Secrets Behind Failed Cannabis Builds: Where Every Team Needs to Look Now ft. David Fettner

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David Fettner: What's amazing about it too is there's never been a sensor to sense any type of risk, right? Like spider mites or powdery mildew, things like that. Well now the AI can pick it up about three weeks before the human eye can. So imagine you're a grower — you don't have to worry about picking up some type of powdery mildew, because your AI is going to catch it three weeks before you could anyway. Think about how much that could cut losses if it picks it up and you can address it. [Music] Bryan Fields: What's up, guys? Welcome back to another episode of The Dime. I'm Bryan Fields, and with me as always is Kellan Finney. This week we've got a very special guest, David Fettner, managing partner of Grow America Builders. David, thanks for taking the time. How are you doing today? David Fettner: Awesome, thanks so much, Bryan. Excited to be here. Kellan, how are you doing? Kellan Finney: Doing well, doing well. Excited to talk to David and dive into everything related to building in this industry. It's an exciting topic for everyone. Are you, Bryan? Bryan Fields: Yeah, I'm stoked. I think we're going to talk about some topics today that people might be considering right now, and timing is super critical — because unless David is going to reveal himself as a magician today, we've got some things we need to solve and get in front of. David Fettner: Pull something out of my pocket, yeah. Bryan Fields: Sometimes I think that's what they're hoping for. I think we both know there's a problem, and timing is the critical aspect. Sometimes people need to recognize if they're aware they have a situation, or may have one — reaching out to someone like yourself, David, before they sign that lease might be one of the best decisions they can make along the way. So before we dive in, can you give a quick background on yourself and how you found your way into the cannabis space? David Fettner: Yeah, thank you. I was at a construction company here in Chicago for about 20 years. I was also a zoning attorney — I practiced zoning law, entitlements, etc. I never stopped smoking, right — smoked every day through college, through life, through adulthood. We were still medical here in Illinois but about to become adult use, and I thought, every day is a grind, I'd rather grind in an industry like cannabis — something emerging that I'm passionate about. I even hate saying that word, 'passionate,' but we are. I thought, let me see what the entry point is to get a dispensary license in Illinois. It was like seven million bucks. So that was off the table, but I knew how to design things, how to build them, how to get entitlements. I figured I could create a company that's kind of a one-stop shop — you have a license, you need it built, here we are. We thought we'd do Illinois, the Chicago area, but we got very lucky. We owe a lot to Verano for giving us our shot — they let us start doing dispensaries for them on the East Coast and down south. Funny story — we were at lunch with their director of architecture or construction, and he asked if we wanted to build in Arkansas. My partner was next to me, and I said, 'Yeah, we'd love to.' My partner's kicking me under the table like, 'Arkansas? We got out of there — how are we going to build in Arkansas?' I said, 'We'll figure it out.' You say yes and figure it out later — I think Richard Branson said that. It turned out to be a great project, and it gave us confidence to start building outside of Illinois — New Jersey, and so on. Long story short, we've now built in 19 states, just started Maryland, our 19th state — probably over 150 projects, ranging from small micro-grows to over 100,000 square feet of canopy, flagship dispensaries, and kitchens for some pretty big names. That's where we are today. It's all we do — I think we're one of the only national design-build companies that works exclusively in cannabis. Kellan Finney: Just to start early on — based on your construction background and zoning understanding, I'd imagine you came into cannabis thinking you could apply some of those elements for a seamless transition. Were there things that surprised you about how construction or zoning worked differently in cannabis versus normal projects? David Fettner: Amazing question. Zoning for sure. Don't forget, this was 2017, 2018 — we were walking into states where the city council or zoning board wasn't friendly to cannabis. We were usually one of the first or second facilities of that type in that state or town. I was used to building bars, restaurants, or schools where sure, no problem, approved. Here it was, 'What does cannabis smell like? What's the security risk? Are kids going to get access to it? No, I don't think we're going to approve it — come back in four weeks and prove otherwise.' On the construction side, especially cultivation, I had to learn — what the hell is fertigation? What's an IMP panel? There was a real learning curve, which I loved. Then you add security, working with cultivators or directors of cultivation who know how to do it their way. A lot of our clients bring in amazing growers who may have grown outdoors or as legacy growers for years but aren't used to taking it indoors on a 20,000-square-foot fully commercial canopy. So there's a learning curve on the grow side for sure. Dispensaries are more straightforward — it's retail for all intents and purposes, with added security and a good concept — but the grows definitely have a steep learning curve. Bryan Fields: On the cultivation side specifically, how do you balance decision fatigue when cultivators come in with preferences that differ from what leadership wants or what's been spec'd out? David Fettner: I always talk to the operator first — the owner of the project — and ask what their endgame is. Is it to hold this for 20 years and pass it on to family, or to flip it in a few years and sell to an MSO or a VC-backed group trying to build a cannabis brand? Most of the time the answer is, 'No, we're flipping this — we want to sell.' Then I'll talk to the grower — it's still their baby, they still have a lot of input — but it has to be built almost like a spec, so the next grower or company can step in and everything is set up to keep the general parameters that nine out of ten growers would want. There's a balance, because a lot of growers grow incredible weed and know their process, so it's a bit of give and take. I think we're pretty good at it — to the point we're not offending anybody when we say no. But it is a bit of a slippery slope. Bryan Fields: The first thing that comes to mind is environmental conditions — say management specs out one HVAC system and the grower wants something different. How do you navigate that? David Fettner: HVAC comes into play mostly in room sizes and programming. Some growers want three rooms of 8,000 square feet of canopy each; others want fifteen rooms at 500 square feet each. Some want a combined dry, trim, and packaging room all in one — which might be what they're used to but isn't going to be compliant and isn't what the next operator would want. So it's really about programming. Where we get real pushback is lights — some growers have their tried-and-true lights and won't even beta test another one. That's where we go to the operator and say, 'Those lights are great, but they're $2,000 a light — do you want to test alternatives?' And the operator says, 'Yeah, of course, let's save some money and test.' That's where the fights happen — under lights, you can imagine. Kellan Finney: That challenging balance — how do you stay a partner and not just a consultant, while making sure you're setting them up for success so they're not pointing fingers later? David Fettner: One thing we have now is historical data — we can point to other facilities we've built that are successful and say, 'This is how we set this one up, and he's happy with it.' It's a small industry, so if a grower isn't happy with what we're proposing, we can say, 'Go talk to so-and-so, we did something similar for him and he's happy.' At the end of the day it's the person writing the checks — whether that's the operator, or sometimes the grower is also a partner. If there's pushback on lights or programming, we can also fall back on compliance, because a lot of what they want may not meet code. We'd rather be the bad guy and play good cop/bad cop to keep the operator and grower on the same page. If we have to take the fall, we will — because if this thing goes sideways or doesn't meet compliance, they're coming back to us. It's our ass on the line. For the most part it's been smooth sailing, other than a few funny stories about lights or room layout. Bryan Fields: Are these conversations the same regardless of whether it's a new build versus a lease that's already been signed on a maybe-not-ideal building? Is there room for compromise to help increase yields in an existing space? David Fettner: Yeah, it's all about increasing yields at the end of the day, and about whether there's a track record or something people can point to. I'm open-minded to any idea from any place — you have to be. But if a client already signed a lease two weeks ago or has had a space for a few months before calling us, that's my biggest heartburn, because I don't know what I'm walking into. If it's got eight-foot ceilings and 200-amp single-phase power, that's where we have to get creative, and that's where I get nervous. You probably should have talked to somebody before signing that lease — they might have told you to walk away, or that whatever price per square foot you budgeted is now going to be 2x, because we have to figure out how to raise ceiling heights and bring in way more power than expected. Bringing a project into an existing building is always scary to me. Kellan Finney: Do you have a checklist you work through with a client before evaluating buildings? David Fettner: Yeah, I think it's up to about 42 points now — when I started it was maybe eight. It's a very fluid, evolving document. Most of the time buildings aren't ideal; once in a while you get a Goldilocks building that's just perfect, but usually there are quirks. As long as you tell the client ahead of time, it also helps them negotiate with the landlord — they can come back and say, 'Great building, but what you're asking will require an extra hundred thousand dollars to reinforce the roof,' or 'a quarter million to bring in three-phase power.' It gives them a negotiating tool. We even check broadband — we had a project in rural New Jersey where there was no broadband signal out there, and you're running a factory, you need high-speed internet. Back then, before things like Starlink, there wasn't an easy fix. The client said, 'We brought you in, David, to fix the ceilings and the power, not the internet.' I said, 'Be a magician, I guess — bring the broadband in.' Bryan Fields: What's been the most challenging state to deal with? David Fettner: New Jersey is up there for sure — it's still a very small-town, local-government-driven process. I'd also say California is pretty difficult; we try not to do much there anymore. Even Illinois, our hometown, is hard for anyone coming from out of state — for instance, we use casino-style security where in any grow area, back of house, plant-touching areas, hands always have to be visible. That adds cost to security. There are also special inspections required before you even start your drawings — they want to look at the building first. So New Jersey and Illinois are tough if you're not used to them. But honestly they're all hard except Montana. We built in Montana, called in for final inspection, and they said, 'You're good.' I said, 'What do you mean, don't you want to come see it?' They said, 'We'll pop in in a few months.' I said, 'But they could start growing?' They said, 'Yeah, they're good.' It can't all be like Montana. Kellan Finney: So when is the ideal time to call you and your team — even if it feels too early, like someone's just starting to look at properties? David Fettner: That's exactly it — as soon as someone starts looking at properties. Sometimes people feel bad asking us to come look because we don't charge for site visits — that's just what we do. Some people call us even earlier, during licensing, and we help with SOPs or property narratives, like in New Jersey where you need a narrative on why a site is suitable. As soon as someone starts working with a broker, we love to tag along, because we'll tell you if it's a lemon — get away — or if it's good but will cost an extra $25 a square foot because of X. If you can bring us in once you've narrowed it to about five locations, that's ideal, because we can help make sure you're covering all your bases. Bryan Fields: That makes sense — even though operators might feel like they're too far from a real plan to bring you in, that's actually the perfect time so you can walk the site with them and flag issues before they commit. David Fettner: Exactly — I'll ask questions about how they're going to operate and grow. If someone says they want 5,000 square feet of canopy stacked in a two-tier system, I'll say, 'Hold on, our ceilings are at 12 feet — we need to look at that.' Or maybe they want a heavy living-soil grow on the second floor, and that floor can't support the load. I always ask about their process first, then we figure out the layout. Every building has its own character and quirks. My advice to anyone, even if it's not us: get an architect or someone who's put these projects together involved before you lock down a building — it'll save you heartache. Kellan Finney: Do teams ever come to you and say, 'We're planning to expand to a new state in six or twelve months, can you help find us a building and take us further down the chain?' David Fettner: Yes, I'm doing that right now for a company in Minnesota — find a broker, team up to look at buildings, narrow it down to three or four good listings, and we'll put together a report: here's roughly what it'll cost to build out, here's what you need to do, is it in a good green zone, will you need special approval, and so on. We do that all the time — it's fun to get on the road, look at buildings, and figure out how to make it work. Bryan Fields: Do operators typically come to you with a full-fledged business plan on expected yields and light counts, or is it more hit-or-miss? David Fettner: Very rarely. We have a questionnaire for growers — a couple of pages — because they may not even know what they need to tell us. It covers growing method, lights per room, total canopy, target yield, endgame, and phasing — are they doing everything at once, which I wouldn't recommend, or in two or three phases? I even get into preferred humidity levels per room and their climate. Once I have all that, I can walk the building with a lot more detail. Very rarely do people show up with the data — but we can pull it out of them. Kellan Finney: What about upgrading older facilities — is CGMP, and eventually EU-GMP, something teams are actively talking about now? David Fettner: Yes, that's top of mind for everyone — upgrading facilities, not just for GMP compliance, which New York is now mandating, but also because a lot of older facilities are still running HPS lights. They grow great bud, but they're being pushed out, and the energy usage is insane. About 95% of new facilities use LED, but older ones need to be replaced, and operators look at their electric bill and go, 'This is crazy.' A lot of facilities were built 'dirty' early on, not in a bad way, just because of budget constraints at the time — and now it's time to upgrade to today's commercial standards, whether or not you're going for GMP certification, just to get it ready to operate efficiently or ready to sell. Bryan Fields: Would you recommend a slow, incremental upgrade process instead of shutting everything down at once? David Fettner: It's subjective. Sometimes I walk in and say, you're growing great bud, I wouldn't touch it, unless it's a state-mandated compliance issue. Other times operators can't figure out why their yields, cannabinoid levels, or THC aren't where they want, and it's obviously facility-related — we'll suggest shutting rooms down to rebuild or upgrade. It's a hard ask, but usually if there's a problem, it's facility related. A facility is almost like a living organism — it's breathing air in and out, it has its own climate and its own blood flow through water and irrigation. If it's not all working correctly and dialed in, your plants won't be dialed in either. Some operators do it incrementally — one or two rooms every few months — and eventually you've got a fully upgraded facility. Kellan Finney: Have you seen seasonality or regional climate issues catch operators off guard? David Fettner: Definitely — we make sure whatever region we're building in, we bring in an engineer familiar with that region. We got brought in to help fix a project in upper Michigan — a beautiful new greenhouse where the engineer, who was familiar with a desert climate like Palm Springs, had designed a wet wall inside. They had two great harvests, then summer hit with super-high humidity in Michigan, and it was a disaster — they lost about 70% of that harvest and brought in half a million dollars of temporary equipment trying to cool the place. If it's not engineered to the right climate, it can go off the rails fast. We saw something similar in Montana, where it gets super cold in winter but hot and humid in summer — the system has to manage both, so you really have to engineer it properly. Bryan Fields: Do you have to build in a range of outcomes when specifying a building for different conditions? David Fettner: Right — first you look at where you're building, whether it's Illinois, California, or Arizona, and then each room has to be its own self-contained climate regardless of what's happening outside. That's much easier in an indoor warehouse grow than in a greenhouse — especially a sealed, positive-pressure hybrid greenhouse. We actually passed on a greenhouse project in Mississippi because the client was adamant about doing a greenhouse there, and we knew it just wasn't going to work in that climate. It's very hard to say no to a project, but I knew it would end badly. Kellan Finney: How critical are sensors these days for maintaining the environments a building is designed for? David Fettner: Massively critical. When we put a facility together, obviously there's data on your iPad and phone, but we also place monitors everywhere — in the break room, the conference room — so you're always seeing what every room and sector is doing. That segues into AI, which adds a whole other level of detail and data. A good grower or director of cultivation is like a cross between a mad scientist, a botanist, and a geneticist — they do things I could never think of. But even they need help, because they might be covering 50,000 square feet of canopy, and without that data and sensors telling them exactly what's happening in every room and sector, they'd be lost. Bryan Fields: Can you give a range of the sensors people are using? David Fettner: They'll tell you humidity levels — high and low for the day — and temperatures. Growers are extremely particular about what every room is doing. What AI adds is more micro-level detail. The AI sensor units are about the size of an iPad or laptop screen, and they hover over the canopy — I haven't seen a good version for two-tier grows yet, just single tier. It constantly reads every plant and tells you not just what the room is doing, but what each individual plant is getting — this area might be hotter, or getting less circulation, less humidity, needing more nutrients or water, or even predicting what the THC level is going to be. What's amazing is there's never been a sensor that detects risk, like spider mites or powdery mildew — now AI can pick it up about three weeks before the human eye can. In a 3,500-square-foot flower room, that lets you contain an issue before it spreads. That's one of the coolest things I've seen — detecting what the human eye can't yet. Bryan Fields: That's a great example of shifting from reactive to proactive management, and it multiplies a grower's expertise across facilities they can't physically be in at once. David Fettner: Right, and it's not a tool taking anyone's job — it's helping the director of cultivation and their team focus on other things. I think we're just scratching the surface. That was the thing that blew me away most — being able to catch risks way ahead of time, and even flag issues with THC levels in advance. I know a grower who grew amazing bud but kept getting lower THC levels and couldn't figure out why — AI could have flagged early on that a batch wasn't going to get above a certain percentage, so he could act sooner. Kellan Finney: How close are we to AI actually controlling the rooms itself — adjusting climate or even applying treatment for pests automatically? David Fettner: It can already do that with climate — if you give it the autonomy, it'll adjust humidity, temperature, kick fans to higher speed, and so on. I haven't seen it apply treatments autonomously yet, but I'm sure we're close — something new comes out every week. Bryan Fields: Where's the line for you and your team in helping clients onboard this kind of software? David Fettner: A lot of times clients don't even know it's available, so we're often the first to say, 'You may want to look into adding AI tech to your flowering rooms.' Many AI companies want to get in and prove themselves, so they'll offer a discounted rate for one or two rooms. After that, it's really just a matter of roughing in the wiring and data infrastructure so it's plug and play, and then it can always be upgraded. Kellan Finney: What pushback do you get from growers who've done things their way for 15 years and don't see the need for sensors or AI? David Fettner: I hear that all the time. Where I get them is on risk mitigation — that's everyone's biggest fear. Our VP of Construction, Elliot, came from Blue Apron and then Acreage, and his whole focus is GMP and risk mitigation, making sure nothing that comes into one room infiltrates others. Once you frame it to a director of cultivation as, 'This isn't going to affect how you grow, but it will detect risk,' that's an easy sell, and the cost isn't that high. Most guys want to at least try it in a room or two. It reminds me of under-canopy lighting — guys used to say, 'Screw that, look what I'm already pulling out of here,' and then they'd try it and say it changed their world. Same thing with AI and data solutions — the proof is in the pudding. Bryan Fields: What technology haven't you seen yet that you think would make a big difference for growers? David Fettner: Not so much on the grower side, but sustainability hasn't been fully implemented yet, and there's going to be a huge market for it — my dream is a fully sustainable grow facility using geothermal for HVAC, maybe wind and solar. At the end of the day we're growing Mother Nature's plant. The capital cost isn't cheap right now, but in 10, 15, 20 years we'll look back at a lot of these grows as dinosaurs in terms of energy use and carbon footprint. Money is the biggest roadblock — if you've scratched and clawed to get your facility funded, you're not going to spend an extra half million or a million to make it sustainable today, even if the ROI works out in five or ten years. Kellan Finney: How often do you see companies bring on-site generation like solar or wind to offset some of that? David Fettner: Solar is getting bigger — there are rebates, so sometimes it's close to a wash out of pocket. But you need space — a big parking lot or a lot of roof area, and if you're putting panels on the roof you may need to reinforce it structurally. If you have a facility with unused parking lot space, it's a no-brainer with the rebates, but you need enough solar to actually offset your energy usage. I was on a panel in New Jersey talking about how hard it is to generate enough solar for a grow, and a woman in the audience said she had a 15,000-square-foot canopy grow running almost entirely on solar. I wanted to go see that facility. Bryan Fields: What items seem like nice-to-haves today but you think are becoming must-haves — like backup generators? David Fettner: I always ask about the local grid — do you lose power often, are you in a hurricane or blizzard zone? If yes, you'll need a generator, even though it's not cheap. If the grid's solid and you only lose power a few hours a year, make a deal with a company to back up a trailer generator for you when needed. Other things — epoxy flooring and IMP wall panels — aren't necessary to grow good cannabis, but they make life so much easier and let you turn rooms around much faster. Without them, after harvest you have to hose everything down carefully because it seeps into bare concrete and gypsum, and it might take three or four days to dry out before the next round of plants goes in. With epoxy flooring and IMP panels, that can be down to 24 hours. Multiply that time savings by every harvest cycle across a year, and that's essentially an extra harvest cycle you gain in that room. Bryan Fields: People often don't realize the impact of that until they see the math over a full year. David Fettner: Exactly — you multiply it over 12 months and do the math. I push it gently and show clients the potential gains from epoxy flooring, sealed floors, and IMP panels, plus interior floor drains — none of that changes how you grow, but you can squeegee everything into the drains and the room dries out much faster. If you have the funds, it's a no-brainer. If you're planning to sell in a few years, it also matters — the next buyer isn't going to want to retrofit walls, grind and epoxy floors, or cut in floor drains after the fact; if it's already done, that's an easy decision for them. Kellan Finney: If you could get every client to understand one thing before they start, what would it be? David Fettner: Do your due diligence on the building before you start, and make sure it can actually accommodate what you want to do. I had someone recently with a license for 15,000 square feet of canopy looking at a 25,000-square-foot building — that's not going to work. As a rule of thumb, for 15,000 square feet of canopy you want a 50,000-to-60,000-square-foot building, because you also need mother rooms, prop rooms, trim and packaging, probably three dry rooms, plus offices and other support space. You may start smaller, at 2,500 or 4,000 square feet, but if 15,000 is your goal, you need to know the building can accommodate that, or you're painting yourself into a corner. Bryan Fields: What's the biggest mistake you see teams make? David Fettner: Cutting corners in ways that hurt quality and efficiency — a cheaper HVAC system, cheap lights from who-knows-where that will break down. I understand money is scarce and everyone wants to get up and operating, but you're competing with operators down the street who may be building something far more upgraded. And on due diligence — we've had projects literally get stopped, scrapped four, five, six weeks into construction because of mistakes made upfront. Disaster stories you wouldn't believe. Bryan Fields: Last question — what question do you wish more people asked you? David Fettner: It's not so much a question I wish people asked, but something I wish people told me upfront: their ballpark budget. We can design and build to almost any budget, but if I don't know what it is, I'm in the dark. Telling me the number lets me modify and target what's important and value-engineer what isn't — it's not that I'll design right up to the dollar, but I need to know if we're working with two million, half a million, or five million so I can direct things properly. On the dispensary side, I once had a client say, 'Design it assuming we don't have a budget — we want this to be a flagship.' We designed an amazing, flagship-level space, bid it out, and he said, 'Guys, this is $400,000 more than we have.' We'd just spent eight weeks designing to a budget that didn't exist. That's why it's so important to share that number upfront. Bryan Fields: David, for our listeners who want to get in touch and need help solving problems, where can they find you? David Fettner: Growamericabuilders.com — my cell phone is right on the front page, just scroll down, that's me. You can also email me at david@growamericabuilders.com. That's the best way to reach me, and I love talking about this stuff. Bryan Fields: Thanks for taking the time — this was a lot of fun. Appreciate it, David. David Fettner: Thank you so much, guys.