Budgets can be tough to pin down in cannabis, and a cultivation facility buildout is one of the largest up-front expenses a business can take on. Overspend on construction and risk a tight operational budget. Take too conservative of an approach and you might shortchange yourself out of key equipment selections that can make your grow more efficient and profitable long-term. So how much should it cost to build out your grow?
In order to get the most accurate answer possible to this million dollar question, we connected with John Paul (JP), co-founder and CEO of Vulcan Squad, a licensed general contractor specializing in the construction of cannabis cultivation, manufacturing and retail facilities. In the sometimes shoot-from-the-hip world of cannabis, JP is as experienced and authentic as they come.
In addition to founding and operating Vulcan Squad, JP also owns and operates Hemp Temps, a cannabis staffing company, and Klone, a cannabis genetics supplier based in Colorado. Just ask any of your lighting, irrigation or hydroponic gear sales reps, and they’ll tell you: JP knows his shit. We sat down with JP and picked his brain on cannabis facility construction costs and on where to find some savings and efficiencies along the way.
Cost of Cannabis Facility Design and Engineering, Per Square Foot
Step one of any grow buildout is facility design and engineering. This includes your floorplan, as well as specifying all of your equipment, and the all the mechanical, electrical and plumbing (MEP) required for operation. Once complete, this design package will drive the bidding process, and eventually, construction and installation. Exactly how much you spend depends on a variety of factors, such as:
- Will your architect or engineer run your bidding process?
- Is your general contractor handling design/engineering?
- Are you in an agricultural zoning area with minimal permitting requirements?
Each of these scenarios has its pros and cons, and each will come at a slightly different cost. Because of these factors, cost for design and engineering can vary greatly. Fees for developing a complete design and construction package can run anywhere from $2 per square foot, all the way up to $8 per square foot.
If you fall into the agricultural zoning category or are in a scenario that requires minimal permitting or interaction with building departments (maybe rural Missouri) you can plan for the lower end of that range, but if you are in a metropolitan area in the northeast like New York, New Jersey or Maryland, expect to land closer to the higher end.
Equipment selection can play a big role in design and engineering costs as well. For example, do you want features like a packaged air conditioning system, hybrid heat and ac split or a ductless setup? Do you anticipate incorporating, chillers, boilers or cooling towers into your HVAC design? Will you be using LED or HID lights? Considering vertical grows and rolling benches? These more advanced systems can increase design/engineering costs—but also save in the long run.
Cannabis Facility Construction Costs
When digging into the costs to construct and equip a cultivation facility, many operators like to look at the cost of equipment separate from the actual construction and/or tenant finish of the facility itself. This can be helpful because once you select your equipment and establish the approximate square footage cost for equipment, you can use that formula to quickly estimate equipment costs for various facilities you may be considering. Major drivers for equipment cost are lighting and HVAC, followed closely by racking/benching and irrigation. Making sustainable or upgraded selections might be more expensive at the outset, but can contribute to larger yields or more efficient cannabis facility design over time.
Some equipment selections like traditional HVAC and dehumidification systems, high-intensity discharge lights and stationary, single-tier benches will trend cheaper. Others, like sustainable builds with the latest environmentally friendly tech, will likely cost more. Depending on those selections, we generally see equipment costs land somewhere in the $50-$300 per square foot range. LEDs and multi-tiered racking, along with the HVAC to support it, will land you on the higher end of that range.
Just like with any other type of construction job, pricing/bids on the same job can be dramatically different depending on the contractor. Renovation costs for an existing facility can be especially hard to pin down, as unforeseen issues can pop up along that way, which can oftentimes open a can of worms that can completely skew the budget.
New builds are slightly easier to estimate. A major contributor to the overall cost of construction is the cost of MEP. Cannabis facilities are much more utility intensive than the average business and equipping your facility to accommodate all that equipment and systems can get expensive. Working with a general contractor who is experienced with cannabis cultivation facility builds (like Vulcan Squad) is key to accurately estimating utility needs and costs.
Depending on the condition of the building you intend to retrofit or if you intend to build from the ground up, expect to pay $100-$300 per square foot on construction.
Hopefully this overview gives you a better perspective when estimating facility construction costs, but like you’re probably thinking at this point, there are huge ranges in price between the high and low end. Ultimately, you can expect to spend about $250 to $600 per square foot on your cannabis cultivation facility build, but in order to really pin down your construction budget, we recommend working with an experienced cannabis-focused design and build consultant in order to dial in your design to specify and price out all of the equipment you’ll need to achieve your operational goals.
Another factor that will influence how much to budget is the cost of construction on your buildout timeline. It’s no secret that the COVID-19 pandemic kicked off years of supply chain woes and impacted the labor market. The longer it takes for necessary materials to come in, the more time that workers will sit on the job site. How much those workers are paid depends on numerous factors like inflation, union involvement, cost of living and more. You may be able to save money on construction costs with a flexible buildout timeline—but that can also mean delaying production and revenue.
How to Save Money During Cannabis Facility Construction
There are a few ways to trim buildout costs, however, without sacrificing square footage or valuable inputs for quality crops. Some of the best ways to save money during cannabis facility construction:
- Fully vet the property ahead of time
- Scrutinize bids from cannabis architecture and engineering firms
- Engage a competent engineering partner with previous cultivation facility design experience
- Take advantage of commercial cannabis rebates whenever possible for:
- LED grow lights
- Vertical racking
- HVAC systems
Is It Cheaper to Build a New Cannabis Cultivation Facility or Retrofit an Existing Grow?
Part of vetting potential properties is evaluating factors like location, whether an existing property has good bones worth retrofitting, and if there are cost-saving logistics in play, like existing suitable power availability or opportunities to use rebates to offset the expense of key upgrades. That said, it can often save time and money in the long run to build a new facility to suit your exact grow strategy and goals.
That’s especially true when implementing features like integrated pest management, automated cannabis cultivation systems, and positive or negative pressure hallways and grow rooms. Building a cultivation warehouse from scratch also makes it simpler to consolidate all your cannabis ancillary services in the same building. Putting drying and curing rooms, laboratories, changing rooms, fertigation rooms, strain libraries, mechanical spaces and break rooms in the same building as bench space is simply more efficient.
Is It More Expensive to Grow Cannabis In a Greenhouse or a Warehouse?
The cost of building a new cannabis cultivation greenhouse or warehouse grow varies depending on location. The regional climate, real estate costs and local regulations can all impact what type of cultivation facility is most advantageous. However, there are certain considerations that transcend location that can make it easier to choose between a greenhouse or a warehouse for cannabis cultivation—or inform design decisions for new builds and retrofits.
For example, many greenhouses are built too short for efficient circulation of heat, humidity and CO2. That common problem can be compounded in high-humidity climates like the Pacific Northwest, where excess moisture can cause condensation, wet walls, and an added burden on HVAC systems. Indoor cultivation facilities tend to have more space—particularly vertical space—that can improve crop efficiency over time.
“When I interview many owner-operators with greenhouse grows, they often say that they wish they had gone with an indoor facility,” said JP.
One factor that might influence your budget is whether you’re choosing indoor over outdoor to have more granular control over even the most minute inputs at your grow.
“I’m biased towards indoor facilities because they allow you to have full control of every aspect of the facility, including photosynthetic photon flux density (PPFD), vapor pressure deficit (VPD), the light spectrum, and airflow,” added Paul.
We’ve seen all sizes, scales and styles of grows at Next Big Crop. If you want help finessing how much build you can get for your budget, or comparing different options to assess which will help you best meet your goals, reach out today for a cannabis facility design review.