Riviera Creek’s Medical Marijuana Project on Schedule
YOUNGSTOWN, Ohio – Work on one of the first medical marijuana grow sites in Ohio is on schedule and its owners are confident the first harvest should be cultivated by the end of the year.
“We plan — as soon as we get our license — to put the plants in, and with a little bit of luck, have our first harvest by year’s end,” said Brian Kessler, who along with his nephew, Daniel Kessler, are partners in Riviera Creek LLC. The company won approval last year as one of 12 Level One medical marijuana cultivation sites in Ohio.
On Tuesday workers from DeSalvo Construction were hustling inside a 72,000-square-foot building at 1275 Crescent St. in the Riverbend district, putting up interior framing for the RIv’s growing operations and front offices.
“We’ve got 15,000 square-feet of growing construction under way to start,” said Brian Kessler, Riviera Creek’s CEO.
The production site, Kessler emphasized, will contain some of the most sophisticated technology and design in the business, details of which he’s reluctant to share for competitive reasons.
“As the market grows, we’ll increase our size,” said Daniel Kessler, Riviera Creek’s chief operating officer.
Just how large a market will develop in Ohio remains to be seen, the Kesslers say. “On Sept. 8, there’s going to be somewhere between 1,000 and 25,000 patients,” Brian Kessler projected.
In between, there are a lot of administrative tasks that the state must fill in, such as how the distribution of pharmacy cards would work and the size, shape and look of containers that are approved to hold medical cannabis.
“The patient count will dictate the strength of the business model,” Kessler said. “It seems like the state has been very accommodating so far. Ohio’s working hard to do a really good job.”
Kessler said that Riviera Creek is starting to reach out to other players in this emerging industry across Ohio, he said, such as approved physicians, and potential dispensaries and processors. More than 30 physicians across Ohio have been approved for writing medical marijuana prescriptions, while a decision on dispensary licenses is expected sometime in late May and a decision on awarding processors should be forthcoming in late June.
The company has applied for its own processing license as well, Kessler noted. “Either way, if we have a processor and we hope we get one, we also know how to supply other processors’ product. We have some pretty good systems to help them know that when they work with Riviera Creek that they’ll have a stable supplier and someone they’d like to work with.”
A processing operation converts the plants grown at the site into tinctures, edibles and oils — products that could be then sold at state approved dispensaries.
In order to secure a grow license, Riviera Creek had to pay a $20,000 application fee, a certificate of operation fee of $180,000, a $200,000 annual renewal fee, establish $500,000 in liquid assets and provide $750,000 in an escrow account or surety bond.
Yet the state has refrained from issuing any licenses because of a legal challenge wrapping up in Franklin County Common Pleas Court. On Monday, testimony concluded in a case involving Ohio Releaf LLC, a company that applied for, but did not receive, one of the 12 Level One provisional grow license.
Ohio Releaf requested an appeals hearing before the Ohio Department of Commerce, but the state has placed these hearings on hold after an error was discovered in the scoring process. That process is under review and the commerce department has said that the appeals hearings would resume once the review is finished.
The company has since sued the state, arguing that the 12 Level One licenses allow these companies to expand, thereby making it more difficult for others to move into the market in the future. Ohio Releaf has asked the court to delay awarding any licenses until the appeals are heard.
Common Pleas Judge Richard Frye said a decision could possibly come later this week.
“I don’t believe too much will get slowed up. I hope for everybody’s sake it doesn’t,” Kessler said, noting there are patients waiting for medical marijuana to come on the market as soon as possible. “We have no control over what’s beyond our abilities.”
The Kesslers’ venture scored high – ranking fourth out of the 12 approved applications.
What is clear is that legal squabbling in Columbus hasn’t stopped Riviera Creek from moving ahead full-steam on their project in Youngstown.
Interior construction is well underway at the building, which Kessler said would feature sophisticated high-tech security features – the main priority mandated by the state — showers and dressing rooms for future employees at the site. Security cards would be issued to those employees cleared to enter the growing space.
Everything from growing to the drying process is supervised and regulated, Kessler said. Waste that is produced from the process also needs to be handled a specific way and packaged a certain way, he noted.
Once the framing and interior is finished, the growing and drying equipment could be installed. However, the seeds cannot be planted until a final license is issued by the state.
Under a Level One license, the company has the option to expand from 25,000 square feet the first year to 75,000 square feet of growing capacity.
“We hope in the next couple of months, we’ll begin the process of hiring,” he said. The company has projected that should the venture encompass both growing and processing, then it could potentially employ as many as 300 with a full-scale, 75,000-square-foot operation.
“We’re starting with a small startup team and evolve every few months,” Kessler said.
Company representatives were scheduled to appear before the city’s planning commission Tuesday to request a waiver to establish a regulated use within 500 feet of another regulated use operation, in this case, Heidelberg Distribution.
However, the planning commission could not establish a quorum so the meeting was cancelled and rescheduled for next month.
The building once housed distribution operations for Kessler’s Maui Toys, and he acknowledges that five years ago he never expected his business to evolve into growing medical marijuana.
Kessler said that he became intrigued at the level of those using the drug for medicinal purposes but who were obtaining marijuana illegally and through means that were unsafe. His involvement in the medical marijuana industry started five years ago, and evolved from trying to find a safer alternative for these patients.
As for making a strong business case for the operation, Kessler reports that the team has invested “millions” in the venture, but declines to provide details on exact costs.
“I’ve seen people make money, and I’ve seen people lose money,” Kessler said. “We hope to have a strong, sustainable business here.”
Copyright 2020 The Business Journal, Youngstown, Ohio.
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