Although medical cannabis use has been on the books in Illinois since 2013, it was the statewide legalization of recreational cannabis, which took effect on Jan. 1 of this year, that put the spotlight on a number of implications. Not least of these is the demand for dispensaries and cultivation centers. Connect Media spoke with Andy Poticha, principal of Northbrook, IL-based Cannabis Facility Construction and Mosaic Construction, for insights into how commercial real estate is addressing this demand.
Q: When did demand begin to rise for specialized cannabis construction expertise?
A: The new and fast-paced Illinois cannabis industry is building a legal supply chain that has never existed before, so there is a significant need for experienced construction and design experts to shape the built environment. After the medical cannabis program was established in Illinois in 2013, facilities were immediately needed, including cultivation and processing centers as well as dispensaries. We saw a surge in demand for facility construction at that time; that pattern follows in other states as they legalize medical cannabis as well. To meet this demand, Cannabis Facility Construction was established in 2015 as a dedicated construction team for this industry grounded in decades of commercial design build expertise.
Demand also surges when a state expands from medical cannabis to medical and recreational cannabis. The facility needs are surprisingly different, so there is a need to build more facilities, and to renovate existing dispensaries and cultivation centers. In Illinois, for example, the need for intentional cannabis facilities design is rising rapidly. Both medical and recreational cannabis design and construction require specialist expertise to comply with state, city and local regulations, as well as to make the dispensaries compelling for customers.
Q: How are cannabis companies using real estate to meet the rising demand for recreational cannabis, now that it’s legal in Illinois?
A: As cannabis legalization sweeps the Midwest, demand for facilities to grow, process and sell cannabis products rises in line with demand. Since Illinois decided to legalize recreational cannabis last year, the anticipated product shortage has been a widely discussed topic and is still a hurdle for the young market to tackle today. We’re building a 35,000-square-foot cultivation center now, and there are many others in the works as well. Along with the Illinois medical cannabis program enrolling more participants than ever, consumer recreational demand for cannabis is only going to increase.
To meet the rising demand for recreational cannabis, dispensaries, processing centers and cultivation centers across the state are being expanded to allow for increased production and sales. The expansions require strict compliance with local recreational regulations for adult-use cannabis; at the same time, dispensaries must redefine their customer experience to shift from the needs of medical patients to the preferences of recreational customers.
Q: How can cannabis companies differentiate the customer experience in dispensaries, and why is it important?
A: With the limited number of cultivators in the state and the strictly-defined supply chain, customer satisfaction and loyalty will come down to the experience they have in the dispensary—and that comes down to smart and pleasing design, strong site selection and high quality construction. Dispensary design in particular is a key factor in defining the customer experience from the security booth to the waiting room, the waiting room to the point of sale and finally, as a customer exits the dispensary.
Not only is intentional dispensary design important for representing a company’s brand, but it is crucial to driving retail sales volume and profitability. A design-build approach can ensure that this critical factor is considered from the beginning. Bringing the architects, construction professionals and suppliers to the table early in the process will ensure that the right questions are considered regarding compliance with local and state regulations, security, storage and the more aesthetic components of the customer experience.
Operators need to consider what they are selling – does a dispensary only sell product, or is it a retail environment driven by unique customer experience? With only a few cultivators in the supply chain, retail dispensary design will be the key differentiator that will drive customers to purchase at, and to return to, certain retail dispensaries over others.
Pictured, top: A cannabis dispensary. Image courtesy of Cannabis Facility Construction. Below left: Andy Poticha.
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Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism.
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