Indoor Grows Could Prove Costly for Hawaii MMJ Businesses

Medical marijuana dispensary investors and owners in Hawaii could be required to spend millions of dollars on construction and utilities because the state’s interim business rules require that cannabis cultivation be indoors, The Garden Island News reported.

Having to grow indoors may force dispensary owners to recoup the additional costs with a product price increase, said Jud McRoberts, a dispensary project leader on the island of Kauai.

To qualify as an indoor grow site, a building must have concrete floors, steel walls, secured entry points, and its interior cannot be visible from the outside, according to Hawaii’s health department. Greenhouses, which would drastically reduce power expenses, don’t qualify, the newspaper reported.

The interim rules expire July 1, 2018.

Should McRoberts’ team win a license, their planned two 8,000-foot cultivation centers would cost $3.6 million to build and suck-up $1.5 million annually in power expenses.

The cannabis industry’s extensive utility demands have come under scrutiny in recent months, and have been blamed for transformer blowouts and environmental degradation.

Hawaii will award eight licenses for medical marijuana businesses on the islands of Oahu, Maui, Kauai and the Big Island. Each licensee may run two production centers and two retail stores, and can begin dispensing in July 2016, pending state approval.

6 comments on “Indoor Grows Could Prove Costly for Hawaii MMJ Businesses
  1. Michael on

    Hawaii has one of the best climates in the world to grow outdoor cannabis and yet politicians prefer they pollute their environment with all indoor grows.

    Reply
    • Gentle Jim on

      Yes Michael, And all this because of the extreme paranoia caused by years of conditioning by drug war propaganda. But remember, by combining both natural light and LED in facilities we can grow 4 crops a year, control bugs and molds. We need to call out the politicians that hide behind this unnecessary crap that stifles the owners creative thinking. Sounds more like they are trying to keep their bureaucratic jobs.
      God bless all who work to end the war on drugs.
      Gentle Jim

      Reply
  2. Roger Krehl on

    This law should be scrapped and rewritten with appropriate input from people who actually KNOW something about the industry. The end result will be medicine that is WAY overpriced. The goal to help patients was completely ignored, and the result will be an over-priced product produced by monopolies.

    Reply
  3. Brett Roper on

    Interesting perspectives although I am not sure how an indoor grow ‘pollutes’ the environment any more or less than a greenhouse facility? First off, there are wide variety of both greenhouse as well as indoor cultivation facility design(s) and I suggest there is no wrong way to cultivate cannabis as all methods generally achieve some level of proficiency and at a cost of capital as well as operations to its ownership group.

    Based upon a safe and efficient indoor cultivation deployment, it would not be out of line (not being well versed in knowing the specific costs of construction in Hawaii) to expect to spend $225 per SF (or more) in the creation of a reasonably founded indoor facility although I am not sure how 16,000 SF of space would require a $1.5M utility cost. (I am assuming each of the 8,000 SF elements as mentioned are for 3,000 plants)

    Assuming utility costs in Hawaii are 3+ times what I have seen in a specific indoor Colorado operation (recently completed 20,000 SF aseptic cultivation space accommodating approximately 6,000 plants with a 3,000 AMP 120/208V service whose average monthly cost runs about $20,000 based upon 2015 billings), I would expect with the initial 3,000 plant count cultivation operation in combination with the necessary elements of the facility (extraction, trim, dry, cure, packaging, secure storage, plant work area(s), security elements, offices, storage, restrooms, other State of Hawaii required elements, etc.) to need around 19,000 SF (extraction and production of non-flower inventory on shared premises to achieve better cost of operation efficiencies) and likely generate a power bill of between $55,000 and $65,000 a month (including an expansion of approximately 10,000 SF for the second 3,000 plant count as allowed) or about half of Mr. McRobert’s prognostication utilizing no sunlight efficiencies due to design limitations. I have advised our clients in Hawaii to anticipate a substantially lower power expense base than what is indicated in the article and hope that advise survives the test of reality, should they be successful in securing one of the licenses to operate in Hawaii.
    The operation I mention in Denver currently incurs an approximate 3% cost of power (includes natural gas) against its retail revenues for 2015 and this includes offices as well as two dispensary operations or 50,000 SF (approximately).

    Nice article, great comments! Hawaii … here I come!

    Reply
    • Hawaii Greenthumb on

      Outer islands in Hawaii have a electrical rate of 42-48cents per kWh. Plus we have constant high heat and humidity that places like Colorado don’t have to deal with, meaning constant AC and dehumidifying. We also don’t have access to natural gas. Living here and being a certified caregiver I am well aware of the utility concerns that out of state individuals are not used too. The numbers in this article I believe to be more than accurate. Growing in the tropics provides its unique challenges and being forced into growing indoors in the State with the highest electricity cost in the country is concerning.

      Reply

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