Lufa Farms, Canada, is the world’s first commercial and largest urban RTG (Korea Trade-Investment Promotion Agency, 2021; TYM, 2022). In 2006, plant scientists, agricultural specialists, engineers, and architects launched the first Lufa farm. Over the following four years, Lufa Farms focused on developing hydroponic-based irrigation, solar-powered cultivation, pest control and management systems, and software based on these technologies for ecofriendly greenhouse operations. Presently, in collaboration with McGill University, Lufa Farms continues its research aimed at creating an optimal growth environment for each type of crop, considering the changing environments and conditions (Proksch, 2017). Their first greenhouse, 3,000 m² in size, was installed in their office building in 2009. Since then, through subsequent expansions in 2013, 2017, and 2020, Lufa Farms acquired four RTGs. Starting with the first harvest from the initial greenhouse in April 2011, Lufa Farms produced 122 tons per acre of over 100 varieties of vegetables and herbs each year, which was sufficient to feed more than 20,000 residents throughout the week (Fig. 3).

To establish the foundation of the company, including the installation of a greenhouse and technology development, as well as securing the funding required to cover early-stage operational costs, Lufa Farms devised and promoted a comprehensive business plan. This plan outlined the installation and operation of a rooftop smart farm, incorporating agricultural expertise, innovative ideas, and the strategic direction of greenhouse operation. The objective was to attract external collaboration and support for the successful launch of the company. To secure the space where the greenhouse would be installed, which is the most important aspect of the endeavor, Lufa Farms engaged in long-term agreements with a real estate investment trust company responsible for several commercial properties in the Montreal area, which ensured the stability of the company’s post-installation operation. In addition, farms adopted a community-supported agriculture (CSA) distribution system, where consumers and Lufa Farms jointly operated the RTG to secure the funds needed for the initial operation (Proksch, 2017). CSA is a distribution system that moves away from the traditional system of producers being responsible only for production and consumers only purchasing products; instead, it is a bidirectional system in which consumer participation starts from the production process. Lufa Farms set up pick-up points at cafés, bakeries, and cultural centers in areas without nearby grocery stores and delivered seasonal eco-friendly crops produced in RTGs to those points for 12 weeks using electric vehicles (KOTRA, 2021; Lufa Farms, 2023). In addition, Lufa Farms operates an online shopping mall for direct-to-consumer sales to get closer to consumers. According to Proksch (2017), the company generated USD 1.2 million in income in its first year of operation and secured US$4.5 million in equity investments from a venture capital fund. Lufa Farms recouped its initial capital within the first 18 months of operation by recruiting consumers who could support the distribution and sales of products and private investors who could invest in the installation and operation of the RTG without any public support, such as subsidies (Proksch, 2017).

The CSA distribution system was the largest contributor to the growth of Lufa Farms. To maximize production satisfaction among consumers, Lufa Farms strategically partnered with local farms, fostering collaborative growth (Fig. 4). Consumers choose to purchase seasonal crops grown exclusively on Lupa Farms and seasonal crops supplied by local farms. This sales method offers advantages for both Lufa Farms and local farms to grow together while granting consumers direct access to various seasonal products, including those cultivated by Lufa Farms. This distribution strategy, which allowed consumers to conveniently purchase crops cultivated using eco-friendly methods, gained attention from the community and became the foundation for the growth of Lufa Farms.

Gotham Greens is the largest commercial RTG in the US, and is considered an excellent case for establishing a distribution system with a major supermarket. In 2009, a team including start-up support, greenhouse, and financial experts founded Gotham Greens, and the first commercial RTG was installed in Brooklyn, New York, in 2011. Greens attempted a new form of RTG-type urban agriculture by installing greenhouses on the rooftops of vacant buildings in urban centers to reduce costs, shorten the time associated with long-distance distribution between urban and suburban producers, and maintain the freshness of agricultural products.

In 2011, Gotham Greens has its first harvest. The company developed and installed a prototype greenhouse, which was approximately 1,395 m² in size and capable of producing approximately 45.36 tons worth of crops per year by hydroponics. However, the productivity per unit area was lower than that of indoor vertical farm specialists, such as Aero Farms or Plenty (Ryu, 2020). Although Gotham Greens achieved its goal of short-distance distribution, it still required its own urban distribution network. In 2013, Gotham Greens signed a 20-year long-term agreement with Whole Foods Market (WFM), an eco-friendly supermarket chain, and installed its second greenhouse, its first supermarket-integrated RTG (Hansalim, 2017) (Fig. 5).

The philosophy of the WFM and the operating goals of Gotham Greens, including eco-friendly crop cultivation, short-distance distribution, and delivery within 18 miles, were integrated into RTG (Stevens, 2013; Media SR, 2013). After signing the agreement with WFM in 2013, Gotham Greens received an outside investment of USD 750,000, and in the following year, it received a “Best” rating from the 2014 Whole Foods Market Responsibly Grown Rating System. In 2015, Gotham Greens installed its third greenhouse after receiving a subsidy of USD 900,000 from New York State Department of Economic Development. In January 2018, Gotham Greens again proved its value by securing an investment of USD 29 million (Ryu, 2020). Currently, Gotham Greens has 11 RTGs and continues to expand its business (Gotham Greens). According to Proksch (2017), Gotham Greens produced 400 tons per acre of crops annually as of 2017 and has continued to scale up production since then, following the installation of their eight greenhouses.

Because crops from Gotham Greens are cultivated using hydroponics, they do not qualify for the organic certification provided by the US Department of Agriculture (USDA) for crops cultivated on American soil (Hansalim, 2017). Nonetheless, eco-friendliness and food safety have been ensured through long-term agreements with the WFM, which sells only eco-friendly products. Consequently, the WFM recognizes crops cultivated by Gotham Greens using rooftops in urban spaces as eco-friendly crops, based on how they are produced and distributed (Fig. 6). These criteria include the use of renewable energy, such as solar and wind energy; cultivation by hydroponics; minimal water consumption (only 1/10 of the water required for open field farming); and the distribution of crops within 24 h after harvesting (Zeveloff, 2011; Proksch, 2017; Ryu, 2020).

BrightFarms® of the US originated from New York Sun Works (NYSW), a non-profit organization that supports sustainable urban agriculture, and grew to become a consulting firm specializing in greenhouses. NYSW, which installed RTGs on the rooftops of urban schools as laboratories, was founded in 2004 to support experiments and education on sustainability in which students and teachers can participate (Kay-Twelve, 2023). In 2007, NYSW developed the Science Barge, a prototype urban greenhouse that grows eco-friendly crops using solar energy and rainwater on a steel deck barge floating on the Hudson River in Manhattan, and provides a venue for sustainability education for students and local residents (Groundwork, 2023) (Fig. 7). Based on its experience in developing and installing greenhouses, NYSW established Bright Farm Systems in 2008 as a consulting company that provides RTG-based agricultural technology services. In 2011, Bright Farm Systems merged with Better Food Solutions, a company specializing in hydroponics, to form a new urban greenhouse consulting firm called BrightFarms (Gibson 2014; Signature Exteriors 2017).

In 2011, BrightFarms installed the world’s largest hydroponic greenhouse, approximately 100,000 m² in size, on the rooftop of the Brooklyn Navy Yard, constructed in 1916. This greenhouse can grow enough tomatoes, lettuce, and herbs to feed 5,000 people annually (Fleetowner, 2012). During this period, when the average cost of installing a greenhouse was USD 1.5–2 million (Scharwath, 2012), BrightFarms® strategically entered into long-term agreements with 10 US grocery and supermarket companies, including the Great Atlantic and Pacific Tea Company, Inc. (A&P) and Mcffery’s Market, to secure financing for greenhouse installation and operation. McFerrty’s Market, which has stores in Pennsylvania and New Jersey, was the first grocery company to sign a produce purchase agreement (PPA) with BrightFarms. The BrightFarms® PPA is an agreement by which the purchaser or reseller agrees to acquire crops at set prices; the PPA is similar to the power purchase agreement used in the solar energy industry (Gibson 2014) (Fig. 8). A&P became the third grocery company to sign a PPA using BrightFarms (Business wire, 2012). Crops produced by BrightFarms using hydroponic farming boast an extender shelf life, maintaining optimal freshness for a long time and this minimizing spoilage until delivery to consumers. After being recognized by the community for this benefit, BrightFarms® initiated its venture with an investment of USD 4.3 million in December 2011 and expanded the market share by continuing to install additional greenhouses using grants and subsidies from the community, non-profit organizations, and development agencies (Scharwath, 2012). In 2018, the company secured a substantial investment of USD 55 million from companies in diverse industries unrelated to greenhouses, including the telecommunications, media, and automotive service industries (Cosgrove, 2018).

However, securing rooftop spaces and capital for greenhouse installation, which is required to strengthen its distribution system and expand its business, poses a challenge (Ferris, 2012). The RTG business, which began with the goal of replacing local specialty products from distant places, shifted into a distribution strategy exclusive to BrightFarms® through long-term agreements with grocery and supermarket companies (Manning and Burwood-Taylor, 2016). Accordingly, BrightFarms® began installing greenhouses on ground space instead of rooftop spaces to minimize greenhouse installation, operation, and management costs and to make it easier to provide crops to the contracted companies (Gibson 2014). This spatial change in greenhouse placement offered significant advantages to BrightFarms® of being able to save greenhouse installation, operation, and management costs and the contracted partners to supply the harvested crops to the consumers within a short time (Scharwath, 2012). As of 2022, BrightFarms® continues to grow with an average annual revenue of USD 11.5 million (ZIPPIA, 2023).

The Local Garden, which was the first in Vancouver, Canada to develop and operate a commercial vertical farm (Fong, 2012), is a prime example of an RTG installation with a public partnership; however, it is also known as a failed operation case. Valcent, a British company founded in 1996, developed an eco-friendly vertical cultivation system. In 2008, Valcent developed VertiCrop, a vertical cultivation system that can grow crops by stacking 12 trays vertically (DH, 2017). Due to the economic recession at the time, the company relocated from the United Kingdom to Canada and changed its name to Alterrus System Inc. For the stable operation and management of greenhouses, in 2012, Alterrus established a wholly owned subsidiary called Local Garden Vancouver Inc. (Crawford, 2012) and became the first in North America to install an RTG of 560 m² on the rooftop of a parking garage building owned by the City of Vancouver (Ng, 2013) (Fig. 9). The Local Garden signed a 10-year lease agreement for a low monthly rent of CAD 2,400 with Vancouver, which owns the right to use the parking garage rooftop, enabling it to secure the space needed to grow its crops and stably promote VertiCrop as its proprietary system (Hutchinson, 2014). Vancouver made the rooftop space available to local gardens based on the expectation that renting the rooftop space would generate more revenue than using it as a parking lot (Proksch, 2017) (Fig. 10).

The Local Garden was expected to produce 75 tons per year through vertical hydroponic farming; however, it supplied products to only 12 grocery stores and restaurants in downtown Vancouver, aiming to maintain freshness and minimize nutrient loss from harvested crops (Wolak, 2012; Perutka, 2013). In the first semester of 2013, the first year after construction was completed, the Local Garden generated approximately CAD 320,000 in sales, but also suffered losses of over 1 million in losses due to greenhouse energy supply issues (Hutchinson, 2014). Owing to Vancouver’s restrictions on solar panel installation, highly stacked cultivation trays require a significant amount of supplemental lighting.

Consequently, the production of broadleaf crops has become difficult and production has shifted to microgreens and pesticide-free vegetables that can be grown at higher profit margins and lower operating costs (Levenston, 2014; DH, 2017; Proksch, 2017). However, the company faced difficulties finding distribution channels because the products did not meet local demand. By the end of December 2013, greenhouse operations were suspended owing to equipment malfunction inside the greenhouse, which limited crop cultivation and delivery. Consequently, the company was unable to overcome its financial difficulties, which included over CAD 4 million in debt (Shore, 2014; Greer and Denis, 2015). In January 2014, the parent company, Alterrus Systems Inc., and its subsidiary, Local Garden Inc., went bankrupt (Shore, 2014; Proksch, 2017).

The primary aim of the four greenhouses is to reduce food mileage by minimizing packaging, storage, and transportation between consumers and producers, and delivering fresh produce directly to the local community within a short timeframe. Strategically located in close proximity to large cities, these greenhouses specialize in exclusively selling locally harvested crops. It is noteworthy that each company applies its own eco-friendly technologies to operate greenhouses for cultivation; however, overall, they are based on hydroponic cultivation techniques. Most food companies utilize otherwise unused rooftops as fields and rely on renewable energy sources such as sunlight, water, and wind for basic greenhouse operations. Hydroponic cultivation requires less water than open-field greenhouse operations, making it economically viable. However, owing to limitations in hydroponic cultivation technology and securing deep soil necessary for crop growth, the cultivated crops typically include vegetables and herbs, such as tomatoes, basil, lettuce, cucumbers, and bell peppers.

Each company operates a greenhouse using a differentiated operational model that reflects its vision and conditions. Some collaborate with private supermarkets to distribute organic crops over an extended period, whereas others enter fixed-price contracts for crop distribution (Table 1). Additionally, there are cases in which companies collaborate with local farms to operate and supply seasonal crops to consumers at the desired time. Some companies lease the rooftops of abandoned buildings owned by the city at affordable prices for long periods to operate greenhouses. However, considering cases of rapid growth, bankruptcy, or the development of community education, it is evident that the degree of company growth varies based on the operational model and economic and external factors.

In the second section on legal cases, we conducted research and analysis on legislative and regulatory cases in New York City in the United States and Paris in France (Table 2). Both local governments have garnered attention as advanced cases influencing the establishment and revision of relevant laws at the local government level. In addition, they have played a significant role in the development of guidelines facilitating the smooth installation of rooftop greenhouses.

The revision of laws related to rooftop greenhouses in these regions originated from the need to address urban environmental issues, such as mitigating the urban heat island effect through greenhouse gas reduction. Rooftops of buildings, often considered unused spaces within the city, have been identified by citizens as high-potential areas for both greenhouse gas reduction and urban agriculture. Through local-government-led legislative revisions, related regulations and ordinances were amended, and the corresponding standards, guidelines, and regulations for rooftop greenhouse installations were drafted and distributed. New York City established specific criteria for rooftop greenhouse installations, whereas Paris explicitly designated rooftop greenhouses as an exception to its regulations.