The decision between an indoor facility and a cannabis greenhouse is fundamentally a capital-allocation question under regulatory constraints. This guide compares cost structures, yield drivers, retrofit realities, and approval risks so you can pick the right asset for your market and balance sheet. If you’re exploring space now, start by reviewing available properties for lease on 420 Property—then apply the framework below to shortlist candidates.
Executive snapshot
- Cost: Greenhouses generally offer lower long-run energy intensity and build cost per square foot; indoor offers tighter climate control with higher baseline CAPEX/OPEX.
- Yield: Indoor can achieve highly consistent quality where genetics and SOPs rely on precise temperature/RH/VPD and light levels; a cannabis greenhouse can reach comparable outcomes with excellent design, commissioning, and disciplined operations.
- Retrofits: Not every warehouse or legacy greenhouse can be converted economically. Structural loads, utilities, envelope performance, and code requirements (e.g., CUP conditions, odor) are go/no-go factors.
- Risk: Your AHJ (and lender) will key on zoning, CUP compliance, hazardous operations adjacency (e.g., C1D1 extraction nearby), and documentation quality. Finance focuses on stabilized NOI, DSCR, and downside cases—not peak yield claims.
Total cost of ownership: where dollars actually go
CAPEX (design + build)
- Indoor: Heavier TI scope (framing, insulation/air sealing, epoxy/FRP finishes), dense electrical distribution, high-capacity HVAC/dehumidification, and supplemental lighting throughout. Roofing, structure, and slab typically carry adequate loads, but added rooftop units and hanging points may require reinforcement.
- Cannabis greenhouse: Lower structural CAPEX per SF when you leverage sun as the primary light source and supplement strategically. Major spends shift to glazing/curtains, environmental controls, dehumidification, and water/fertigation systems. Well-engineered envelopes (e.g., Venlo/gutter-connected with energy curtains) materially reduce long-run OPEX.
What swings CAPEX either way: utility upgrades (new service, transformers, switchgear); sitework and drainage; odor control and filtration; and special program areas (post-harvest, packaging, vaults). Delays from permit revisions can add soft costs quickly.
OPEX (operate + maintain)
- Indoor: Energy (lighting + HVACD) dominates; labor scales with room count and turnover cadence; consumables and maintenance are steady.
- Cannabis greenhouse: Energy burden shifts to dehumidification and seasonal heating/cooling; lighting spend depends on climate and target PPFD. Curtain strategy, airflow, and controls materially affect bills. Preventive maintenance on curtain drives, infiltration seals, and dehus is crucial.
Management takeaway: Commissioning and continuous tuning (controls/BMS, airflow balance, irrigation uniformity) are the highest-ROI levers in both modes. Poorly commissioned “efficient” equipment is an expensive paperweight.
Yield and quality: what’s actually controllable
Indoors
- Advantages: Narrow environmental bands; photoperiod integrity; replicate rooms for repeatable outcomes; strong risk control for PM/botrytis and pest ingress with good SOPs.
- Challenges: Heat rejection and latent load removal must be engineered precisely; comfort-cooling equipment without reheat typically misses humidity targets; energy intensity can compress margin when wholesale prices soften.
In a cannabis greenhouse
- Advantages: Sunlight spectrum and DLI support dense, terpene-forward flowers with lower energy input; energy curtains, light-dep, and modern dehumidification narrow the performance gap; modular bays help stagger cycles and labor.
- Challenges: Climate variability, infiltration, and microclimates demand vigilant airflow and VPD management; curtain leakage or poor sealing creates herm/light stress risks; seasonal swings require adjusted SOPs.
Design variables that change outcomes in both modes: airflow path and velocity, SHR (sensible heat ratio) matching, dehu capacity, setpoint strategy (day/night), irrigation distribution uniformity, and post-harvest environmental control.
Retrofit reality check: warehouses and legacy greenhouses
Retrofitting a warehouse to indoor cultivation
- Power: Confirm the available service in kVA, voltage/phase, and upgrade timelines. Avoid over-crediting “diversity” without stamped calculations.
- HVACD: Grows need equipment matched to latent-heavy loads with reheat capability. Comfort units alone are rarely sufficient.
- Structure & envelope: Verify hanging loads for lights/ducts/dehus; air seal and insulate to protect HVACD performance; ensure slab drains or trenching fits washdown plan.
- Water & drainage: Fertigation rooms require backflow prevention and secondary containment; plan condensate routing and potential reuse (if allowed).
- Odor & noise: Many CUP approvals include odor mitigation and mechanical noise thresholds; design filtration and acoustics at the start.
Retrofitting a legacy greenhouse to cannabis
- Glazing & curtains: Assess transmission, insulation, and condition; energy/blackout curtains often pay back quickly.
- Dehumidification & airflow: Add dedicated dehus sized for peak transpiration; re-engineer airflow to avoid stratification and wet corners.
- Controls/BMS: Sensors (temp/RH/CO₂/DP), reliable actuators, and alarm logic; greenhouse performance rises and falls with controls quality.
- Structure & weather: Validate wind/snow loads, anchorage, and corrosion; repair and seal to reduce infiltration.
- Zoning & MAQs: Confirm permitted cannabis use and any storage/processing MAQs if you co-locate manufacturing; keep C1D1 areas separated and engineered as such.
Rule of thumb: A retrofit only wins if the base building or glazing system and utility capacity align with your program. Forced fits tend to become permanent cost problems.
Regulatory and approval path: don’t lose time at plan check
- Zoning and buffers: Verify cannabis use and sensitive-use setbacks in writing before you open escrow or sign a lease.
- CUP and conditions: Expect odor, security, transport, hours, and sometimes sustainability conditions; build them into the design narrative.
- Building and fire code: Adopted editions of IBC/IFC/NFPA vary by jurisdiction; plan early meetings with the AHJ to reduce RFIs.
- Environmental: Stormwater, wastewater discharge, and chemical storage/secondary containment.
- Documentation: Provide stamped MEP, fire protection, and life-safety drawings; narratives for ventilation, MAQs (if applicable), and commissioning. Lenders and buyers doing QoE diligence will ask for the same package.
Need an engineer, architect, or code consultant who understands cannabis? Search the Professional Services directory to assemble the right bench early.
Financing lens: how indoor vs. greenhouse hits DSCR and valuation
Credit committees and investors care about durable cash flows and downside protection. The mode you choose (indoor vs. cannabis greenhouse) affects underwriting assumptions:
- Revenue quality: Consistency sells. If your brand and buyer base expect a specific nose, bag appeal, and potency band, indoor control can reduce variance. A greenhouse can match expectations with strong SOPs and climate design, but must demonstrate stability over seasons.
- Cost profile: Energy and labor curves shape margin. Show sensitivity tables and headroom under conservative wholesale pricing.
- Capex governance: Phased greenhouse builds let you align capacity with demand. Indoors can also phase by room, but utility step-ups and HVACD procurement often create step changes in spend.
- Resale & appraisal: Easily transferable, well-documented systems (with maintenance logs and commissioning data) improve buyer confidence and EBITDA multiples at exit.
- Deal documentation: A crisp LOI with TI responsibilities, rent commencement tied to permits, and clear remedies for utility delays prevents disputes. If acquiring assets (via APA), require drawings, commissioning reports, and a punch list with holdbacks.
Operating model: standardize for repeatability
- Rooms/bays: Replicate veg/flower bays with common equipment SKUs and spare parts; standardization reduces downtime and speeds training.
- Controls strategy: Use staged setpoints, deadbands, and alarms; trend temp/RH/DP/CO₂ by room and shift; validate sensor calibration.
- Airflow discipline: Map supply/return paths; balance CFM; maintain HAF or ducted mixing; visually inspect for stratification and condensation.
- Irrigation & fertigation: Uniform distribution, EC/pH monitoring, and leachate management reduce variability.
- Post-harvest: Dry/cure must be engineered, not improvised; environmental control here is as important as in flowering.
Market fit: when each mode wins
Choose indoor when:
- Strict product spec and visual bag appeal define price realization, and buyers penalize variance.
- Real estate options for greenhouses are limited by climate risk, zoning, or neighbors.
- You need highest control to meet strict QA or frequent genetics changes.
Choose a cannabis greenhouse when:
- The market supports premium flower grown under sun-plus-supplemental light, and you can standardize VPD, airflow, and dehu.
- Utility costs are high and you need a structurally lower energy intensity to keep margin.
- You can phase capacity in modular bays aligned to demand, de-risking inventory swings.
Hybrid portfolios—indoor for flagship SKUs and greenhouse for high-velocity SKUs—often create the best overall DSCR by combining quality leadership with cost leadership.
Due-diligence checklists you can use on day one
Indoor facility checklist
- Power: Confirm service in kVA, voltage/phase, and upgrade path; review panel schedules and spare capacity.
- HVACD: Verify dehu capacity and SHR match; identify reheat and control logic; request commissioning records and trend logs.
- Envelope: Insulation/air-seal details; light-tightness; penetrations sealed.
- Water/drainage: Fertigation room design; backflow devices; trench or point drains; condensate routing.
- Odor & acoustics: Filtration strategy and mechanical noise abatement reflected in CUP documents.
- Compliance file: Stamped drawings, final inspections, and any open correction notices.
Cannabis greenhouse checklist
- Glazing/curtains: Transmission, age/condition, energy/blackout curtains, seal integrity.
- Climate & dehu: Dehumidifier specification, airflow maps, and controls/BMS documentation.
- Structure & anchorage: Wind/snow load compliance; corrosion condition; curtain drive maintenance history.
- Utilities: Power capacity and distribution; gas availability; water pressure/flow; drainage and storm management.
- SOPs & QA: Season-specific setpoints; IPM; sanitation; post-harvest environment plans.
- Neighbors & odor: Nuisance mitigation program documented and operating.
Implementation roadmap: 90-day plan to reach first harvest
- Site control & approvals: Execute LOI with contingencies for zoning/CUP verification, utility letters, and stamped design review.
- Design development: Freeze program with engineering (MEP/FP), choose greenhouse type or indoor equipment packages, and file permits.
- Procurement: Long-lead equipment (curtain systems, dehus, AHUs, switchgear, controls).
- Build & commission: Install; balance airflow and irrigation; validate dehu capacity and alarm logic; train staff.
- Operational readiness: Finalize SOPs; calibrate sensors; run mock harvest and post-harvest flows.
- Go-live: Stagger first two cycles to stabilize labor and QA.
“Retrofit or new build?”—decision framework
- Utility delta: If upgrades exceed a meaningful share of TI (or extend schedule beyond your lease concessions), new build or different site may pencil better.
- Envelope gap: If infiltration and uncontrolled gains overwhelm HVACD, retrofitting becomes a maintenance trap.
- AHJ friction: If plan check indicates major revisions (e.g., added odor scrubbers, structural upgrades), compare full-cycle cost and time to a greenhouse or alternate warehouse with better bones.
- Resale value: Consider future buyers’ appetite; standardized, documented assets command better offers and less diligence friction.
A cannabis greenhouse vs. indoor: choosing with confidence
The right answer is rarely ideological. The winning choice is the one that aligns your customer promise, regulatory path, climate risk, and capital plan with an operating model you can run at scale. If you need space now, start narrowing candidates by market, utility capacity, and entitlement, then stack-rank based on CAPEX/OPEX, risk, and time-to-first-sale.
Ready to evaluate real spaces and vendors? Compare current listings for lease and connect with sellers and brokers. Then assemble your engineering and permitting team through 420 Property’s Professional Services directory to move from concept to CO and revenue.
Disclaimer
This article is for educational purposes only and does not constitute legal, engineering, financial, or tax advice. Always consult qualified professionals and your local Authority Having Jurisdiction before making decisions.
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