The Development of Cannabis Facilities

Chicago, IL | October 26, 2020

Managing Construction of Cannabis Facilities - David Graff

As seen in the Business of Cannabis Special Feature Section of Crain's Chicago Business

Cannabis facility development remains both a hot topic and, in many ways, the wild west! It is a relatively new frontier with many different and continually developing approaches.

MB Real Estate’s Project Services team has been a leader in cannabis real estate development. Whether developing cultivation and processing centers or dispensaries, our experience in the life sciences, healthcare, and commercial sectors gives us a unique advantage in understanding cannabis real estate projects.

Cultivation/Processing Centers & Dispensaries – No One Size Fits All

Large-scale cannabis cultivation and processing centers are still in the early stages of development. As cultivation and processing teams gain more experience, strategies evolve.

The one constant is that there is no one solution. Greenhouse works best in some locations for certain clients. Others prefer indoor grow using new or existing warehouses. There are pros and cons for each, and experience assisting clients with both has positioned us to evaluate which system works best for an individual’s unique situation.

The same goes for dispensaries. Careful, up-front analysis is critical to the Zoning Board of Appeals process, permits process, design, and budgeting. Understanding specific state and local regulations is key to avoiding delays and added costs.

Cost & Schedule Alternative Analysis – A Critical Service We Provide

The ability to apply our experience and resources evaluating alternatives has proven invaluable to our clients over time. The analysis for the development of cultivation and processing centers should focus on budget (hard, soft, and equipment costs), schedule, concept, and projected annual output in terms of pounds per year and, ultimately, development cost per pound. Critical aspects related to dispensaries:

  • Cost analysis
  • Speed to market
  • Understanding and adhering to state and city regulations
  • Satisfying cultivation and processing criteria

Whether you’re talking about developing cultivation and processing centers or dispensaries, the numerous critical tasks at hand—the many variables to simultaneously watch—make each project akin to spinning plates that you also have to juggle. This kind of development takes a practiced hand.

The Effects of COVID-19 on Cannabis Real Estate Projects

In some cases, the coronavirus outbreak has slowed zoning approval processes. That has put pressure on operators and their real estate teams to accelerate the development and construction process once approved. We have seen delays with materials, and in a few cases, suppliers close their doors and create serious schedule and cost issues. While some material costs have increased, we have also been able to leverage market conditions to obtain savings on labor and contractor mark-ups.

Capital is King, Use It Wisely!

Today’s world is like no other we have seen, and the cannabis development world is not immune just because the product is hot. Capital, speed to market, and long-range flexibility are key factors with the funding and development of cannabis cultivation and processing, or dispensaries. Up-front costs and uses of capital are seeing even more scrutiny, which we think is always a good thing. Well-thought-out options, sector knowledge, and leverage lead to cost-effective solutions. And with the multi-faceted problems you will be dealing with, you will need to ensure you surround yourself with those who can help provide multi-faceted solutions.

Contact us to help with the development of your cultivation and processing centers or dispensaries anywhere in the U.S.

  

Learn more about MBRE's Project Services division here.

To read about David Graff's expertise & experience, click here.