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In Focus: Key Success Factors for Building a Cannabis Processing Center

Developers looking for growth opportunities presented by increasing legalization of cannabis must be familiar with state-level building codes for processing facilities.

Q1 2020
On January 1 of this year, Illinois was the latest state to legalize recreational cannabis, and there are strong indications that New York will be following suit. By the end of 2020, more than 40 U.S. states could have marijuana laws on the books — a boon for industrial speculative developers looking to diversify by seeking new growth opportunities beyond e-commerce leasing.

The development of facilities for cannabis processing is highly specialized — more akin to the development of a pharmaceutical manufacturing plant than an e-commerce warehouse. Even then, it’s not an apples-to-apples comparison. Pharmaceutical manufacturers are subject to federal oversight from the Food & Drug Administration. In contrast, cannabis is not legal at the federal level, meaning that design-builders must be familiar with a varying compilation of cannabis licensing commission rules and building codes regulating processing centers at the state level.

While “legal” states have somewhat harmonized rules for cultivation facilities due to the hard-to-ignore by-products such as odor, establishing broad regulations for processing centers remains in flux. This does not mean, however, that developers should take a “wait and see” approach when it comes to exploring opportunities to convert vacant industrial space into cannabis processing centers. Based on our work on several cannabis processing centers in five states, there are some established factors to consider when it comes to designing and building these facilities.

Cannabis industry regulations rule facility design.
At the outset, specific state and local building codes and regulations for the cannabis industry must inform every aspect of processing center facility design. For example, while cultivation and processing facilities are typically on the same land plot in order to streamline the process as the cannabis moves through the supply chain from harvesting to packaging, some state laws dictate that each facility must have its own entry and exit.

Design for efficiency.
Beyond specific regulations and building codes, cannabis companies can look to successful manufacturers in other industries — and even e-commerce distribution centers that are focused on the picking, sorting, and distribution of finished products — for strategies on creating an efficient facility. In essence, facility designers must consider how the processing center supports the entire supply chain – from receiving raw product from the cultivation facility, all the way through to shipping packaged product to the retail dispensary. To that end, it’s helpful to look at facility design through the lens of how it can support the following functions:
  • Operations: First order of business is to determine what your facility will be processing. Cannabis plants can be converted into oil, or raw product that can be packaged by size and strain.
  • Production: To maximize production, it’s critical to envision the “assembly line.” Determine what technology can support processing and the ideal ratio between machine and worker to enhance production.
  • Maintenance: Ensure machines are easily accessible in case of repair, to avoid potentially shutting down the assembly line. Situate machines based on manufacturer requirements such as air-flow, access to exterior walls, etc., in order to prolong their life.
Design for flexibility.
Given the U.S. cannabis industry is only a few years old, and technology is constantly changing, expect some trial and error to find optimal machines that will streamline production. It’s important to keep design plans flexible, in case equipment needs to be relocated or replaced, or facilities need to expand to meet increased demand as more states make the move toward legalization.

Working with a trusted design-build partner early on in the process who understands state building codes and manufacturing industry best practices will save cannabis companies time and money later and put them in the best possible position to comply with federal oversight, if and when the time comes.

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