Illinois created a cannabis industry mess. Here’s how to begin cleaning it up.
OPINION: Andy Poticha calls on state lawmakers to grant universal extensions to give new cannabis entrepreneurs, who are already under tight deadlines and facing pandemic-related supply chain shortages, more time, flexibility and the certainty to launch their business and leverage high quality resources. Poticha asks the state to make amends for its own delays and treat new cannabis entrepreneurs as the business partners they are, important future generators of significant tax revenue for Illinois and leaders in the cannabis industry.
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Building Your New Dispensary: Avoiding Common Design-Build Mistakes as a New Licensee
So you’re planning a new cannabis dispensary – congratulations! Whether this dispensary is your entrepreneurial dream come true or you’ve been down this road before, once you confirm your license, you’ll want to begin building out your location as quickly as possible. Our teams, currently building dispensaries across Illinois and other States, can help steer you through the unique maze that is the cannabis construction process.
Building a new dispensary is not as simple as it sounds. Dispensaries must offer the security of a bank branch, the compliance of a pharmaceutical company, and the aesthetic of a high-end retailer.
As experts in the design-build construction of cannabis facilities, our teams have been in the trenches building dispensaries, cultivation centers and processing labs since 2015, including a national flagship dispensary in Northbrook, currently under construction. We have been involved in more than 30 dispensary, cultivation center and processing lab projects in nine states since 2015. Currently, we are leading renovation projects that offer more than 35,000 new square feet of cannabis cultivation and dispensaries customized for the needs of both medical and recreational cannabis customers.
Here are a few ways you can jump ahead of the curve:
Differentiate the customer experience. Buying cannabis in a regulated dispensary should feel easy, welcoming and natural. Designing for the customer experience, creating welcoming sales environments, while remaining compliant with regulations, is where dispensaries differentiate themselves from the competition. One reason this is so important: with strict supply chain rules in place, many cannabis products are highly commoditized. If your product is a commodity, the customer experience becomes even more important.
Prioritize compliance or suffer the consequences. To maintain product supply and operational retail sales, stick to strict protocols and carefully follow building codes related to the handling, storage and distribution of cannabis throughout the supply chain. In Illinois, building code inspections are unique to each municipality, with enormous differences from one community to another. Be sure your design-build construction partner knows the right questions to ask, and the pitfalls that could come up at each inspection milestone.
Use a design-build approach. Design-build integrates your design and construction teams from the beginning, reducing surprises and streamlining your budget throughout the process of envisioning and construction your dispensary. When your architect and contractor are working together, you’ll find you have more time to focus on running your cannabis business, with less time spent in meetings about your space. In addition, a design-build model allows for a single point of accountability. At CFC, we use our four-step design-build process to ensure alignment and high-touch customer service throughout your project.
Your contractor shouldn’t be learning on the job. Your design-build construction partner should be respected in the industry and be able to speak to ‘tales from the trenches.’ While legalized recreational cannabis may be new to Illinois, there are companies like us that have been building for both medical and recreational cannabis for many years. You should never have to hear ‘let’s learn this together.’
Don’t let the pandemic get you down. As an essential business, construction has been building cannabis facilities throughout the COVID-19 shut-down period and continues today. With the right protocols in place, there’s no reason the construction of your dispensary can’t press forward. To understand more about how our crews stay safe, you can read our National Cannabis Industry Association (NCIA) blog post from June 2020 on how to expand or renovate your cannabis facility while observing social distancing.
Choose a contractor with experience. For nearly five years, CFC has worked with numerous cannabis companies, including vertically integrated multi-state operators (MSOs). “Partnering with CFC, we have been thoughtful about connecting the design/build process with our customer experience and compliance objectives,” said Mitch Kahn of Greenhouse Cannabis. “Together, we identified and solved potential issues early in the design/build process, so that the build-out is supportive of sales, security, and being good neighbors in our communities.”
Need more resources on the design-build dispensary construction process? Here are a few suggestions:
KNOW BEFORE YOU GROW:
KEY SUCCESS FACTORS:
While cannabis continues to be a fast-paced industry with changes on a daily and weekly basis, it’s no longer brand-new. There’s no reason you shouldn’t have a guide who knows the right questions to ask and can keep you from repeating mistakes of the past.
For more information on working with our Cannabis Facility Construction experienced teams, you can request a consultation here and one of our team members will get back to you immediately.
The Rise of Hemp: The Federally Legal Industry is Booming
The hemp-derived CBD industry is expected to reach $16 billion nationwide by 2025. The ground-breaking Agriculture Improvement Act of 2018 or Farm Bill removed low-THC cannabis and its derivatives from the Controlled Substances Act, opening the door for FDA-regulated products like CBD pharmaceuticals, food items, additives, and dietary supplements. Already, major retailers like CVS and Kroger are selling CBD products. Granted CBD products, including CBD-infused water, CBD-infused cosmetics and CBD-infused pet treats in the marketplace pre-dated the Farm Bill, those products can now be shipped across state lines and sold legally at the federal level. Here’s what you need to know about the rise of hemp in the U.S.
Hemp Vs. Marijuana
Hemp and marijuana look and smell nearly the same, but the similarities stop there. They derive from the same plant, cannabis sativa, but hemp contains less than .3% THC while marijuana has much higher levels. Hemp is now considered a federally legal agricultural product, and majijuana remains a DEA Schedule 1 drug, only legal in states with medical and adult use programs. In addition, hemp is regulated by the FDA and marijuana is not.
Just like with marijuana, there are hemp cultivation facilities, processing centers, and retail businesses. The focus and capital investment has been on processing centers with businesses in Colorado City, Colorado and Janesville, Wisconsin leading the charge.
Colorado City has a population of under 3,000 but is home to Paragon Processing, the largest hemp-processing center in the United States. According to Westword, Paragon will produce a variety of hemp extractions through isolation and distillation techniques, projecting to produce one million pounds of hemp monthly. Industrial hemp production has the complete buy-in from Governor Jared Polis. “Governor Polis’s administration has pushed for looser regulations on hemp farmers and businesses in order for this state to maintain its top spot in the hemp industry,” adds Westword. “During a recent speech at a hemp and CBD industry conference, Polis said that hemp farming was part of his rural economic initiative, and that he’d like to raise Colorado’s current 62,000 acres allotted for hemp farming by 20 percent.”
Wisconsin’s young market already has as big player in Simply Solutions, a maker of natural personal care products, getting into the hemp game. Simply Solutions will be the area’s first-to- market commercial-sale processing facility with another distinction: a method that extracts almost 100% CBD oil content.
Per GazetteXtra, “Simply Solutions claims their extraction process is a cleaner and more efficient way to extract more CBD from hemp…Methods other producers use extract only 60% to 70% of the CBD, they said.That’s important, considering that some strains of hemp grown for CBD can net $2,500 to $75,000 an acre, according to New Frontier Data, a cannabis industry analyst.”
Sourcing hemp from reputable farmers is crucial for CBD purity, as many companies are extracting CBD from hemp plants not bred for CBD.
Licensing and Regulations
The Farm Bill gives states the authority to submit plans for licensure and regulations. According to the National Conference of State Legislatures, “A state plan must include certain requirements, such as keeping track of land, testing methods, and disposal of plants or products that exceed the allowed THC concentration…State policymakers have taken action to address various policy issues — the definition of hemp, licensure of growers, regulation and certification of seeds, state-wide commissions and legal protection of growers.”
Keeping Marijuana and Hemp Separated “Marijuana entrepreneurs who want to enter the federally legal CBD industry should consider starting a CBD business separate from the marijuana entity,” according to Marijuana Business Magazine. Though the Farm Bill has federally legalized the hemp industry, marijuana remains a Schedule 1 drug, and the main concern for businesses is extracting CBD that stays below .3% THC content. However, the same owner can have separate hemp and marijuana businesses.
The same article reported that Fairwinds, located in Washington state, faced a dilemma, desiring to enter the hemp space. The company’s products include tinctures, capsules, and topicals derived from a cannabis strain with CBD-dominant ratios, but with THC content above the limit. “The solution wasn’t simply removing THC from the products, because that would make them less effective. Rather, in anticipation of hemp legalization, Fairwinds CEO James Hull and his team spent more than a year finding new cannabinoids that could replace THC in formulations that would be federally legal while still an effective treatment.”
In the spirit and best practice of keeping the businesses separate, Hull ultimately created a new entity called Fairwinds CBD.
Less Oil Means More Plants
Another significant difference between hemp and marijuana is hemp’s lower oil content, which means that business owners must process more of the crop for an adequate CBD oil yield. Marijuana Business Magazine interviewed Craig Henderson, CEO of Extract Labs, a Boulder, Colorado-based extraction firm and CBD products manufacturer, who says hemp processing facilities will need larger extraction machines. “He [Henderson] estimated that a large marijuana company processes 100-300 pounds of cannabis per week, whereas large hemp companies process 2,000-10,000 pounds of the plant each week.”
In addition to larger equipment, business owners will need more employees and more space to handle the volume of product and extraction needs of hemp. “I think it’ll take people a couple months to figure out what they want to do and how they’re going to create businesses, and hopefully, maybe by June, we’ll see a huge spike in interest,” adds Henderson.
Proceed with Caution
The FDA remains the be all and end all governing body when it comes to regulating hemp. Hemp-derived CBD companies must be judicious about their product descriptions, especially information on potential health benefits. Moreover, the FDA has not given CBD as a food additive the designation of Generally Regarded as Safe.