Cannabis producer needs more electricity for Tryon expansion, official says

New 30-day-old cannabis plants growing in one of Vireo Health’s two greenhouses are seen during a Jan. 15, 2020 tour. (The Leader-Herald/Michael Anich)

By JASON SUBIK

The Leader-Herald

JOHNSTOWN — A local marijuana producer’s $55 million expansion project at the Tryon Technology Park has run into a power problem.

An Aug. 31 letter from the Fulton County Industrial Development Agency’s Board Chairman Joseph Semione to National Grid senior representative Robert Muller indicates the board was “shocked” to learn the new electrical transmission line the county paid to have installed for the Tryon Technology Park in 2021 isn’t big enough to supply the electricity needed for Vireo Health’s new 325,000-square-foot facility, currently under construction.

“Vireo has informed the IDA that [National Grid] cannot provide Vireo with the power it requested from NG’s (National Grid’s) new electric service it just installed,” reads Semione’s letter. “The IDA Board was shocked when it learned of this. Fulton County paid NG a significant amount of money to install this new electric service for the [Tryon Technology Park] only to find that the first customer wanting to connect into it is advised that NG cannot meet its anticipated electrical load.”

The proposed expansion is expected to provide 180 new jobs at the plant, and help to bolster Fulton County’s property tax revenue base.

FCIDA Executive Director James Mraz on Thursday said the new 13.2 kv primary electric service line installed for the Tryon Technology Park cost approximately $650,000, a portion of which was paid for from a state grant.

“The line that was put in is the same size line that National Grid puts into most of its industrial parks. It services the majority of companies’ needs, so that’s what was done,” Mraz said. “Vireo’s project is going to utilize a large amount of electricity, and it’s, in essence, more than what that standard line can provide. When it was learned what the size of the [electrical] demand from Vireo was — which is the driving issue here, their demand beyond what the line can provide — it was shocking.”

Mraz said the 13.2 kv primary electric service line has been proven to be adequate in the past for other FCIDA business parks, except when an expansion of the FAGE USA yogurt plant in the Johnstown Industrial Park also required an electrical transmission line upgrade.

“You can’t say this line isn’t adequate. It is adequate, it’s just not big enough for this large, large electrical user,” Mraz said of the Vireo expansion project.

According to Semione’s letter, Vireo needs at least 9 Mega-volt-amperes [MVA] of electricity for Phase 1 of its expansion and 6 MVA for Phase II.

“It is also the IDA’s understanding that NG has advised Vireo that it can only provide 2.5 MVA to 4 MVA from its 13.2 kv line,” reads Semione’s Aug. 31 letter. “NG has further advised that they could bundle three or four services from their 13.2 kv line to provide Vireo the 9 MVA it needs for Phase 1, but only if Vireo first agrees to pay for a NG transmission line and substation estimated [to cost] in excess of $4.5 million.”

Semione’s letter formally requests National Grid “bundle services as needed” to provide Vireo with the power it needs for its Phase 1 expansion, but was also adamant that the FCIDA board feels it is unfair for National Grid to require Vireo Health to pay for the entire cost of additional infrastructure for the Tryon Technology Park.

“NG had previously advised Fulton County that NG was going to itself upgrade the transmission line from the Stoner Trail substation to CR107,” reads the letter. “Apparently, NG never completed this work. Now, it appears it’s trying to get Vireo to pay to upgrade NG’s infrastructure. Vireo should not bear the financial responsibility of paying to upgrade NG’s infrastructure that it previously committed to upgrade itself.”

Mraz said there were meetings Thursday of the stakeholders in the electrical power problem conducted via the “Microsoft Teams” virtual video conferencing program.

“The project is moving forward,” Mraz said. “I believe there will be a solution to this worked out in the very near future.”

Mraz said he isn’t certain the $4.5 million figure quoted in Semione’s letter will end up being the accurate cost for upgrading the electrical infrastructure needed for the park.

“Right now, no final decision has been made yet,” he said. “National Grid is assessing how much power they can actually provide. Once they can provide that number. Vireo will assess its options to either reduce the load, or potentially generate its own electricity, and at that time decisions will be made for what is the best path forward, and whether it will cost any additional money. Don’t quote a number, no one knows today what the cost of bringing that transmission power for Vireo to Tryon is. That’s something National Grid is looking at.”

In June Vireo Health announced it was exercising its $1.3 million option to buy 97 acres alongside its existing grow and production facility in the Tryon Technology Park. The move was made to take advantage of New York state’s decision to legalize the production of recreational marijuana, although all of the regulations for the new law have not yet been finalized.

Vireo Health

Vireo finished 2019 and 2020 in the red but jumped from $30 million in revenue to $49 million. With major regulatory changes ahead in Minnesota, New Mexico and New York, it is projecting cash flow will turn positive in the first half of 2022 and expects revenue of $140 million to $180 million for all of 2022.

Vireo spokesman Andrew Mangini on Thursday did not have a comment about the electrical power problem by this story’s deadline.

Mraz said one of the issues that still needs to be resolved regarding the power line capacity for the park is ensuring there is adequate power to supply Vireo’s existing plant and future users at the park. Mraz said currently the only electrical user at the Tryon Technology Park is Vireo’s existing plant, but the FCIDA is in the process of possibly selling the 15,000 square foot former maintenance building that was used by the former juvenile detention center at that location before it was shut down by the state and the land was gifted to Fulton County for use as business park. Mraz said a company called Lott Holdings LLC, out of Amsterdam, may be purchasing the building for the purpose of leasing portions of it to industrial and commercial businesses that can operate within the parameters of the Town of Perth’s zoning ordinance. He said the sale of the maintenance building will also hinge on the cost of additional electrical and gas lines to be built for it.

Mraz said Vireo hopes to finish construction of its Phase 1 expansion by April 2022, and he hopes the electrical power problem will be resolved within the next two weeks.

“There is a comfort level that there’s going to be a solution that can be worked out based upon all of the investigations, all of the evaluations and all of the work that’s been done since this came up,” he said. “I think everyone is reasonably confident that a solution is there.”

By Paul Wager