Companies working in the marijuana industry are expecting a busy year in 2020, as more licensed businesses open and additional communities begin regulating recreational operations.
2019 was full of activity as new marijuana companies sought licensing and construction firms built provisioning centers and grow operations for medical marijuana businesses, particularly in the city of Grand Rapids.
After receiving a flood of inquiries for work on marijuana-related businesses this year, Grand Rapids-based Orion Construction Co. Inc. took on several projects and expects the work will continue into 2020.
“Right now, we look at it as a booming market in the next year, and we’re going to take advantage of that market while we still can,” said Brad Walsh, project manager at Orion.
Orion is under contract or currently working on five marijuana-related projects, with five more planned in the coming months. Most of the projects are in the Grand Rapids area, as the city’s Planning Commission has been working through a list of more than 90 medical marijuana business applications.
Many of the city-approved medical marijuana facility projects — which include 16 provisioning centers and five grow facilities, some of which also have provisioning centers — will open in 2020.
Orion’s work includes new construction, as well as renovations of retail facilities, warehouses and storefronts. The firm is working on a provisioning center off East Beltline Avenue, as well as a 28,000-square-foot grow facility in the former Kids’ Food Basket warehouse on Oak Industrial Drive in Grand Rapids.
Elsewhere around the region, companies from Detroit and Dallas are looking to put projects in Muskegon, which opted into allowing recreational marijuana businesses in October.
“I think it’s going to be huge for 2020,” Walsh said. “It seems like every other week we have a new prospective client come in.”
Recreational gets regulated
As of mid December, provisioning centers in Battle Creek, White Cloud and Evart received state licensing to begin selling adult-use marijuana products. Most of the licenced retailers to date have been in Southeast Michigan.
The city of Grand Rapids could start receiving applications for recreational marijuana businesses in April after zoning ordinance amendments for adult-use marijuana are completed, Landon Bartley, senior planner for the city of Grand Rapids, told MiBiz in an email.
Communities around the state will also need to decide whether to allow recreational businesses if they have not already; many have opted not to allow them.
The additional adult-use marijuana business approvals will allow medical marijuana companies to get into that industry first, per state guidelines.
“A lot of these companies are being designed for medical and recreational,” said Walsh at Orion Construction. “When the city of Grand Rapids says, ‘OK, we’re going to do recreational,’ a lot of these companies will have already built that into their existing floor plan.”
The Michigan Marijuana Regulatory Agency in November surprised the industry by allowing recreational businesses to transfer medical marijuana for recreational use. Some marijuana advocates have said this would cause increased pricing and shortages of product in the market.
When adult-use marijuana retailers opened in Michigan this month, some stores ran out of product within days. In the first week of legal sales, recreational marijuana yielded $1.6 million in total sales from just five shops.
Walsh expects a similar result in West Michigan, underscoring the desire for marijuana companies to be among the first to open. Many of Orion’s clients remain more concerned with timing than budget.
“They want to spend as much money as they have to to get these things open as quickly as possible, because they realize the companies that are open first are going to get the flood of the market share,” Walsh said. “They realize that whoever is out there first is going to get the attention.”
Planning for the future will be key to ongoing success in the industry, said Max Benedict, managing partner at Blue Pointe Equities LLC, which has partial ownership in the former Benteler Automotive facility on Grand Rapids’ southwest side that will house a growing facility and retail dispensary for Fluresh LLC in early 2020.
Blue Pointe Equities formed in 2018 as a privately-held real estate investment trust that plans to invest around $90 million in the local market by attracting interest from local and national accredited investors.
Benedict expects Blue Pointe to entertain more opportunities in the marijuana industry in 2020. As well, he predicts the opening of retail operations will squeeze the supply of product from licensed marijuana grow operations, which take longer to open than a provisioning center.
“There’s going to be a huge demand for product, and supply will not have come completely online yet,” Benedict said. “While the prices we’re seeing right now are high, it’s going to go up from there.”
