly, and behind every cultivation facility is a major conversation about energy, infrastructure, and long-term sustainability.

In this episode of The Canna Connect Show, Stephen Eigenmann is joined by Tony Beman of the Center for Energy and Environment (CEE) to explore how cannabis businesses can reduce costs through lighting rebates, energy-efficient systems, and smarter facility planning.

Tony shares insights on:

•  LED lighting rebates for cannabis businesses 
•  Why energy infrastructure matters more than most operators realize 
•  Real estate challenges facing Minnesota cultivators 
•  The economics of cannabis cultivation 
•  How Xcel Energy programs support microbusinesses 
•  Long-term planning for cannabis entrepreneurs 
•  Why efficient grow design can dramatically improve runway and profitability 

This conversation offers a practical look at the business side of cannabis and the systems helping shape Minnesota’s emerging market.

The Canna Connect Show highlights the people, businesses, and conversations building Minnesota cannabis culture from the ground up.

#CannaConnectMN #MinnesotaCannabis #CannabisPodcast

Transcript

SPEAKER_02 0:01

The thoughts, views, and opinions expressed on the Canaconnect show belong solely to the individuals and do not reflect those of Canaconnect and its affiliates, sponsors, or partners. Canakonnect does not promote or facilitate any activity that violates state or federal regulations. Everything you hear here is strictly for educational and entertainment purposes. It is not legal advice. It is not financial guidance, and it's definitely not medical direction. Seriously, don't take our word for it. Even if someone on the mic sounds like they know what they're talking about, and they're probably crazy smart too. Regardless of how legit our guests may be, you should always do your own homework, consult with your attorney, and understand the risk you're taking before you do anything when it comes to cannabis. Our intention is to keep it real. If you've got a problem with anything we've said, take us to court.

SPEAKER_01 0:52

One thing about the Center for Energy and Environment, or CEE, is they don't look at things in dollars and cents. They look at things in kilowatt hours. And that's your biggest differentiator when you're trying to figure out who CEE is, what CEE does. They're not just a rebates company. There's a lot more to it, and we're going to get into it on today's episode. So Tony, we were chatting yesterday and you were saying that you know you're starting to feel more comfortable at these cannabis events. You guys have been showing up. I mean, we met at the uh at the end of 2023 for the first time at the Legacy Cup. Um I myself have had some time to uh process and understand how CE fits into the greater cannabis ecosystem, especially on the lighting side, the rebate side. Your team, uh specifically Laura from the marketing department, has worked really hard and beyond that, you know, beyond Laura, but the whole marketing team has worked hard to redefine the message and the approach that you want to present out, whether it's to the consumer, the business owner, or just the greater cannabis industry as a whole. Talk about how you've seen the shift and how it's starting to click more when you're out at shows on how CE serves the market.

SPEAKER_00 2:12

Sure, sure. Yeah, we've been going to quite a few shows um for the last few years. Um, and I would say every time they get progressively more engaging. Um, you know, when we've you know, rewind a year, you know, licenses are still not approved and everything like that. Now we've got folks with their preliminary approvals, they're in the real estate hunt. Um, so I think things are progressing nicely. Uh, I think we've got um, you know, a dozen or so projects signed up in various stages of implementation. Um Brad's got a nice case study that we're working on, which is going to be great to get out to the out in Watertown, Minnesota, right? Exactly. Which is in Excel Energy Territory. Exactly. Yeah, it's very surprising when you look at that map. Everyone always thinks, you know, Minneapolis Metro, but it's St. Cloud, Watertown, Mankato, you know, there's a lot of oh wow. Yeah, yeah. So um we're just it's still trying to figure out real estate, you know, uh trying to find buildings that have enough service to support the new load. Um that's a big challenge for folks. Um sometimes service upgrades are not only taught uh cost, you know, prohibitive or not, not necessarily prohibitive, but not cheap. Um and then there may be a delay too, and there may be a time frame before you can get a new transformer installed. Right.

SPEAKER_01 3:21

And there's a certain uh urgency. We've been waiting on this industry to come online. It is now online, yep. Uh early infancy stages of it from a cultivation perspective. Right. And and we can we can go there and we'll get there. But how does CE differ how is CE set up differently than rebate companies that you might see at at trade shows?

SPEAKER_00 3:45

Yeah, I think uh, you know, there's quite a few folks that helped on the rebate side in this industry that we've learned, and we've uh put them all through the um, you know, training on the program and you know how to maximize rebates and all that fun stuff. Um, I think uh, and I think a lot of them, you know, add a lot of value because I think a lot of those rebate companies have um a lot of manufacturers that they can help the customer sift through and compare and understand differences. Um, some of them help with the HVAC and the dehumidification that we don't touch as we're just lighting, if that makes sense. Yeah, there's definitely value there. Um if there's you know cost constraints, a lot of those folks uh will have uh the rebate allocated to that organization rather than the end user. So the end user doesn't have to come up with the full you know$200,000 with a hundred thousand dollar rebate. They just pay the hundred thousand and the utility will write the check to the rebate company.

SPEAKER_01 4:31

Yeah, there's an element of financing or exact or creativeness in in who gets paid when.

SPEAKER_00 4:36

Yeah, and our big thing is we don't there's no hidden fees, there's no, you know, uh putting you know markup on things or any of those type of you know business things. Our we're paid by Excel Energy to save as much energy as we can get. And uh I think that was one big thing that Laura did a really great job with our collateral. Is I think um over the last couple of years, I think when folks walk by, if they don't recognize us, they may think we're one of the rebate companies, you know, because it's similar messaging and everything like that. Sure. Um, but yeah, I think the big thing is, you know, we don't we don't take a cut, we don't charge, we don't anything, you know. Uh and there's nothing wrong with that business model. It's very helpful. Um, I'd say 70% of our projects that we've had come through are through some type of rebate administrator organization, you know? Okay. Um and they're really, you know, getting um getting up to speed with the program and the dimming protocols and the things we need to turn out reports. So we've got a pretty well-oiled machine by now.

SPEAKER_01 5:30

Yeah, and I think what makes it complex or dynamic is there's been learning on both sides. You've you've uh taught people about the about the one-stop shop, the m the specific two microbusinesses in Exile Energy Territory and how they can get LED lighting rebates. Right. But you've also learned along the way from professionals in the lighting space uh on the manufacturing side. 100%. And so there's there's mutual growth, there's mutual benefit, and you've been training people, uh they've been training uh you your team uh as far as new technology and innovation goes. Right, right. Difference being though, CE measures success on taking kilowatt hours off the grid, lowering the amount of power uh strain on the grid versus traditional companies are measuring themselves in uh dollars and cents. Right, right. CE is a nonprofit, and that speaks to a lot of how you guys approach uh projects and entrepreneurs uh and micro business owners.

SPEAKER_00 6:36

100%. Yeah.

SPEAKER_01 6:37

Yeah. That's really great. So you have a stated goal of how many kilowatt hours that you want to take off the grid this year?

SPEAKER_00 6:45

For grow specifically, we're shooting for about 13 million kilowatt hours um for the portfolio as well. Because remember, we do commercial lighting and you know that's kind of our bread and butter for the last 25 years. That's right. So you guys can also help out hemp shops and dispensaries. Dispensary. If you have lighting, we can help you.

SPEAKER_01 7:00

It's not just retail cultivation that you're that you're able to help within XL Energy Territory.

SPEAKER_00 7:04

Yeah, yeah. If you have a dispensary but not cultivation, just give us a buzz. Uh, our rebates, we actually have a bonus program going on for traditional commercial lighting. Um, and when the stars align, the rebate is covering about 75% of the project costs. So it can be very, very affordable uh in a nice way. And one thing that uh I've learned, I mean, not just with Grow, but just in my career, um, is there's a lot of benefits to quality lighting, um, not just the energy savings. It'd be a benefit to the energy used and the environment. Agreed. Yep. Yep, it's a big deal. And you can refresh the space and have a really attractive uh, you know, dispensary or, you know, whatever you're working on. So yeah, if if you've got lights, grow lights, commercial lights, doesn't matter. We're here to help help you.

SPEAKER_01 7:46

That's kind of cool because I know we've touched on it, but a lot of how I think about it is is cultivation areas. We have to remember that as long as you're in Excel Energy Territory and you're a micro business, there's a reason to reach out to the Center for Energy and the Battery. Agreed.

SPEAKER_00 8:01

Yep.

SPEAKER_01 8:02

So, you know, you've shared with me a little bit behind the scenes that you're getting close to your goal. Yep. Uh talk about what an ideal project looks like uh within within your realm.

SPEAKER_00 8:13

You know, I think the best ones, um, you know, because they're kind of all over the map. You know, you've got folks that are just early in the inquiry process. I mean, do you have rebates? That fundamental question, all the way to we're selecting from a we have three different manufacturers that we want to see what the rebate looks like, you know? Um so the ones that are pretty fun is when you get into that compare and contrast uh between multiple manufacturers or rebate administrators or trade allies in general, um, and helping the customer understand the short and long-term economics of the decision they're about to make. So when you get into that bid, uh multiple bid situation, I think that's where our value really helps. Uh, we're not the growing experts. We don't know about you know spectral tuning and you know all these different things and how you know LED affects dehumidification load and all that. We we definitely just help them understand how much energy they can save compared to traditional systems.

SPEAKER_01 9:06

Hey everybody, Steven with Canaconnect. Taking a quick minute to shout out today's sponsor, CEE, that is the Center for Energy and Environment. If you're not familiar with CE, they're your one-stop shop for all lighting rebates. If you are in XL Energy Territory and you're a micro business, CEE is somebody that you need to talk to. Give Brad a call, give Tony a call, go online, one-stop shop, LED lighting rebates. They'll help take care of up to 60% of the costs associated with your grow and your build out with the lighting. Uh, really nice people, great people to work with, huge sponsors of Canaconnect, and uh give them a shout. That's CEE, Center for Energy and Environment. And when you're in Excel Energy Territory, the rebates are better.

SPEAKER_00 9:52

Agreed. Even if we can't support, we have a great network and a team at Excel Energy. So if you have a Meso or a cultivation or any of these things that we can't necessarily help you out with directly, um, as long as you're in Excel Energy Territory, we'll make sure to connect you for uh their lighting program for a Meso, for example. Um, HVAC dehumidification, uh, that's something that every project we're running. So we work with the end user to make sure that they have enough uh amperage coming into the building. We make sure that they're getting supported for lighting directly by uh one stop. And then uh HVAC and dehumidification, we tag in our XL energy teammates to make sure that we're getting them every rebate dollar we can for their uh for their building.

SPEAKER_01 10:31

Because often you and I are just thinking through the lens of CE, which is micro businesses, but there's rebates beyond the lighting as it relates to XL Energy. And they're very strong. Yeah. And is that a testament to ultimately the size of XL Energy and their ability to be more competitive?

SPEAKER_00 10:46

I think they identified through uh their Colorado market over the years that there's tremendous potential. Um and you know, energy efficiency just in general for commercial buildings has been going on, you know, for decades, right? And so we're getting to this point of diminishing returns. I mean, think about LED lighting in just a general commercial space. It's been commercially and economically viable for 10 plus years. Okay. So now we're wondering who's left if that makes sense. And that that same thing is happening with XL Energy. They have goals just like we do with the state. And how do we make sure that we accomplish those goals as affordably as possible? And I think both organizations, CEE and XL Energy, are looking for grow lighting to make a big impact on the portfolio-wide savings as a whole. Colorado went insane gangbusters, not perfectly. There were some hiccups and a lot of changes have taken place in Minnesota to avoid a lot of those pitfalls. Okay. Um, but it's, I mean, when we say it's a million kilowatt hours for 2,500 square foot of canopy, and then our commercial, just to put it in perspective, our average commercial lighting project, yeah, it's only about 35,000 kilowatt hours. So you have multiple uh X uh multipliers on the amount of savings for 25x.

SPEAKER_01 11:56

Yeah, it's crazy. Because uh the cannabis plant, the cannabis cultivation rooms are so lighting intensive. Exactly. Yeah. They're like mini data centers. That's what I always say. Yeah. Now, you know, you touched on it a little bit, but you know, projects that break your heart or you know, projects that ultimately don't work out, you've you've had a few of those come c come across your desk as well. You've learned through um experience that some of it's not related to the rebate, it's related to getting the uh the the facility enough power. Right. They need three-phase power. Yeah, yeah. Okay, so uh and getting that installed. Tell me a little bit about what uh what it takes to get the right amount of power into a building.

SPEAKER_00 12:40

Yeah, we've heard um varying things. Um, because we we don't we we basically hand that part of the process over to XL Energy because they have access to the grid and you know the the amount of service coming in for that location and things like that. Okay. Um I don't know costs, it's not cheap to have a surface upgrade, that's for sure. Um I've heard XL specifically is about three to six months out on Transformers, so that's a little challenging. Um, I've heard Outstate, uh the benefit of Outstate is a lot of these municipals and co-ops um are seeming to be a little bit quicker on the service upgrade. So I think that what that might be why we're seeing kind of a disproportionate amount of non-XL energy customers versus Excel being the biggest provider in the state. Um so we're definitely um we've got that real estate link where where it lists all the available Excel energy properties and the amount of service coming into the building to mitigate that need, that that cost and that time delay. Um yeah, real estate has been the least common denominator throughout this whole process.

SPEAKER_01 13:36

Yes, it's interesting how lighting and uh it's uh interesting how lighting and real estate kind of uh overlap in ultimately entrepreneurs landing where they need to be. Yeah. Uh yeah, and we certainly have compassion and empathy for the folks that are still pre-approved, that are still working through where am I gonna set up my business. They feel a certain amount of uh time crunch as it relates to the runway that they have and the the amount of time they have to get started. Um but I also think the OCM is is figuring things out and adapting. And um, you know, we're still in that pocket of hey, there's still time to figure this out. But um, you know, looking ahead, like what are you excited about? You mentioned the the Watertown Minnesota project. I mean, you you shared with me offline that this group has a a certain level of acumen that you're really impressed by.

SPEAKER_00 14:27

Yeah, they are, yeah. I mean, it's been so crazy. Like I said, it just there's no um theme between these group with these growers. You know, you've got folks that are you know just bootstrapping it and they're gonna we can do multiple phases. You know, you can do 5,000 square foot of flower canopy within a micro business, but I'd say half of them, if not two-thirds of them, we're starting with a small phase. Let's do one room, let's get some profit coming through, take that savings, build phase two, build phase three. And so we're trying to remind customers that's not all or nothing. Yeah, let's do what you can do now, what you can afford now, um, and we'll support you throughout the process. Commercial lighting, we have you know 17 phases over 10 years with some of these organizations who are trying to save energy, but they just don't have the money to take the whole enchilada at one at once. So we'll just do two to four, four to eight. We're happy to support people short and long term. We can have an ongoing uh relationship as they expand their uh grow rooms over time. Absolutely. And how long has the Center for Energy and Environment been around? Uh we've been doing well, 40 years as an organization, uh, but as far as lighting and the partnership with XL Energy, that's been since the year 2000. And then Grow were about three years in, somewhere in there.

SPEAKER_01 15:40

And that's great. I mean, 40 years for the entire organization, 25 years in partnership with XL, uh, three years with a focus on cannabis. Yep, yep. But I'm sure as a leadership group, there's there's vision into the future, right? The Center for Energy and Environment wants to be around in another 40 years. And and the the cannabis industry in Minnesota, the folks working on it want it to be around for another, yeah, long-term, 40 years, 80 years, you know, forever. Yeah. Um, you know, and there's there's certain things to like about the industry, there's certain things to maybe dislike about how Minnesota's setting it up. I think though, if you zoom out and you look at all uh of the adult use recreational states, and Colorado's the one where you have good a good amount of exposure to, uh, it's never perfect. It it does take time. Um I I I was talking to Carol Moss uh at Lucky Leaf, lawyer lawyer for Helmut and Johnson about how things change. And it it it takes experiment experimentation and tinkering, right? You have to try things, see if they work, get feedback. Sure. And I and the industry is just known for that. Yeah. It's known for pivoting, tweaking, especially in the lighting and cultivation rooms. Not to take anything away from the dispensaries, right? But to fit to dial it in, you know, that's a common phrase these days. Sure, sure. Um, you know, and and so for folks that are still working through a lot of the decision making, uh, the Center for Energy and Environment will be at NECAND, we'll be at Canacon. And so there's going to be opportunities for folks. If you've seen Tony, if you've seen Brad on camera and you want to have a conversation, come out to these shows and events. You guys can connect further. Also, you know, it's easy to reach out to CE online. Yeah, exactly. Just track us down, guys. We're here to help. Yeah. Uh great resource. And that's why we really appreciate having Canna Connect be a part of CEO CE be a part of the Canna Connect show, I should say, because you guys are a resource for us and we enjoy sharing the good news, spreading the good word, and continuing to open up people's eyes to the Center for Energy and Environment. Yeah, we're mission aligned since day one. I love it. Yeah, I appreciate it. Um, so we're recording this middle of March. Um, April's gonna be a busy month for dispensaries, but then I think the trade shows um that we've talked about May and June, and and hopefully by the summertime things will be ripping a little bit further.

SPEAKER_00 17:57

Yeah, I would love to do 30 million kilowatt hours in grow this year. It would just be the mic drop. It was Brad's idea from the beginning. He tagged me in saying, let's do grow. And there's, I don't know if we can do this, and that's not how our regular program works. So a lot of development and and program design and research and everything like that. So I gotta give credits to Brad for hatching the idea because I think it's it's uh internally at uh CEE. I think a lot of people are excited about the potential. So I think the projects are so much bigger than than your average. Well, and they're our favorite custom type of customer. We're uh by definition a small to mid-sized customer. They need more capital, they don't have energy managers on staff, they don't have you know Fortune 500 budgets with greenhouse gas emission reduction targets. It's just regular people who want to get into the industry, bootstrapping it with every dollar they've earned over the you know for their whole career. We've taken out mortgages, taking out loans, all this stuff. Um, so we're just gonna solve problems. We're single-minded in our approach to make sure that they are looking at it long term because uh my only caveat or concern um is I hope folks aren't looking at first costs of HPS versus first costs for LED and using that as their delineation. Yes. When you stack the rebates on top of it and the energy savings, we've yet to have a project that's greater than a one-year payback. So from a just a I have 20, I have this much money and I have this many things to spend it on. Who's got the best economic return? Commercial commercial grow lighting with LEDs definitely pencils out. It's an invad, it's a very uh savvy investment long term. I mean, these could well, like we said, there are a million kilowatt hours a year that you're not buying in the next 10 years.

SPEAKER_01 19:37

Right. Because you've got to pay that electric agreed. It's yes, you've got to buy the lights, but you also gotta pay the electricity exactly. Yep. And by taking yeah, by shrinking your electricity bill, you're gonna give yourself longer run with agreed to figure it out. So it makes a lot of sense. I think this was one of the most eye-opening uh conversations that we've had so far. Sure. Appreciate you coming back in. Happy too. Yeah, I mean things are things are moving like we talked about. Yeah, uh, and I think in another few months things will be moving even faster. Yeah, we'll just catch up in a few months and give you the news. Yeah, Tony, good to see you. All right, good man. Thank you. Yeah, thank you guys.