Those 'drain plugs' allow the enclosed areas to breathe.  Imagine a ballon that does't lose air over time.  How large is the ballon during the winter compared to its size during the heat of summer?  What kind of pressure changes occur in each of your enclosed structures when, after sitting out in the summer sun for an hour, you then put the canoe in the water and the bottom half of each area is cooled by 50 degrees or more?  Also, the moisture trapped inside when the enclosed spaces were sealed will condense on the cooler surfaces.  Water inside is not good.  So the little drain plugs are really to let air circulate when the boat is off the water, not to drain water.

A few just ignore the problem.  Some people drill a very small hole (drill-fill-drill) in the bulkheads to equilize the air pressure and don't worry about the condensation.  They can leave the hole(s) open while on the water, plug with a toothpick or cover with tape.  The "drain plugs" are the better alternative for many, if not most, paddlers.

Do you have a recommendation on cutting those holes for the drain plugs now that the boat is done?  I assume it would have been easier to cut those holes before installation of the bulk heads but I didn't see much talk of the drain plugs in the instructions so I figured they were optional.

 Would I try a paddle bit of some kind to cut out that hole and then do you epoxy it in place?  I will have to pull out my instructions again and see if I missed it but i don't remember it talking about the plugs.

 Any advice would be appreciated.

The Sassie 12 is small enough to roll to about any position to drain water, if that is a concern, so you could put the drain plug somewhere that you have good access to now, say, both in an upper corner on the same side (call CLC if you have an issue with strength or ...).

You could also think about putting in a small deck plate or two (see fourth picture in the Sassafras 12 Gallery).  If, while using the 12, you've thought having a space to store your wallet, keys, water, towel, etc., would be nice, a deck plate will allow you access to a secure and dry area for storage when paddling.  Put the drain plug(s) in the center of the bulkhead(s) now and install the deck plates over the winter.

I'd be afraid of the damage I could do with a paddle bit in the thin plywood.  For the small hole I'd probably mark the hole on tape on the ply, then drill around the inside edge with a 1/16"-ish bit.  After carefully pulling out the center plug, I'd then smooth the hole and check fit.  Seal the hole and mounting screw holes, then mount with silastic (bad for refinishing), a rubber gasket from a bicycle inner tube (if a temp fix til winter), or a good bedding material (expensive for a small job).

Enjoy your paddling.

Booy, I wish I knew how to spell Ballon.

Sorry...

I have a graphic in the center of the bulkhead so I was thinking of putting it toward the bottom.  However, if it is mainly to let air move and release pressure than maybe I could put it near the top and almost hid it.  I stove it upside down on a rack in my garage so that would allow water out if for some reason some was in there.

 As for sealing the drain plugs that come with the kit - wouldn't I just use some epoxy instead of some of the other ideas you mentioned?

I definitely wish to build a Sassafras 16...or 2...and definitely in my sights as to the float tanks are deck plates! They are two part plastic units; the center part firmly screws into the part that is screwed and sealed into the bulkhead and can be obtained in small sizes just large enough to admit a hand One can then use this otherwise-nothing-but-float-tank space to keep your wallet, camera, what-have-you from loss and as long as boat is not compromised, dry as well. Still I'd have my sensitive papers (in my wallet) and electronics (digital camera) in a drybag or case inside the float tank. I always assume that they are float tanks thus I would never heavily load them.

Klaver; did you mean spade bit? NO! Not a spade bit, not in thin plywood. One can do wonderous damage with that. Just as well use a shovel. best use a brad point, even a common twist bit is better. then enlarge hole if needed witha jig (saber) saw or a fine keyhole saw, fit hardware and then seal the raw wood with epoxy