Felons involvement and costs of building a business in the new industry

Thanks again for your advice.

After 6 months of research and planning, I finally feel like I've sorted out the foundation of the business model in my mind, which is allowing me to relax a little, lol.

The only things I can't foresee or budget is the plumbing costs(for my HPA drain to waste) Electrical upgrade costs/ Location acquisition.

Oregon is already limited in the amount of available production space for lease and alot of people are already securing space a year before the launch date. I'm curious to see if the outer metro area light-industrial buildings will be available much longer.

What is your advice on securing a location. Should I do it months before I could use it or do you think it's possible to wait for licensing before signing a lease?

Yeah my bad I thought it was weird that you woulndt know with a legal background...yes the charge shows up but this

"So when the Oregon Alcohol Board is reviewing this and they see FELONY BURGLARY arrest, I would assume in most cases they would at least consider this as a case for denial. I am aware both WA and OR state denys based on Manufactoring and Distributing convictions going back 5 years."

key term "manufactoring and distribution Conviction" there was no felony conviction

Good discussion and great info being shared
Just giving my two cents no malice here...

Critter said:

Yeah my bad I thought it was weird that you woulndt know with a legal background...yes the charge shows up but this

"So when the Oregon Alcohol Board is reviewing this and they see FELONY BURGLARY arrest, I would assume in most cases they would at least consider this as a case for denial. I am aware both WA and OR state denys based on Manufactoring and Distributing convictions going back 5 years."

key term "manufactoring and distribution Conviction" there was no felony conviction

Good discussion and great info being shared
Just giving my two cents no malice here...

Click to expand...

When reading Measure 91 for Oregon it states:

(2) The Oregon Liquor Control Commission may refuse to license
any applicant under the provisions of sections 3 to 70 of this Act if the commission has reasonable ground to believe any of the following to be true:

(F) Is not of good repute and moral character.

(D) Has been convicted of violating a general or local
law of this state or another state, or of violating a federal law,
if the conviction is substantially related to the fitness and ability of
the applicant to lawfully carry out activities under the license.

But continue to state:

(3) Notwithstanding subparagraph (D) of paragraph (b) of subsection (2) of this section, in determining whether the commission may refuse to license an applicant, the commission may not consider the prior conviction of the applicant or any owner, director, officer,
manager, employee, agent, or other representative of the applicant for:

(a) The manufacture of marijuana, if:
(A) The date of the conviction is more than five years before t
he date of the application; and
(B) The person has not been convicted more than once for the manufacture or delivery of marijuana;
(b) The delivery of marijuana to a person 21 years of age or older, if:
(A) The date of the conviction is more than five years before the date of the application; and
(B) The person has not been convicted more than once for the manufacture or delivery of marijuana





So I'm just curious if petty theft or something lets say, like insurance fraud misdemeanor, past 5 years ago, would be in violation of F and D.

I get ya totally

However...I Bet it boils down to how they interpret his charge against
" if the conviction is substantially related to the fitness and ability of
the applicant to lawfully carry out activities under the license."

Maybe hard to deny and prove fitness and ability.

Def something to research look into for more info on past precedence for licensing similar situations.

I bet they wont give two shits but i don't know for sure because it depends a lot on the particulars of the crime involved.
I think he will be fine though with the info you've shared on the situation.

Critter said:

I get ya totally

However...I Bet it boils down to how they interpret his charge against
" if the conviction is substantially related to the fitness and ability of
the applicant to lawfully carry out activities under the license."

Maybe hard to deny and prove fitness and ability.

Def something to research look into for more info on past precedence for licensing similar situations.

I bet they wont give two shits but i don't know for sure because it depends a lot on the particulars of the crime involved.
I think he will be fine though with the info you've shared on the situation.

Click to expand...

Thanks for your input.

I think your right and it is one less thing I should worry about.

My biggest problem securing a location.



I liked the idea of eventually expanding to an area like Bend, OR where there is an average of 300 days of sun a year, dry warm climate, high desert. A cool town and good for a greenhouse.

Plumbing and electrical you'll need to figure out with your building contractor. Budget for 1.5-2x whatever he/she pitches you. Plumbing's not too bad usually but wiring is really expensive.

Land's going to be hard. A good real estate agent's going to be the best way to go if you know one who won't screw you. If not, there are tools available online on government websites to sift through zoning maps for available properties for our uses, but they're a pain to use. Took me a couple weeks to really figure out how to use our county's zoning and property map interface.

Marco61 said:

I always found the notion of banning felons with previous cannabis charges a bit ridiculous and malicious. Almost like big business are writing the laws to harm their main competition. Those people who grew and provided people with high quality product during the years of prohibition should not be prevented from participation. Those who were arrested and had their lives turned upside down during the years of prohibition have sacrificed a lot so people could smoke when there were no cannabis stores you could visit. Telling them it is still illegal to operate when everyone else has the right to is the biggest sucker punch ever. All cannabis rights advocates should be trying to keep these people included. Otherwise it just looks like "Well I got mine, to hell with you."

Click to expand...

ya that

SirStynkalot said:

Plumbing and electrical you'll need to figure out with your building contractor. Budget for 1.5-2x whatever he/she pitches you. Plumbing's not too bad usually but wiring is really expensive.

Click to expand...

What will I be using the contractor for? Splitting up large rooms if need be. But what else?

I understand my needs for the plumber, electrician and security installment but what else besides carpentry work will i need from the building contractor exactly?

Sorry I know it sounds like a stupid question but ive never had to work directly with a building contractor and im just interested to know exactly what it entails regarding exactly what they do. Just hire them and they hire their own electrician etc?

There is a minefield of permits and paperwork that experience is basically required for. Not technically "required" but it'll be damn near impossible to navigate on your own. If you were, say, renovating your kitchen then the permitting process would just be to drive down to city hall and drop off a notification of remodeling along with a $50 application fee or some such nonsense. If you're doing commercial instead of residential you'll need a contractor, and if you're doing commercial in this industry you'll need a really good contractor to get you through the rows upon rows of hoops the bureaucrats are going to throw at you beyond what they do for every other industry.

Uhm they also work with the architect and any engineers you might bring on, and the architect is going to have a big job. Again, permitting. You won't get anywhere without at least an architect's stamp and possibly an engineer's as well, and that's just for changing the walls around. There will be a lot more than that that needs to be done even if you're just renovating a preexisting structure. Re-insulate, completely redo the HVAC, change the plumbing to make water available where you need it to be without creating electrocution risks if, say, a running light falls and breaks on the floor, etc.

But yeah. the simple version is they've been building shit in your area for a long time, so they'll know which subcontractors are needed for which jobs, which subcontractors in the area are most honest and experienced, and they will be able to manage them in terms of keeping their different chunks of the job in order and getting them on the site to do their work on schedule and as efficiently as possible. If you're REALLY lucky, you might get one who is also on a first name basis with some of the local bureaucrats you'll need to sign off on your project. A little shoulder rubbing goes a long way toward smoothing out that part of the build-in.

There are also a whole host of things we do for small scale black market production that don't really scale well. A good building contractor might help you catch a couple of these. Don't wanna give away too many of those, though

Thanks again SirStynk,

Realizing it depends on alot of different factors.

But what would you budget in the way of contractor/electrician/plumbing, if you were considering a 5000 sq ft building that has 3 phase already? Just a wide estimate would be greatly appreciated.

two rooms split, running a total of approx 450amps at one time. Something like this. The AC unit you see in the middle is the excel air dual damper system that does 2 rooms.

Something like this:

Also, what are your thoughts on going Oregon medical mj about 6 months before recreational business market is open in jan 2016, applying for permits and switching over.

What are your thoughts of switching from medical to recreational. Possibly get up and running early and make it earier to transition? would their be less red tape with medical initially?

No idea what to budget in with contractors - our owner did most of the budgeting and accounting and I just have a very general idea of what got spent where. I don't know how it scales. All those questions would have to go to the builder. I'd say you'll want a million dollars all said and done to remodel a straight budget op that size without bells and whistles and get through the first crop, assuming you don't get bugs or mold or something. That's with plywood tables on cinder blocks. Could end up being considerably more, depending on where you land and who you get to work for you. The moment "marijuana" gets mentioned contractor rates double, so it's probably safe to assume that anyone who's willing to answer that question for you is undershooting the estimate by at least half in my experience.

So, to answer your question, my wide estimate would be 1.5 million might be able to get you into business. 2.5 million would probably get you into business with a safety buffer in case you lose your first crop and still leave you room for an upgrade or two over straight budget op status. Assuming you found good people to work for you, stuck with it, kept your partnership together, and found a place where land, power, and water were all available and not too expensive. Also when you're processing your ROI check out "IRS code 280E." That's a huge hidden cost.

You'll also probably have to double check pretty well your entire set of plans through contractors bit by bit and what they're comfortable working with is usually going to be what you're stuck with unless you shit gold bars. At least four major parts in the permitting process require different contractors' stamps or the project dies there. You tell your electrician where you want to run lights and he decides how he wants to string the panels and what kind of load he feels safe putting his name to. There are other things besides just lights that are probably on those panels and he's required to keep a certain percentage of the panel's capacity free for safety reasons. Rinse and repeat for HVAC, construction, structural engineering, architectural design, and a half dozen salesmen trying to pitch bulk supplies at a reduced price if you can just manage to swap out a few things with things that don't work quite as well but they get a bigger commission on (guess what I'm doing all day Monday -.-)

To be honest I haven't paid much attention to Oregon. I've been too busy with my own stuff. It looked from what I saw like they were going to allow medical and recreational to run side by side, but I don't know enough about Oregon's culture to know which residents in which parts of the state are going to go to which stores. That whole market is a mystery to me. I know WA and everyone knows Cali but OR's a blank spot. All I know is I'm not trying to sell to any stores on the WA/OR border since OR's tax rate is about a quarter of WA's.

As far as red tape goes, the sooner you get started the better... ASSUMING they're going to let business owners switch back and forth between med and rec. That's one you should send to an OR lawyer. They did in CO, they haven't so far in WA. No idea what's happening in OR, but if so then the faster you can get compliance nailed down, the faster you'll be able to cash in on inflated rec prices during legalization's infancy. From what I've seen of OR so far, they're going to try to put up the same amount of red tape for medical as recreational... but I haven't seen much.

1.5 million for a 5000 sq ft area sounds high.

A buddy in WA did a 30,000 sq ft area for 2 million.

Equipment, rent utilities and materials for a year comes to a quarter million at most. So it will cost 1.25 million for contractor costs?

Also regarding 280E.

Whats the deal with that?

I thought you can write of anything that has to do with the manufactor or production of the product but you cant write off anything that has to do with sales.

So retail gets to write of basically nothing unless they use the space for something else as well. But how does that work with production?

I'm sure it's possible to build in for that if you're kicking all the costs down the line. He's probably paying the difference between what he needed and couldn't find up front at 15-30+% interest rates. There is also almost no chance that that grower is compliant with state or local laws besides I-502. You can't be on that kind of budget. Lots of people built in that way and lied to bureaucrats (as in, the vast majority of those licensed in WA right now did that...) and now there are new moratoriums and lines of complaining citizens a mile long because of all the fishy bullshit. Makes the people who are trying to do the job right and stick around long term look bad. I'm not going to put advice on the internet about how to run an op that way beyond saying it's possible.

We can't write off very much for 280E, even as a grower. Beyond that, I don't know. I'd have to ask our accountant to find out what is and isn't covered but I know it's not as much as you'd think.

I finally got to some other threads you posted information on and have a better understanding of where your coming from with the numbers and the pading.

I was still hoping to start with 400k, although I have access to more funds. Planning on leasing 5000 sq feet but only building 2000 sq ft initially with 30 lights. after the first (successful) harvest, upgrade the production space by adding 30 more lights, in a total of 4000 sq ft. 1000 sq feet that is remaining to veg/clone/dry/processing rooms.

250k should be the total cost for the year not including management salaries.

Included in that I only budgeted 20k for electrical upgrades.

I'm wondering if I added 50k for contractor budget if that will be sufficient.

I could get a full million but I'd rather not and I'm not sure what I would use all that for, except for failed harvests and employee wages.

Gotcha. That would be a more reasonable strategy. It's pretty close to what we're trying to do.

I wish I could give you better advice for this part, but contractor and renovation costs are really just tied to wherever you're trying to rent. I looked at leasing about 10 different warehouses and we had problems all over the place with the available spaces. At one, in order to just bring the insulation up to code we were looking at over six figures because the building was just a steel shell with 30' high walls and they all had to be at R-24 insulation to be re-coded for industrial use instead of storage. At another, the real estate company was using every dirty trick in the book to try and jack our rent higher and higher. The first of the three leases we signed that they "lost in the office" ended up being about 1/4 of the price of their final pitch before we went elsewhere. Honestly it's just going to come down to the space you're looking at, how much different people try to jerk you around, and how much jerking you're willing to pay for to try and get built in sooner.

My thoughts would be a full million would be excessive for something that size and with that number of lights. You're also going way under standard watt-per-square-foot ratios for lighting, so you'll end up saving a bunch compared to me on your HVAC. That's a big deal - industrial HVAC costs a whole lot more than homeowner HVAC for the same capacity. You'll have a good shot at pulling it off with $400k, but were I you I'd still feel safer with at least $600-800k just to be dead sure you could handle the nonsense that will inevitably come up and ruin your projections.

I am also trying to be as safe as I can with my guesses. Heck, there's one guy in my area that got 1400 square feet of canopy in about a 3000 square foot warehouse built in and got through the first crop for $125,000. He's been preaching about it to all the local papers and acting like it was an impossibly huge investment. He's using tinfoil for reflectors and still has a bunch of holes in his walls so he has to blow pyrethrin bombs every 10 days from cloning through harvest, but he did manage it. I wouldn't want to put my name to the products he's putting on shelves and think he's probably not going to make it long term with more pesticide residue than resin glands on his flowers, but the point is it's probably a doable job for a lot less than what I'm pitching. It just depends on what and where you're willing to make cuts and which bureaucrats you've rubbed shoulders with before.

Also keep in mind when you're talking about square footage, you need dedicated space for water tanks, clipping tables, aisleways, bathrooms, and all that stuff. A good rule of thumb for efficient space usage is to plan on planting 1/2 of your total square footage and dedicating the other half to other business functions. For more info about layout and that sort of stuff on a commercial scale, Marijuana Venture did a great in-depth three part series on how to set up an efficient commercial grow operation. Issues 3 to 5 or something like that. I highly recommend checking it out. That's a damned good magazine, which is saying something after all the usual boobs n' buds garbage we get in this industry.

Ah, thank you! That's one of those hidden costs I needed to know about! Insulation. I would have never thought. Any others like that you've run into? Like photosyn paying the 40k for one wall. If I need a wall built to split the sq footage in half, I was puzzled on a budget of that as well.

As for HVAC. I planned on using the Excel Air 5.0 ton AC units which are plug in play. They are designed specifically for you NOT to use a HVAC certified install, they totally recommend against that. So will that save me or is there other HVAC things I'm not considering?

Also I will be obviously running 30 gavitas in one room for 12 hours with Excel Air Units. When the lights shut off I will be running the other 30 gavitas for 12 hours. Excel air offers a damper system like in my photos so I can use the same unit for 2 rooms same as system for lights, 12 hours in one room, shuts off, 12 hours in the other room. So my amps wont be doubled.

As for water tanks. I wont have any really. It will be automated fert injection systems like dosatron. Which will save space and labor. Ditch most of the water tanks, airstones, circulating pumps. I should have 1-2 water lines coming in and 1-2 drain to waste lines going out. Should be simple. I build systems similar to this NDS (nutrient distribution system) like this one:


https://www.youtube.com/watch?v=4iRRUgYJf2s

NDS at end of video. But I like this company. I am big HPA aeroponic guy and have been waiting for a commercial company to build HPA systems I approve of. Worth a check out.

I will build a rockwool drain to waste tray system for first 30 lights to secure the first few harvests. The upgrade/expansion 30 lights will be HPA.

I will save 150k on medium/water/nutrient costs every year with a 60 light run using HPA. HPA will be the future of commercial growing.

uh I can think about it.

I wouldn't even try the HPA, but that's just me. I'm a hydro head too, but it took a lot of years for me to get that way. You want something simple enough that you can train someone else to run it for you. Labor is a huge cost and people are really unreliable when they aren't working for themselves. If you want to expand at any point you're not going to want to have your own hours tied to an aero system first.

Dehueys are also required on this scale. That's not a huge cost, but it is one. Water in the air is considered "latent heat" for HVAC equations and just your ACs aren't going to keep up with the load from both the plants and the lights if they're only designed to handle the lights... and with that amount of lighting, you're pushing those AC units REALLY close to tolerances. Expect them to burn out faster and you might have some problems with heat control in your grow rooms even if they're working perfectly. Not huge problems as far as these things can go, but the difference between 78 degrees and 83 degrees is pretty crucial.

Ducting is going to have to be up to code. The unit itself might be a plug and play but you'll have to at least get someone to sign off on ducting, and the regulations with those are weird and regional, kinda like CO2. That's one you should look in to with a general contractor.

Fert injection systems are a good idea. Make sure you have water treatment, too, which is pretty expensive. You can't let fert mixes stabilize on an injector, so choose your ferts and treatment array accordingly.

And walls. Walls walls walls. We couldn't get our architect to sign off on our interior walls unless they were immune to humidity, rather than resistant to humidity. No wood, no drywall. That was a huge expense and we got off lucky. Some people had to make them fireproof, too.

Floor drains are also a huge problem. You're WAY better off figuring out how to move waste water above ground than trying to get drains set up. You also will want public sewer service, otherwise you'll need either two septic tanks (one dedicated for humans and one for "industrial strength waste water") or you'll have to do something really, really creative. That's a huge potential hidden cost.

Security systems are expensive. If you want something that will meet legal requirements in WA for that sized facility, you're probably looking at about $15k. If you want something that will work as intended and last longer than a year, double that. Also, bids for alarm systems and camera systems usually come from different people and a lot of security companies in general and alarm companies in specific won't work with pot businesses. Expect to pay more than usual for that.

You also have to have a huge security server to maintain all your state required video logs.

Compliance software is a hidden cost.

LFT (legal for trade) scales (plural) are a hidden cost.

PPE (personal protective equipment) is a hidden cost. You gotta buy it, but you also gotta know how to use it and teach your employees how to use it. There goes two months of your life.

Waste removal is another cost depending on where you are. We have to have a designated, controlled "waste quarantine and destruction" area to shred up our leaves and mix them with the root balls before we take it out to compost. Lotta folks try to toss "moldy" bud out the back door and sell it on the street, so regulators make you quarantine your waste before destruction so they can verify that it really is waste if there's a problem. The LCB already busted about five ops just in my town that tried to do that.

Then there are going to be a LOT of others. One guy in CO had funny issues with the state randomly telling him he needed to install $75k fire-proof vent fans and ducting, only to change their minds a week later. You gotta remember, the regulations are still in flux and bureaucrats don't care one bit about what stuff costs us. They don't mind telling you to drop $100k into, say, a new vault for finished product and cash storage or something, only to decide later they'll let the banks handle it. Hasn't happened yet but would be totally believable. You have to have a discretionary fund for that stuff.

And don't even get me started on processing. Unlike growing ganja, processing incorrectly can kill you.

I think that's a pretty full list. I'm sure I'm forgetting stuff. We should probably get an admin to change the title of this thread to "How many body parts does it cost to get into the legal industry" or something Gotten a little off track from the original topic. But it's been fun to share and I hope this helps you and any others who might stumble across this.