Managing Construction of Cannabis Facilities
Chicago, IL | November 25, 2019
Cannabis is a topic you don’t stop hearing about that has implications for service providers of all kinds, especially commercial real estate.
For the last 18 months, MBRE’s Project Services team has been a leader in cannabis real estate and currently manages construction of marijuana cultivation and processing facilities in five states. While each facility has unique physical and regulatory concerns, our team has noticed general trends and issues common amongst most projects of this kind. In our piece, Cannabis Facilities in Commercial Real Estate published last November, we discussed construction management challenges for this emerging market. In this article, we’ll share four tips based on what we’ve learned in the last year that cannabis professionals and their development partners should take into consideration for future operations.
Expect the Unexpected
Large-scale cannabis cultivation and processing centers in the U.S. are still in the early stages of development, so design, engineering, grow settings/techniques and processing requirements are constantly evolving. This may be the biggest challenge facing developers, owners, and operators until the industry is more established because standards and best practices may change half way through construction of your new facility. Establishing and sticking to the project program and basis of design (especially engineering) is key to a successful project. Sudden changes in expectations or requirements for a facility can significantly redirect a project mid-course, delay delivery, and/or increase costs.
Prioritize Speed to Market
Speed to market is critical, especially in an industry as competitive as cannabis. Once a project is given the green light, the facility needs to be built as quickly as possible, keeping in mind that licenses are often tied to completion deadlines. One way to ensure construction isn’t lagging behind is to order long-lead items early. Making sure coordination and communication between the general contractor and greenhouse vendor is seamless is also essential to staying on budget and schedule.
Pick the Best Team
Another area where projects face potential issues is in the division of labor and coordination between the general contractor and greenhouse vendor. In addition to expecting the unexpected and staying flexible, it’s crucial for project managers to assemble a team that works seamlessly together in order to maintain costs, stay on schedule, and ensure a quality product. At MBRE, we champion a design-build turn-key strategy for certain projects.
Know What Makes Sense for Your Client
In the search for the highest quality agricultural methods, the merits of warehouse versus greenhouse growing have quickly become a hot topic. With more and more ownership of facilities being held by REITS, we are seeing a lean toward warehouse growing in certain markets. However, the amount of capital you have, local climate, and regional/state taxes and regulations can all play a determining factor in which type of facility makes the most sense for your client.
The most important considerations to make when constructing cannabis cultivation and processing facilities evolve as quickly as the industry itself, but the tips outlined above will almost certainly have staying power.
Learn more about MBRE's Project Services division here.
To read about David Graff's expertise & experience, click here.