The cannabis industry is still in its infancy. Not necessarily a “cottage industry” but certainly not nearly as advanced as many agriculturally dependent business marketplaces. However, that infancy has not led to a low-cost entry point when trying plan a commercial marijuana start-up. Equipment is expensive, renovations are often complex and costly because in many cases municipalities limit commercial marijuana businesses to industrial zones, occupied by old factories, which need a lot of work to bring them in line with their new purpose.
Right Size For Now and Later
While in many cases finding any building that is properly zoned, in a cannabis friendly city, can be daunting, you don’t necessarily want to just go with the first one you come across. As part of your plan, you will need to “right size” your operation now, while also planning for the future. Given the growing size of State medical and recreational marketplaces, cannabis start ups and even currently operating businesses need to plan appropriately so that they can scale up as their business and the marketplace grow. In many cases, that decision starts when you choose the physical building out of which your company will operate. For example, if you are working to open a processor to manufacture marijuana or hemp distillates, you may only need a three to five thousand square foot space to begin your operation. In order to process you will have to buy agriculture at market rates, and as you increase your unit output, you will need to acquire more agriculture. You will either need to have a larger space to safely and securely store inventory, or in some cases, you may find it more cost effective and efficient to try and vertically integrate your operation by obtaining a cultivation or grow license and growing your own agriculture onsite. Those decisions are going to be driven, in part, by the size of your building, property, and whether there is room for the type of expansion you desire.
Size Isn’t Everything
However, you don’t want to buy a sixty-thousand square foot building, planning on a five-year expansion, for a processing license that only requires four thousand square feet to operate. Also important is choice of equipment and ensuring that you have a set up that is most efficient for your space and operation. As another example, for a grower, there are a massive number of choices that need to be made, many of which are determined by the size of the building, but also require proper planning for future expansion. Whether to use low nano-meter wavelength lights (which result in wider, but often shorter plants), or to use traditional heating lights, or another method. Should you install systems for hydroponics, traditional soil base, cocoa shells, deep water culture, or another methodology for growing the plants? Ensuring not only enough space to operate the grow, but ensuring that you can expand efficiently as the demand for your product grows is just as important. Setting up your lighting, growing base electrical systems, fertilizer storage (if applicable), inventory processing, trim rooms, and proper plant growth staging will all make a difference in your ability to grow and scale as the market demands.
Timing is Critical
Planning for scale and growth also requires knowing the right time to scale. If you wait too long, you will miss your window for growth and an expansion may result in being pushed out of the market place and either stagnating or going out of business. If you pull the trigger on scaling up too soon, you risk growing too quickly, investing too much, and finding yourself stretched to the breaking point. In either case, serious business strain, or an inability to continue operations leading to being out of business, are possible and likely. Knowing your marketplace and the trends in both your State, and others, can help guide your decisions. Having a consulting firm, like Hunter Green, can provide you with some serious guidance and expertise to give you direction about where to buy a building, how and why you should make certain efficiency decisions, as well as when and how to scale up your operation based on market trends and discernible demand patterns in the cannabis market place.