Is Cannabis Real Estate the Next Big Thing?
The world’s real estate is facing a massive shift in paradigm due to the decriminalization of cannabis in some states despite the national sentiment against it. If weed is legalized in a state, it means you can grow, harvest, and sell it, even though not publicly. This development has paved the way for tons of business opportunities such as dispensary, farm, and sales around cannabis. Surprisingly, the business has yielded a considerable profit for many weed entrepreneurs and investors. In the US, for example, the cannabis industry is worth $67 billion and is projected to worth $100 billion by 2030.
Having understood this demand, commercial personnel and real estate owners receive lots of needs for lands, warehouses, and stores for marijuana. According to the National Association of Realtors, states with legalized medical and recreational cannabis have received a surge in demand for lands and buildings for marijuana purposes. You may then wonder what cannabis real estate stands for and why there is so much fuss about it.
Why Cannabis Real Estate?
Marijuana real estate is the next significant evolution coming to shake the market. Savvy investors and entrepreneurs are already staking their money in. If the cannabis business sounds like a great idea to you, you should think of investing in it.
It can sometimes be time-consuming to navigate through the weed industry – an industry yet to stand firmly on its legs – looking for the right opportunities. Luckily, professional and experienced cannabis real estate consultants help those looking to buy, sell, or invest in cannabis real estate. Also, they provide cannabis compliance services and match suitable buyers and sellers.
Even though there are some risks associated with the cannabis industry, entrusting your money to the real estate aspect is still the best decision you can make at the moment. Properties values have increased drastically with the legalization of marijuana in some states, making business owners transform their houses to suit cannabis purposes.
There is a huge demand for properties but little supply for them. Can you blame property owners, though? Who would have ever thought that recreational and medical cannabis would come to stay? Before you forge ahead with investing your money in cannabis real estate, there are some things you need to know.
1. Location
Location is an essential factor to consider in real estate. When it comes to cannabis, you need to exert extra effort into the location. Ensure you narrow down your list of potential locations to jurisdictions where the law permits cannabis. Also, research and familiarize yourself with the community’s stance on it. There is no use in investing in a society where they frown at cannabis.
2. Legal
Leasing a property for cannabis possesses much more risk than buying. Any changes can erupt in the future, and as long as you have no claim to it, the business’s future is shaky. However, if you choose to buy a property for marijuana purposes, it gives you more freedom and peace of mind regarding the business future. Besides, maintaining a legal entity (LLC) for the property owner is crucial as it reduces risk and liability and shields your investment from sudden changes to cannabis laws.
However, if you decide to lease, be sure to structure it to accommodate any change in the cannabis laws. Early termination clauses (ETCs) are statements in a lease that allows you to leave in case of any issue in the future.
3. Construction
The structure of a cannabis business is quite different from a typical house. It is tedious, time-consuming, and takes lots of processes from zoning to permission before the actual rehabilitation, after inspection, and meetings with officials. Unlike a typical real estate buying, you and the town officials will be working hand-in-hand to make sure no law is broken in the process of building.
Additionally, one should be aware of the variety of property types that are used in the cannabis industry. The main properties include:
Testing Facilities
In testing facilities you need to do extraction. Extraction is a process which should be held in a lab and it includes extracting the oils from the cannabis itself. Because of the regulations and other requirements, this is not an easy process. It needs a one of a kind property and also a lot of knowledge about how the process should be dealt.
Retail Cannabis Properties
This is yet another challenging step, because you have to be very cautious of rules and regulations. Retails means putting a retail shop in a green zone that allows it. In the USA for example, there are some states that allow it, but the next neighbor ones might deny the right.
Distribution Centers
Cannabis distribution has to happen somewhere and distribution centers are made especially for that step. The one that is considered a distributor deals with the shelving, rules about the shipments and also interacts with the retailer directly.
Indoor Warehouse Grows
Something that you have to keep in mind is the additional costs that you have to pay. Water costs, electricity costs together with a large amount of machinery, temperature control are some of the elements to consider.
Final word
The cannabis industry is skyrocketing at a fast pace. Out of the many business opportunities the cannabis industry offers, the real estate aspect appears more profitable with lesser risk and liability. Whichever way you choose to get involved in cannabis real estate – be it rent, lease, invest or buy a property for the cannabis business, you will still make a reasonable profit from it. Cannabis investments might be profitable but they are also far more complicated.
But Cannabis real estate values are very likely to grow because of the large amount of demands. So make sure to do your research and get ready to get into it. You should also study different types of properties necessary for the cannabis business and the regulations that might or might not allow them. Local licensing and entitlement processes should be prioritized before you do the rest of it.