Tim McGraw, in the baseball cap, and Jonathan Charak, founders of Canna-Hub, stand in the former cold-storage building in Mendota that they plan to convert into an office park for cannabis-related businesses. Photo by David Castellon

published on July 27, 2018 - 6:23 PM
Written by David Castellon

There’s no doubt that Cannabis is on its way to becoming a big, legal industry in California, and a pair of developers are hoping to bring some of that prosperity to the rural city of Mendota.

On Thursday, a sort of groundbreaking was held for Canna-Hub, which the developers envision as a business park — but just for cannabis-related businesses.

In California, there are 21 different types of recreational and medicinal cannabis business types licensed by the state since the start of this year, from growers of the now legal plants, to manufacturers of marijuana-based goods, to oil extractors to dispensaries to transporters to labs that test the plants, said Jonathan Charak, co-founder and chief financial officer for Canna-Hub.

Together with co founder and company CEO Tim McGraw — not the country singer — the two men are planning to build industrial parks “specially designed to accommodate the cannabis operators in the new, regulated environment that went into effect in California in 2018,” Charak explained.

They’re starting with two locales, a 1.2 million-square-foot facility in Williams, north of Sacramento, that hasn’t yet broken ground, and the other one in Mendota.

But the groundbreaking in Mendota was purely ceremonial, because while the planned Canna-Hub in Williams will be built from the ground up, in Mendota the plan is a $3.5 million project to convert a 100,000-square-foot, steel-walled former cold-storage facility and subdivide it into nine spaces ranging from 5,000-15,000 square feet for cannabis businesses.

“Our vision for the facility is to have as many different license types as possible. Obviously, we’re building it, and we’re setting it up to be very conducive and affordable for all cannabis operators,” Charak said.

“We want to have a community where everyone helps each other out. So the guys that grows it can sell it to the guys who extract it or send it down to the testing lab,” rather than having to transport product dozens or hundreds of miles away.

“The zoning ordinances we helped get passed in Mendota [last year] are among the most flexible in the state and allow for anything other than outdoor growing and dispensaries,” Charak said, though the City Council did limit all cannabis businesses in Mendota to be within the 16-acre parcel Canna-Hub owns and some adjoining, undeveloped land.

McGraw said the conversion of the cold-storage building could generate about 100 jobs and about $800,000 annually in direct taxes and fees to Mendota, not to mention the additional economic benefits of those businesses and their staffs spending in town on gas, restaurants, groceries, etc.

Future plans to expand on the 16-acre parcel should generate more revenues and jobs, a large chunk of them likely local hires, the men said.

The developers said they came to Mendota 15 months ago because their business plan involved locating their “campuses” in small communities where local governments would be easy to work with and people would appreciate the economic benefits the new businesses could bring.

The two said the responses to the project proposal from Mendota leaders and residents have been largely positive, but there were some “mixed reviews,” said Jose Alonso, the city’s planning commissioner.

That stemmed from people worried that allowing cannabis businesses would result in the drug making its way to street sellers.

“But I told them that would not be the case, and it would be great for the city,” he said.

Indeed, the developers noted that they don’t plan to rent to shoddy operations but rather to sophisticated businesses that would be on par or more sophisticated than Fresno’s new Amazon Fulfillment Center in terms of the technology and equipment they would use.

Charak said he and his partner are being selective in choosing tenants, favoring businesses that already have experience and success in the cannabis industry.

Alonso said that for the most part, Mendota residents are happy over Canna-Hub’s plans. “It will bring jobs to the community. A lot of these people don’t have jobs, and a lot of people can find jobs here.”

Charak and McGraw said interest in leasing property at the Mendota business park already is high, noting that a third of the building spaces are under contract, and discussions are underway with more potential tenants, the first of which, Cresco Labs, LLC, might be able to move in within 90 days.

Cresco, the only signed or potential tenant the two developers would identify, is described on its website as “one of the fastest-growing companies in cannabis” and is involved in “every element of the seed-to-sales process — starting with state-of-the-art cultivation facilities, precisely designed to produce thriving cannabis plants. Our in-house lab team ensures product purity and quality before moving products through production, packaging, and shipment. We distribute our products to dispensaries nationwide, including several dispensaries owned and operated by our team.”

Once the building conversion is done, plans are to begin some time next year Canna-Hub’s second phases, construction on an additional 150,000 square feet, which likely would include a cannabis nursery.

In the planned third phase, the entire operation could grow up to 500,000 square feet, said McGraw, roughly estimating a combined cost of more than $150 million for all three phases, paid for through investors and loans.

McGraw is a veteran of the cannabis industry, having founded and run Revolution Enterprises, the largest cannabis-growing and distribution business in Illinois.

A former real estate developer, McGraw said he left Revolution a year-and-a-half ago to start Canna-Hub, figuring he could apply his skillsets in the cannabis industry and development to California, the largest cannabis market in the world.

Eventually, McGraw said, “We intend to build the most valuable real estate portfolio in the cannabis industry” with an eye toward developing the next campus somewhere in Southern California.

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