Traditional St. Louis electrical firm gets a little less so with marijuana subsidiary
January 7, 2020
Birkel Electric, a traditional electrical contractor based in Chesterfield, is entering a less traditional industry: marijuana.
The company has formed a subsidiary, Birkel Cultivation Solutions, to serve the equipment needs of marijuana growers. Mike Birkel, president and owner, projects it will add $7 million to the company's $20 million in annual revenue, just to start. It is currently doing $200,000 in electrical work for a cultivation facility in Illinois, though the client does not want to be identified.
Birkel is another example of small businesses that are going to profit from the marijuana industry in Missouri and elsewhere, and don't even need a license to do it. Last month the Business Journal profiled St. Louis Hydroponic Co., which sells growing equipment such as lighting, pest control and fertilizers.
"We've been in electrical contracting and engineering since 1967," Birkel said.
One of its clients is the Danforth Science Center. About 10 years ago, Danforth began having increasingly complex electrical needs for its projects, especially greenhouses.
"They have very specific control systems for sunlight, air movement, water and humidity," Birkel said. His company was, at first, a subcontractor, doing the traditional electrical work but not the most sophisticated parts of the project. "It was trial by fire," he said. "We had to figure out these complicated systems to monitor every aspect of the plants."
The greenhouses are comprised of 24 glass rooms, each with dramatically different climate and growing needs. One room might be growing coffee beans, Birkel said. An adjacent room, separated by only a glass wall, might be growing something with strikingly different climate requirements. Though the learning curve was steep, the company acquired the expertise that would serve the marijuana industry well.
The needs of marijuana growers, especially those growing in large quantities, are complicated. "The electric watts needed per square foot are off the charts, and you need that power 24/7," Birkel said. "Ditto for the mechanical power. It's very complex."
The revenue potential is significant. "A 30,000-square-foot facility could easily reach $1.5 million," Birkel said. "If substantial infrastructure isn't there, it could go way up in cost."
For example, you can't locate your marijuana cultivation facility just anywhere and expect to get the wattage necessary. "In more locations than not, there isn't access to that kind of power," Birkel said. That's one part of the professional advice the company will provide. "When a grower is ready, we have a team that has already thought this through, so we are shovel ready," Birkel said.
Birkel employs 100 electricians and expects to add 40 more as its cannabis business expands.
The Missouri Department of Health and Senior Services, which regulates the state’s new medical marijuana program, is evaluating 2,163 facility applications and plans to license 60 cultivation facilities, 192 dispensaries, 86 medical marijuana-infused manufacturing facilities and 10 testing laboratories.
Industry trade organization MoCannTrade estimates $500 million in total economic benefit for Missouri in the first year of the Missouri medical marijuana program.