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Building the Cannabis Industry One Facility at a Time: Your Green Contractor

There were a few categories that CBE avoided including in the 2016 CBE Ancillary Business 100 due to the local nature and sheer number of players out there. In addition to the legal and accounting professional services areas, we also avoided construction. Fortunately, one of the players from the commercial building arena, Your Green Contractor, reached out to us. We are happy to share their impressive story with our readers, and those seeking a top notch contractor and builder.

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Nate Mendel, Cannabis Creative Conference
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When founder & president Nate Mendel graduated from college with a degree in business from the University of California Santa Barbara, he moved to Colorado and joined his uncle’s construction business before starting his own company in 1997. His company, Mendel & Company Construction, Inc. (M&C), turned out to be a prescient move. The original plan was for Mendel and the son of his uncle’s partner to take over the reins of the business. Mendel, however, wasn’t feeling it and decided to go his own way.

The company successfully grew (they have engaged in more than 700 projects since 1997) and found a niche building dentist offices, restaurants and other commercial facilities, primarily in Colorado. In 2011, the green rush was well under way in Colorado, and forced vertical integration was the newest regulatory wrinkle for licensees to deal with.

One of the trusted architects at the time that M&C had done multiple projects with over the years (50 plus), brought plans to him for a licensed medical marijuana dispensary to do a modest addition. For $30,000, that would include an office, safe room and conference room. M&C put a bid in, quoted a 3-week construction schedule, and went to work. Three weeks later, with the project complete, owner Matt Huron of Good Chemistry (GC) happily paid him in cash for finishing on time and within budget, and offered M&C another project. With lots of green backs in hand, Mendel readily agreed to expand a grow.

The 1,500 sq. ft. project (for $80,000) included a grow facility extension and an expanded dry and flower room, which his team finished on time and on budget again. Huron then hired M&C again to build a 20,000 sf facility ($750,000 project)in another part of town. Good Chemistry Aurora

Mendel’s most trusted advisor, his wife Teresa, suggested that M&C was onto something. They decided to set-up a separate entity, Your Green Contractor (YGC), a Colorado Corporation, which (as far as I can tell) is one of the largest general contractors in the cannabis space. The new entity was formed as a way to not alienate his existing clientele. M&C hasn’t experienced any noticeable push back in their business since entering the industry.

Beginning with the first GC project, Mendel tells CBE that they have built just about every kind of facility (dispensaries, indoor grow facilities, greenhouses, extraction facilities, MIP kitchens, etc.), with the exception of testing labs. The Colorado approach to licensing that allows all comers into the industry has fueled the majority of YGC growth.

Expanding the Footprint in Licensed States

YGC learned the costs of working out-of-state with much tighter and competitive marijuana license issuance and award processes the hard way. The first scheduled out-of-state project was to be Massachusetts, again working under contract with GC. However, the problems that GC ran into due to the uncertainty involved in the Massachusetts licensing process delayed the original project.Good Chemistry Flower Room

They ran into a similar problem in Illinois, where a client believed that a cultivation license was a slam dunk and began construction before receiving the license. Unfortunately, after completing foundation work, it turned out that they were not awarded the license and had to stop the project. This was an expensive lesson for the Owner.

Zoots Colorado_1YGC has since completed projects in Washington, they have 2 under design in Oregon, and they are in the middle of building a smaller grow facility in Nevada. They are also currently working with a pre-licensure client in Maryland. They should know if the project will move forward any day now. The state said it would announce grow license awardees on August 15.

As a construction management company, scaling comes down to their ability to subcontract to local trades that can build out the projects. This can represent challenges, as most trades aren’t willing to bid on contracts unless the general contractor already has an exclusive relationship with the licensee. Their typical out-of-state contract involves placing a superintendent on site until the project is finished, and a traveling project manager. The customer premium includes the cost of housing and per diem expense, but the reward is a hands-on managed project resulting in being on budget and on time—YGC’s number one goal.

Mendel tells me that his experience delivering consistently for a few clients like Good Chemistry, Sweet Grass Kitchen and Zoots, has resulted in the expanded state footprint, as well as produced word of mouth referrals resulting in dozens of clients and projects built to date. Michelle Koster, who joined the team 3 years ago, Michelle Kosterheads up business development and typically focuses her efforts in licensed states within a two-hour plane ride from their Colorado Headquarters. This makes Adult-Use initiatives in Arizona and California logical places for expansion. The California regulatory environment can be a nightmare to deal with and represents a challenge to developing projects profitably and on-time.

With few General Contractors having the breadth of experience working for a tightly regulated industry like cannabis, and the nuances that each state brings to the table, YGC has a first mover competitive advantage. Revenues grew to nearly $5 million in 2015 and YGC is projecting over $7 million for 2016. The only thing holding them back is time and building the team and resources that will allow YGC to take advantage of the growth opportunities the industry presents nationwide over the next 2-3 years.

 

Background Information

Company Name: Your Green Contractor

Year Founded: 2011

Ownership structure/operating entities: A Colorado Corporation

Management Team: Nathan Mendel, Founder & President; Michelle Koster, Business Development; Patrick Jasen, Sr. Project Manager

Headquarters: Denver, CO

Website: www.yourgreencontractor.com

Industry Segment/Category: Turn-Key Construction

Current Markets/States Served: Colorado, Washington, Oregon, Nevada, Illinois, Maryland

Current Number of employees: 33

Market Strategy/Goal:  Maintain status of the #1 cannabis facility builder in the country.

2014 Revenues: $3,268,965

2015 Revenues: $4,745,770

2016 Projected Revenues: $7,000,000+

Product/Revenue Mix: Construction of Indoor grows, dispensaries, greenhouses, extraction facilities, MIP kitchens

Expansion Plans: We will expand into every state where cannabis is legalized.

Financing strategy: Cash on hand.

 

Rob MeagherRob Meagher

Rob Meagher

Rob Meagher, CBE’s Founder, President and Editor-in-Chief is a 30 year veteran of the media world. His career has spanned from stints representing the Washington Post, USA Weekend, Reader’s Digest, Financial World & Corporate Finance to the technology world where he worked at International Data Group and Ziff Davis where he was part of the launch team for The Web Magazine, Yahoo Internet Life, Smart Business and Expedia Travels before starting his own marketing and Publisher’s Representative Firm. He also ran all print and online media sales and marketing for the Society for Human Resource Management before partnering with Forbes and then Fortune to create Special Sections covering a variety of topics. Rob, who started CBE Press in 2014, can be contacted at [email protected]

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