The selection of the site for setting up a cannabis facility is one of the very first steps that a cannabis company has to take. One can either choose to undertake such an endeavor by themselves, or they can rely on companies whose goal is to assist growers in this and provide them with fully functional facilities, ready to be operational. “New Lake Capital is a company focused on the cannabis industry,” says Jarret Annenberg, director of acquisition with New Lake. “We buy properties for and from experienced cannabis operators. As of now, we have four cultivation facilities.”
Jarret Annenberg, director of acquisition with NewLake
NewLake’s facilities are either retrofit a suitable industrial facility for cultivation or a de novo facility purpose built for an operator. “All of our facilities today are indoor grows,” he further explains. “Thus, it is important to pick a building that is an empty box, so that you can retrofit cost effectively, as cost is a big component when it comes to a cannabis facility.”
Benefits of retrofitting
Even though retrofitting an existing facility can be quite challenging, there are instances in which this undertaking can potentially save money. “Of course, it all depends on the site’s previous use,” Jarret points out. “First of all, you’d need enough space to install all the necessary equipment, such as the need for an extraordinary HVAC system. Generally speaking, some industrial buildings can already present some characteristics that make them suitable to be retrofitted for large-scale cultivation.”
NewLake owns indoor facilities for their alternative use value and for an operator to grow premium product due to the highly controlled indoor environment; and according to Jarrett, indoor facilities are the go-to approach as of now. “Our initial focus was to look at indoor grow facilities based on the high value alternative use,” Jarret says. “Additionally, we have also chosen locations that are close to tier 1 markets, such as Chicago and Boston, for this same reason.”
Yet, there is a growing greenhouse trend in the cannabis industry, and New Lake is very much aware of that. “We do look at greenhouses, and we know that it is possible to make premium products that way. Technology continues to advance, and we know that companies will be able to control the greenhouse environment the same as an indoor environment at some point in the near future.”
Selecting the location
The selection of the perfect location really depends on the state, as each state gives licenses differently. “For instance, the state of Pennsylvania is divided into 6 geographies, each of which has 4 cultivation licenses. So, in some instances, higher scores are given if you bring jobs to economically disadvantaged areas. From a location standpoint, you have to be sure that there is access to infrastructures, such as water resources, excess electricity, and so on. Additionally, it is also important to have close access to highways, so that the product can be distributed efficiently. At the same time, one has to look at the cost and the quality of the labor market.”
Considering the complexity of cannabis cultivation facilities, NewLake has a whole network ready to help growers kick off the operation on the right foot. “We support them in any way we can,” he continues. “We give them our opinion on what we see as typical build-out expenditures so that they can plan accordingly.”
As the cannabis industry matures and together with it the market, many opportunities lie ahead for experienced cannabis growers. “Things change,” Jarret says. “Yet, these changes take a long period to actualize. At some point in the next few years, some bill about federal legalization will pass. Yet, state governments have spent a lot of time and energy on these state-run programs, they brought investments and jobs, and they are not going to give that up that easily. We position ourselves as a partner to experienced operators who are equipped to handle the constantly evolving landscape and are excited about growing together with these operators, while we support them in building out these facilities.”
For more information:
NewLake Capital
312.273.5816
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newlake.com