Comstock's magazine 0818 - August 2018 - Page 56

n CANNABIS Williams Offers Room to GROW Canna-Hub, a cannabis real-estate development firm, is planning its own massive cannabis complex in the city of Williams. Like Sacramento, Williams has welcomed the can- nabis industry, having approved commercial activities for all license types for medicinal and recreational cannabis. While Canna-Hub will own the cannabis business park property, it will lease space to individual large-scale opera- tors. The company’s 80-acre campus will cost more than $200 million to build and include roughly 1.2 million square feet of enclosed cannabis operations preapproved for culti- vation, manufacturing, tissue culture and distribution. The facility will also house a full-service, third-party testing lab, which could save operators significant transport time and money. (Certified, third-party testing is required for all com- mercially sold cannabis products.) Canna-Hub CEO Tim McGraw has been developing and managing real estate for 21 years and for the last six, exclu- sively in the cannabis space. Prior to working in California, McGraw helped craft Illinois’ cannabis legislation and built over 150,000 square feet of operations. McGraw’s MO is to buy property prior to finalizing it for zoning changes and avoiding the exorbitant prices for cannabis-approved real estate. “We find cities that really want us there and then find property that fits,” he says. “We work very closely with the city to write ordinances that make sense.” McGraw has been able to win over local officials with the promise of new jobs that legal marijuana is projected to bring. He worked with Williams’ city officials to write a cannabis ordinance that was very pro-business, negotiating low permitting fees and no revenue tax. McGraw secured similar terms for Canna-Hub’s site in Mendota (in Fresno County), which has already been completely leased or sold. The company expects to break ground in Williams and in Mendota this summer, creating roughly 1,300 and 200 jobs, respectively. “We are getting between 10-25 phone calls a day from in- terested parties, so demand is not an issue,” McGraw says.” We expect some really large-scale operators, with the aver- age cultivator leasing or purchasing over 20,000 square feet of space.” McGraw touts the savings advantages on supplies, power, transport, security and banking, and the business- driving synergies created when dozens of operators work together in a Canna-Hub community. “The collaboration amongst operators will also accelerate innovation,” he says. —Laurie Lauletta-Boshart cannabis businesses at 10 percent of the total industry in the age cost for a business operating permit (which stays with the Power Inn area, or 2.5 million square feet. The City currently business) is $10,000-$22,000, but can go as high as $30,000 has CUP requests for 2.8 million-square-feet in the district. — and separate permits are required for each point in the “The Alliance wants to be open to new businesses, while supply chain. Add to that the additional excise and culti- ensuring we maintain the ability to keep our economic base,” vation taxes, and the barrier to entry becomes significant. Schaal says (which is primarily in manufacturing), noting the Conway estimates the minimum investment to get into the organization is agnostic on the product. “My job is to oversee cannabis space is $2 million: “You probably can’t do any- the overall vitality of the district.” thing terribly significant in this space for less than seven Once the cap was approved, Deane’s landlord reached out figures.” to negotiate, proposing a five-year lease at 40 cents per square Compounding the problem, some brokers use mislead- foot — double Deane’s current rate. “I’m not willing to sign a ing tactics to capitalize on the confusion of the cannabis five-year lease at inflated prices because I think the market market. “I see it all of the time,” says Richter. “A broker lists a will come back down in two years,” he says. “Not all these can- property that states that it’s in the green zone, and it doesn’t nabis startups are going to make it, which means a lot of vacant fit or qualify to be utilized as a cannabis property because it buildings and lower prices.” does not meet all of the setbacks or there’s not enough power allocated to the area to make it a viable green property.” BARRIERS TO ENTRY Nasser Azimi, who has a background in local government The cost to break into the cannabis business is excessive, espe- and the high-tech software industry, is a small cannabis cially for new operators. The City of Sacramento charges about operator and co-owner with son Dar of the Ohana Gardens $30,000 for a CUP (which stays with the property). The aver- Collective in Sacramento. Frustrated by what he calls pred- 56 | August 2018