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As the cannabis industry continues to grow, unique challenges have emerged effecting businesses efficiently opening their doors, especially when it comes to real estate.
Understanding Property Requirements in the Cannabis Industry
Finding the perfect property for a cannabis business isn't as straightforward as it might seem and with each state, county, and town comes a new set of rules. In this blog, we'll delve into why cannabis real estate varies so much, exploring the contributing factors to this variation and offering strategies for navigating the complex landscape of pre-license property acquisition.
Contributing Factors to Real Estate Variation
Legal Framework and Political Agendas
One of the primary factors contributing to the variation in cannabis real estate is the legal framework and political agendas surrounding the industry. Depending on the state’s regulatory framework, many municipalities have to opportunity to opt out of allowing cannabis businesses to operate. This creates a patchwork of laws and regulations that can vary significantly from one town to the next. Uncertainty in rollouts leads to ambiguity in real estate negotiations, as local real estate agents often lack the expertise or experience to navigate this complex landscape.
Zoning and Land Use
Zoning regulations play a crucial role in dictating where cannabis businesses can operate. These regulations are typically set at the state level and often require cannabis businesses to be located a certain distance from sensitive areas such as schools or churches. At the local level, cities may further restrict cannabis businesses to specific neighborhoods or areas on the outskirts of town. This limited availability of suitable properties creates a scarcity in the supply of potential real estate for cannabis businesses.
Market Demand
The high demand for cannabis real estate exacerbates the scarcity created by zoning regulations. With everyone vying for property at the same time and only a fraction of applicants ultimately receiving licenses, landlords and property owners capitalize on the surge in demand by charging higher rents. This increased competition further drives up prices, making it even more challenging for cannabis businesses to find affordable and suitable properties.
Strategies for Finding Your Perfect Pre-License Property
Understanding Your Regulations
To navigate the complexities of cannabis real estate, it's crucial to have a thorough understanding of the regulations governing your area and the possible changes that could affect your application process. This includes residency requirements, zoning regulations, and distances requirements. By familiarizing yourself with these regulations, you can narrow down your search to properties that meet compliance requirements. It can also prepare you for any unforeseen changes to the regulation that could change the direction of your property search at the drop of a hat.
Getting to Know Your Neighbors
Community acceptance and involvement is vital for the success of a cannabis business. Not only should you be seeking acceptance from the community you plan to operate in, but also be seeking to better the community that will be supporting your business. Before committing to a property, it's essential to gauge the attitudes of your potential neighbors and address any concerns they may have. It’s also important to engage in impact activities such as volunteering, donating to local nonprofits, or joining your local chamber of commerce. By the time you open your doors, your community should know who you are and how your business plans to improve the area.
Finding a Facility that Fits Your Business Needs
When searching for a pre-license property, it's essential to find a facility that not only meets regulatory requirements but also fits your business needs. This includes finding a property that isn't too small or too large for your operations and identifying infrastructure requirements such as adequate power supply and security features. By carefully evaluating your business needs, you can ensure that the property you choose is conducive to your success.
Negotiating a Conditional Lease
Given the uncertainty surrounding cannabis licensing, negotiating a conditional lease can provide flexibility and peace of mind for both parties involved. A conditional lease allows you to secure a property under the condition that you obtain a cannabis license within a specified timeframe. This arrangement mitigates the risk for property owners while giving you the assurance that the property will be available if you are successful in securing a license.
Consult with Experts to Understand Your Property Needs
Navigating the complexities of cannabis real estate requires expertise and experience. Consulting with industry experts such as Canna Advisors and Cova can provide invaluable insights and guidance throughout the property acquisition process. By partnering with experts who understand the unique challenges of the cannabis industry, you can increase your chances of success and ensure that your property meets your business needs.