How this St. Louis construction company saw an untapped opportunity in pot
Seeing opportunities to grow in a newly legalized industry, Kadean Construction has developed a specialty in building projects for the emerging cannabis market.
In just over a year in operation, the Fenton-based construction firm’s Cannabis Design-Build Group has designed or built $22 million of Missouri’s cannabis cultivation and manufacturing facilities, or more than 13% of the licensed facilities statewide.
Missouri voters in 2018 approved legalizing the sale of medical marijuana, which took effect in 2020. Also in 2018, Kadean brought on Kyle Wilson, a licensed architect with prior experience designing for the beer industry’s heavily regulated facilities, who saw in marijuana a market niche with opportunity for growth.
“There’s not been a market to come online effectively out of nowhere since Prohibition — and even then a lot of the brewery infrastructure existed, but had just been dormant,” Wilson said. “You look at the economics of how much money was in the black market flowing around as cash, and now it’s all coming above board. Governments are getting their cut, and individuals are now really willing to invest and collaborate in this marketplace.”
Founded in 1963 and led by CEO Mike Eveler, Kadean had $160 million in revenue in 2021 with 62 employees and, aside from the new cannabis sector, operates divisions specializing in industrial, health care, multifamily, science and technology, institutional, food and beverage, and commercial.
So far, its cannabis division has constructed six cultivation and manufacturing facilities for companies including BeLeaf, KindBio and Cannaver. Proper Brands is already adding 30,000 square feet to its 60,000-square-foot indoor cultivation facility built by Kadean in Rock Hill.
The market potential for Kadean could become even larger should Missouri voters legalize recreational marijuana. A signature-gathering initiative to put the legalization of recreational marijuana sales on a statewide ballot this year is underway.
OPPORTUNITY FOR GROWTH
After Missouri voters approved medical marijuana, it took 22 months for the industry to become operational. But Wilson already knew his next steps.
While scouting industrial sites in 2017 in Denver for a project for his previous employer, an architectural firm, real estate brokers told Wilson the market was so tight because cannabis companies were snapping up properties. Colorado fully legalized marijuana in 2012.
Wilson knew that Missouri had none of the real estate or infrastructure for legalized cannabis and sensed an explosion in growth for enterprising firms when that time came. He wrote up a business plan, but his then-firm was not interested in taking on cannabis clients since marijuana is still illegal at the federal level.
But Kadean had already built a cannabidiol, or CBD, facility for a client, and company officials agreed with Wilson that cannabis would thrive with a specialty design-build division, since the technical knowledge behind building pharmaceutical-grade cultivation and manufacturing facilities only applies to marijuana and varies state to state.
“Kadean really was just a supporter of my vision to go after that market for growth here in Missouri and beyond,” Wilson said.
PLANNING FOR LEGALIZATION
Due to federal prohibition, most cannabis companies are forced to find alternative forms of financing rather than relying on banking. Without traditional lenders, Kadean has to fully vet clients to make sure they’re funded.
“It’s a matter of your risk tolerance,” Wilson said.
But Kadean was one of the first construction companies to see beyond those risks, signing on as one of the first members of the Missouri Medical Cannabis Trade Association. Wilson now presents on behalf of the company at cannabis conventions.
With production moving out of the black market and into manufacturing facilities, the industry is maturing as producers and builders collaborate on best practices.
Missouri’s cannabis industry could eventually reach $1 billion in revenue a year if voters approve full legalization, Wilson said. Whether or not that happens, Kadean’s division is growing, launching projects in other states for multistate operators after successful projects in Missouri.
Legalize Missouri, a group hoping to rally voters around efforts to legalize marijuana for recreational use in the state, kicked off an initiative petition drive in December. If the drive is successful, voters could decide whether to legalize the possession, purchase, consumption and cultivation of marijuana for adults over 21.
“If it’s a baseball game, it’s still in the first inning,” Wilson said. “There’s so much more to do, and there’s so much more to grow.”