By Rachel Cavanaugh
As a combination of longtime garage growers expand their businesses in the wake of recent marijuana legalization and throngs of new entrepreneurs jump into the industry, the concept of turn-key production facilities has garnered the attention of potential lessees.
Many growers or aspiring growers want to know whether it makes sense to lease a facility that is already set up to produce cannabis, or if they’re better off building everything themselves from scratch. The answer appears to be that it depends.
A great deal hinges on how well the developers have set up the space, experts say, and how much they want to charge you to lease it.
For a grower who wants simplicity and convenience, it can be an excellent decision.
Many facilities are fully equipped with all of an operation’s electrical needs, water supply, air filtration, HVAC, security cameras and grow lights. Some are even stocked with office furniture and computers.
Yet, according to Craig Allen, a consultant and co-owner of Groco Supply in Bellevue, Wash., a lot of emerging marijuana entrepreneurs assume that all facilities have been built by grow experts. While that is sometimes the case, he said, other times it is not and business owners need to be able to bring their own discretion to the table when looking at a place.
“I would just stress that people do their homework,” Allen said. “Make sure they’re making a good choice. Check out all their options and recognize that they’re probably talking to a salesman. [That] doesn’t mean that they’re getting sold something bad but the salesman is going to have a lot of good things to say and he’s not going to tell you the bad things.”
There are five pro tips that Allen said he’d give to business owners considering a turn-key facility.
- Make sure it’s space efficient
A lot of people have the mistaken idea that having wide aisles and plenty of room to walk around makes a facility more luxurious, Allen said. But the opposite is actually true. If you’re not highly efficient with your canopy space, he said, your utility bills will be high, you’ll lose valuable square footage for planting, and your facility will yield smaller crops.
“The idea that you should have three or four feet between your rows so you have all kinds of room to walk around and comfortably garden is really just wasteful,” he said.
The biggest problem is that inefficiently designed canopy spaces minimize the ability to use multiple grow lights on each row.
If you have a 10-foot-wide swath of plants, for example, there will be multiple lights overlapping; however, if you have extra space between the rows then that light hits the ground.
Multiple lights make crops bigger, cut utility costs, and maximize production per square foot. The practice is an industry standard for all indoor growing worldwide, he said, whether you’re talking about cannabis or tomatoes or ornamental cactus.
“These are really well-researched techniques that aren’t really up for debate here,” he said. “…The problem with cannabis especially is that the margin is so high on the price versus the cost to produce a unit that people just naturally waste.
“But very quickly prices are going to drop and waste is going to become important. So why would you set yourself up for failure with a facility that doesn’t already have the efficiencies built in?”
Allen said you should aim for a maximum 2:1 ratio when looking at canopy space versus aisles and processing space. An ideal situation for 21,000 of canopy space — currently the largest canopy allowed in Washington State —would be a 40,000 square-foot facility. That would allow approximately 21,000 for plants and roughly 9,000 going to aisles, doors and windows. The remaining 10,000 outside the canopy would be used for processing and administrative space.
- Assess the processing area
It is important to know what you are going to be using your processing area for and make sure the space you’re looking at fits those goals, he said.
Different growers have different objectives for their final products. Each business model has a different target for post-grow processing and you need to determine whether the facility meets your needs.
Specific rooms will have certain features built in and you need to be sure they are in line with your purposes. For example, if you plan to have a trimming room, you’ll need it well-insulated. If you want to have a drying room, then you’ll need good dehumidification capabilities. CO2 extractions require special exhaust systems and other fire safety capabilities.
“Make sure the processing area will work with the type of processing you want to do,” Allen said.
- Bring along a consultant
You have to know what you’re looking for and even industry veterans may not know what that is in a large-scale facility. The point becomes even more relevant for people just getting into the business.
“It’s really important if you don’t have a strong understanding of growing to have someone there with you when you’re checking out leases,” Allen said. “Someone that knows advanced grow techniques in large-scale facilities can point out glaring problems really quickly in some of these rooms. Just because it’s a big, clean, brand-new, expensive operation doesn’t mean whoever built it knew what they were doing any more than you do.”
He added that if you’ve been used to a smaller operation you may not fully understand the impact that small decisions can have in a large-scale facility.
“You can make mistakes small-scale and it’s a small mistake. But you can just magnify the size of that and all of the sudden you have a huge mistake.”
It is also advisable, he said, to use a commercial leasing agent. They will be more familiar with local lease prices and able to perform the lease to make sure that you’re not getting unfavorable terms.
- Remember the model’s changed
For a long time, marijuana growers were operating under the radar, Allen said. Facilities were smaller and strategies were different. Now, many people think they can move into a larger facility and expect to do the exact same thing. But Allen cautions that when looking at larger turn-key facilities you need to keep that shift in mind.
“There’s an attitude in this industry that it’s fairly easy to do [on your own],” Allen said. “And I think it’s because of how the industry used to be.
“People had to be their own electrician. They had to be their own plumber; they had to be their own contractor to build out space; they had to be their own gardener. Because it was illegal on one end and definitely a gray area on the other end. You couldn’t call an air conditioning guy to come to your house. Whatever it was, you had to do it yourself.
“People in this industry have historically been do-it-yourselfers and so now a lot of these garage growers are trying to go large-scale and they think, ‘Sure, I can find a building. I can do my own build-out.’
“But what they’re really coming up against is that this is a whole different beast. This isn’t just garage growing. This is a structured business.”
Remembering that the business model has changed will suit you well when deciding whether or not to lease a turn-key facility, along with multiple other areas.