Here’s Why That Matters in Cannabis
Does someone get paid when you switch electric suppliers? If so, they may not be invested in your long-term success — they’re invested in closing a transaction.
That’s the core issue with how many cannabis cultivators engage with energy services. A broker may find you a better rate, or not. They explain the contract they want you to sign and the nuances are lost. Either way, once the deal closes, brokers disappear until your contract is up and another commission is in sight.
Beware Broker-Friendly Contracts
In deregulated states, energy brokers connect buyers with electricity suppliers. They typically earn a one-time fee or an ongoing margin on your energy spend.
The most broker-friendly contracts are often fixed-rate agreements where growers are encouraged to lock in pricing (at a higher rate) to reduce volatility, while the broker pockets the spread between market pricing and the fixed rate. In some cases, we’ve seen markups approach 100%. We’ve worked with cultivators overpaying by $15,000 per month because of deals like these.
Who Needs an Energy Broker?
Brokers aren’t inherently untrustworthy, and in some cases their services are valuable. A knowledgeable broker can help secure better pricing through purchasing volume. A good broker will understand indoor cultivation and incorporate the best option for your load profile, local utility market, and procurement timing. But cultivators should know how brokers are compensated and what value they actually provide.
Where Brokers Fall Short
Meanwhile, your facility may be on the wrong utility rate. Your demand response paperwork may not be filed correctly. Or you may have been denied a rebate because an incorrect box was checked on an application. Seemingly small administrative issues cost cultivators tens, sometimes hundreds, of thousands of dollars each year. And most growers don’t even realize they are overspending, or by how much.
Energy Broker vs. Advisor
Unlike an energy broker, an energy advisor looks at your entire energy picture, including:
- Load profile
- Rate classification
- Blackout prevention
- Rebates and incentives
- Billing audits
- Sales tax exemptions
- Capital planning
- Resilience and sustainability
Why This Matters More in Cannabis
Cannabis cultivators already operate under compressed margins, 280E exposure, and banking challenges. Energy is commonly the second largest operating expense. It’s also one of the few areas where deliberate management can materially improve profitability without operational changes or capital investment.
A broker optimizing supply rates might save 5–8%. An advisor managing your full energy profile such as rates, demand, incentives, tax strategy, and demand response, can often deliver multiples of that. And unlike a one-time rebate tied to new equipment, many of these savings repeat every billing cycle.
The Right Question to Ask
The next time someone offers to “help with your energy,” ask how they get paid. If the answer is “when you buy something from me” or “when you sign something,” that tells you a lot about whose interests they serve, and how long they’ll stick around.
The best energy relationships exist when incentives are aligned — if your advisor wins when you win, they’ll stay engaged after the paperwork is complete.
We specialize in helping indoor cultivators maximize their energy spend. Let’s get going!
