The cannabis industry is growing exponentially and with that growth, more and more cannabis brands are looking to upgrade, redesign, and expand their facilities. To that end, demand for construction contractors who specialize in cannabis industry projects is likewise at an all-time high.
Our latest Q&A features Michael Machat, the Executive Vice President of Business Development and Cannabis Team Lead for Reed Construction. In this interview, Michael discusses previous successful cannabis contracts in state markets ranging from Illinois to Florida, navigating regulatory requirements and other quirks to operating in the cannabis space, tips for cannabis entrepreneurs who are planning a new facility, and more!
Ganjapreneur: Reed Construction has existed as a general contracting firm for over a century: what led to the decision to get involved in commercial cannabis facilities construction?
Michael Machat: It’s an interesting story, actually. About three years ago, we were approached by a major MSO who had knowledge of our extensive healthcare, life sciences, and industrial experience. They believed we were uniquely aligned to complete this type of work and ultimately put their faith in us. At the time, cannabis was a fairly untapped market for contractors in our area. We ran with the opportunity, learned how to scale/repeat our processes, and have continued developing relationships in the industry to grow our team of experts. As a result, we have become a premier design-build contractor within the Cannabis industry.
What types of cannabis industry businesses does Reed Construction serve?
We have worked in all areas of cannabis construction – including cultivation facilities, processing labs, extraction facilities, and dispensaries – with an array of clients, engineers, architects, cultivation experts, end-users, and investors. When we meet with our clients, we always let them know we can support them every step of the way from seed-to-sell with our well-established design-build process.
Which state-level cannabis markets does Reed Construction operate in, and how do you maintain an understanding of the developing regulatory and compliance needs of your clients?
We have the flexibility and resources to work anywhere. We pride ourselves on our “center of excellence” concept. Which is the ability to replicate our process and make sure every client has the best experience, no matter where the project is. In fact, our successful track record in cannabis has already taken us across the country throughout Arizona, Florida, Georgia, Maryland, Massachusetts, Michigan, Missouri, New York, Pennsylvania, and our home state of Illinois. We have an experienced Cannabis team dedicated to offering construction solutions regardless of location.
With more than 125 years of experience, we have strong working relationships with agency officials, along with a deep understanding of construction regulations and processes specified in the cannabis industry. We are always staying in front of compliance and regulatory changes and adapting our processes as those changes arise.
What are some of the unique considerations for cannabis cultivation, retail, and extraction building projects? Does each business model come with its own requirements, and do requirements vary depending on where a business is located?
When it comes to cultivation, there are a few vital areas you need to consider with your construction partner before getting started. One of the most important areas is security. Every square inch of the building needs to be on camera, and the entire cultivation site should be secured with a fence with barbed wire. There should also be multiple security guards on-site full-time.
Generators are another must-have with retail and cannabis sites. If at any point in time they were to lose power and did not have one, it’s basically game over for their crops. Keeping relative humidity (RH) levels and temperature-controlled is also crucial. If it ever gets too high or too low, then you’re at risk of ruining a crop. We always explain to our clients that are newer to the process how vital it is to make sure the building can support the electrical and HVAC capacity required when selecting real estate.
With retail, depending on local codes, the space simply needs to be designed properly. Some of the questions our team considers, in the beginning, are: does the vault require wire mesh within the drywall partition and ceiling to enhance the security of the room per code? Do the vault walls need to be concrete masonry units (CMU) versus drywall? Is a secured loading dock required for all cannabis deliveries? Is one entrance for customers acceptable or is there a code requirement to have one entrance and a separate exit? All items are reviewed based on local and state requirements and developed with input from the client’s compliance department.
With extraction, considerations for the type of extraction need to be reviewed with the client. Storage of CO2, butane, propane, etc. need different building requirements for storage based on local codes. Extraction equipment and methods need to be proactively selected during the design process to properly incorporate power, HVAC, plumbing, etc., as partition fire ratings are dependent on the method of extraction.
Did your team study cultivation or extraction methods and practices to understand the needs of these companies before entering the space or did you learn about these processes from clients as you grew?
Since we jumped into this industry relatively early on, we have done a combination of both. We worked with our clients to learn their cultivation and extraction processes. We took that feedback and used it as our framework for our design-build of the systems and building components within the facilities. Our background in healthcare and life sciences construction also gave us a huge advantage in the beginning stages of working in the cannabis industry because both are very sensitive in nature. In addition, we took the time to independently study general cultivation and extraction techniques to better educate ourselves on the product.
How does Reed Construction help scale clients’ cultivation sites over time? Why is it important to build with growth in mind?
We always advise our clients to design and construct with future growth in mind. For instance, designing high ceilings – this will allow for the ability to re-stack your tables and benching to allow for more plant space. However, to do that, the building will need adequate power, reverse osmosis (RO) tanks, feeder tanks, and HVAC equipment space to upgrade capacities if necessary. It is important to keep this in mind because as more product goes out, the more product you will want to have coming in eventually. That’s why, we urge our clients to think about all of those long-term items upfront to help cut future construction costs.
How do you engineer technology into your building projects to facilitate client success?
We use BIM to confirm clash points as there are a lot of moving pieces going on in the ceilings of these projects. You have feeder lines, RO lines, dehumidifiers, snap fans, LEDs, HVAC, and fire suppression systems that all need to be compacted into a building. BIM can help successfully route all of these items so that we don’t run into issues with running out of space. We also use on-screen take-off to quantify everything involved with the project, and provide an accurate budget based on our knowledge of cultivation and retail centers.
What kind of building precautions are taken when preparing for water and moisture in a cultivation space? What are some of the risks of incorrect moisture/water management?
We always look at what type of paneling is in place within the exterior walls, floor drains, sanitary capacity, and watertight/air-tight capacities to name a few things.
A few major risks if moisture/water management is not controlled are that mold can form on the plant and walls, you can also see an increase in pest pressure and algae growth, ultimately leading to testing failures of the product.
To mitigate this risk, we always recommend our clients invest in moisture-resistant drywall, epoxy paint, epoxy flooring to protect building materials from high moisture, and, as I was mentioning earlier – this all ties back to ensuring that the HVAC system is designed to correctly maintain humidity levels. Mold formation because of poor moisture control can affect more than just crops – it can also lead to a failing building if it makes its way into drywall and roofing.
What are some other building considerations or precautions that are unique to cannabis cultivators?
One other consideration that is unique to cannabis cultivators are the specific regulations. Cannabis is still one of the most regulated industries, from zoning requirements to environmental controls. Yet, speed to market is still critical. This is where choosing the right site and ensuring that drawings are compliant at the onset of the project are critical. Regulations are also meant to protect not only your business, but also the community. Being a good neighbor is critical – for instance, if odor is not properly controlled, that will have a big impact on the community.
For a cannabis production start-up, what is the most important thing to remember when making plans for a new facility?
The most important thing is to make sure to find the right real estate in the proper zone. In addition, make sure that your facility is big enough for when you would like to scale. Once you have a building that is the right size in the right location, you have to make sure that it has the proper water and power requirements. Deck height is very important for new cultivators. Also, bring a cultivation expert on early in the process. They will help with putting together the right functional design.
What kind of hands-on consulting do you provide to clients as you build out their facilities? How might this support differ between MSOs and craft operations?
With our design-build process, we support our clients by hiring both the architect and engineer and managing the process from start to finish regardless of their needs. For instance, we’ve been performing due diligence for a current client to ensure they select the right real estate to meet their current and future needs. We have also helped clients with permitting, inspections, and even planograms for retail sites. MSOs often have more in-house resources and experience, where they don’t need as much support from us. On the other hand, though, craft growers – especially those newer to the process – often lean on us to leverage our past experience and best practices.
Thanks, Michael, for answering our questions! You can learn more about Michael Machat and Reed Construction at ReedCorp.com.