By John Schroyer
A construction firm has purchased 332 acres in southern Colorado for a massive outdoor cultivation site that could change the face of marijuana growing in the state.
Martra Holdings and its subsidiary, Martra Development, finalized the land purchase this week after working on the deal with the tiny hamlet of Walsenburg.
The company bought the land – located roughly two and a half hours by car south of Denver – for $1.3 million and intends to spend the winter and early spring building utility infrastructure on the property. It then plans to begin constructing state-of-the-art greenhouses for commercial marijuana growers.
The project will ultimately have the capacity for roughly 1.8 million square feet of grow space, including a combination of outdoor and indoor cultivation operations, Martra Holdings CEO Brian Trani said. The land will be broken up into 92 units, each offering about 20,000 square feet of space.
Each unit offers enough space to potentially grow hundreds of plants, “based on the operator’s style and method,” he said.
“It’s a labor of love… but Martra is hands-off the plant,” Trani said. “We only want to be a landlord and a management company. We’ll shovel the snow, we’ll change the lightbulbs, we’ll maintain the structure so the (tenants) don’t have to. It operates very much like a homeowners association for townhouses.”
But it’s not as though Martra will build 92 greenhouses all at once. Rather, the buildout will be phased in depending on demand from growers, who will rent space for their cultivation operations. So it could be years before all 1.8 million square feet is utilized in one way or another.
“The market is going to decide how fast we do that,” Trani said. “The brokerage firm will now turn it on from prospecting into actual leasing. And they’ve been receiving calls for a long time.”
Denver-based Business Brokerage Services’ Eric DeWine, the leasing agent working with Martra to find tenants, said he’s already fielded calls from about 150 interested individuals, including a mixture of experienced growers as well as acolytes who have no idea how to grow marijuana.
“Folks are looking to take three to five (units) at a time,” DeWine said, indicating that most companies don’t just want 20,000 square feet of growing room, but more like 60,000 to 100,000.
He’s also negotiating with tenants over rental prices and other provisions based on their individual needs. DeWine added that prices will be lower than the going rates for premium warehouse space in the Denver metro area, which is typically about $15-$25 per square foot.
DeWine further estimated that companies currently growing indoors in warehouses could likely cut production costs by 40-60% just based on utility savings that come with using the sun instead of artificial lights. That means once the Martra facilities are ready to come online for growers, some could decide to move their operations south from the Denver metro area, or new entrants could end up bolstering supply in the state.
When told the project has the capacity for 1.8 million square feet of cultivation area, Jennifer Beck’s reaction was simple.
“Oh, my God,” said Beck, who is the CEO of Cannabase, an online wholesale forum for marijuana growers and buyers. “That’s huge.”
Beck said that with new pesticide and testing regulations around recreational marijuana that are tightening the supply market, a new business model could be to move into a greenhouse like those that Martra is planning, and spend the cost savings on pest control, to ensure that state standards aren’t a problem.
“It’s a necessary evolution. This is a very smart business model, and it’s a very smart move,” Beck said.
But a big question mark, Beck said, is transportation from Walsenburg to rec shops and MMJ dispensaries. Currently, marijuana couriers aren’t closely regulated by the state, but they very well could be in the future.
“That’s a really important piece of the profit margin. If the (Colorado Marijuana Enforcement Division) cracks down on courier services and makes that safer… we’re going to be looking at much higher prices for this product that’s being transported from down south,” Beck said. “I know that’s on (the state’s) mind.”
John Schroyer can be reached at [email protected]