A Commercial Enterprise
Until recreational use is more widespread, the major real estate concerns will rest in the commercial side of the industry, where growers, distributors and marijuana use property owners and managers already face significant hurdles, such as obtaining a mortgage.
“A little over a year ago, the U.S. Treasury Department provided some guidance to banks doing business with legitimate marijuana businesses,” said Derek Peterson of Terra Tech. “Some banks are opening up and beginning to do more business with the industry, but overall, they remain wary because, again, they are still technically in violation of federal statues. Businesses are still dealing with these problems and seeing their bank accounts forcibly closed. Still, there has been progress.”
While Peterson acknowledges the impact cannabis has already had on the residential side of the business, he admits it’s hard to say what the direct results will ultimately be, citing Denver as an example of promise. However, he says the impact on commercial real estate is clear.
“Cannabis legalization has a large impact on commercial real estate by creating a demand for property in more industrial areas that have traditionally found it more difficult to find tenants,” he said. “Because zoning often requires the cultivation of cannabis to happen in industrial zoned areas, places like Denver are seeing a revitalization of these areas.”
And that is particularly true for growers, who, according to IREM, have to consider not only local laws and prices, but also access to “significant light, water and humidity,” which the plant needs to thrive, as well as security concerns, as the buildings are likely targets for theft of plants, products and equipment. For growers producing hash oil, a highly volatile substance, the dangers of industrial explosions will also be a chief concern.
One of the big concerns for dispensaries, which are and will be located in largely retail zoned spaces, will be the impact on neighboring businesses and local residents, who may be hesitant to welcome the business.
“We always make it a priority to do community engagement in areas before setting up shop,” Peterson assured. “We talk to community leaders and elected officials to be sure we’ll be welcome anywhere we go.”
By leading with an open hand, Peterson said his company has avoided any disputes with local businesses, residents and municipalities, all of whom have shown an appreciation for its candor.