Facility Build Out
You have now selected your physical site with an existing building for a retrofit, or in the alternative a new build on vacant land. The business plan will assist you in the fixed property purchase or a lease and also in the case of a shortage of capital a strategy defined by Health Canada as the “Phased Building Approach”.
The external build out will take different forms-- it could be a prefabricated steel structure, a warehouse, or an existing building.
The expensive internal build out will usually depend on the amount of capital expenditure available. For example, the capital required for a micro cultivation license without working capital would be approximately 1 million dollars or more. Now if there’s only $500,000 available for capital expenditure (CAPEX) then the build out will correspondingly be 50% or less of the total build out cost. So, to accommodate the shortage of CAPEX only a small portion of the internal builder is developed for the license grant -- the “Phased Building Approach”.
*Source: Health Canada
After the business has the license and is making money the banks will loan the funds for the complete build out after which the license is simply amended to increase the capacity. We call this strategy the “alternative finance” route. That is, smaller than optimum capacity in the short term—is a much better alternative than no license.
If you are going to pursue the alternative finance route because you do not have sufficient capital for the entire build out, you will need to accurately quantify the build out costs. You will also need to determine what growing technologies you are going to use if you are applying for a cultivation license and what extraction equipment along with the pre-processing and post processing equipment. The reason for this is that the HVAC is the most costly and critical price to be developed to meet the HVAC requirements. In choosing your extraction equipment you will have to consider the high cost of the HVAC. For example, ethanol extraction HVAC requirements are double or more than CO2 extraction.
We have prepared addendums to this special report describing some of the operating systems available for cultivation and extraction for the different license.
After selecting your operating systems, it is now time to assemble your construction team and to work out what you can afford to build. This team will comprise a project manager (usually a civil engineer), structural engineer, mechanical engineer and an electrical engineer. In conjunction with the construction team is the licensing consultant who will advise the team on Health Canada’s criteria to ensure the building is compliant with the Cannabis Regulations. Naturally if you have sufficient capital for the full build out you will still need to assemble your construction team to prepare the floor plan and begin the build out.
The internal build out will follow these steps:
1. Appointment of Project manager - Construction
2. Appointment of Cannabis Consultant.
3. Selection and appointment of project stakeholders such as a structural, mechanical and electrical engineer. Architect, and security SME.
4. Drafting floor plan with input form the architect, licensing consultant and security SME and also the information in the business plan to asst in determining the approximate costs of the build out.
5. After approval of the floor plan the structural engineer, mechanical engineer electrical engineer, and architect, will work together to produce the mechanical engineering (HVAC)and electrical drawings, and the building specifications for the internal build out.
6. The project manager will then put the critical pieces such as the HVAC out to tender, and after the trades have been selected through this process—work will commence on the build out to completion.
7. Once the build out is complete with eg. security equipment, facility lightning, ventilation and air filtration system installed in working order (no other equipment is required e.g. cultivation tables and lights, trimmers, scales etc) a video walk through of the finished build is made for onward transmission to Health Canada.