Cannabis Industry – Cannabis Real Estate Demand

The normalization of cannabis as an industry is spreading like wildfire and it is now arguably out of its infancy and starting to bud into adolescents. But those in the Real estate sector remain perplexed with over valuations, demand anomalies, and financing complexities that have been created by the cannabis industry.

Retail marijuana dispensaries and commercial grow operations must meet specific zoning and setback requirements–which are referred to as restrictive zoning requirements. Some cities even have sanctioned “Green Zones.” For example, San Francisco, one of the most affluent cities in the world, home to many of the world’s leading tech companies, has sanctioned “Green Zones.” Cannabis dispensaries are not allowed to operate within 1,000 feet of a public or private elementary or secondary school; or a community facility and/or a recreation center that primarily serves persons under 18 years of age. In a City that is dense and culturally diverse, these zoning requirements leave approximately 462 acres of real estate zoned for cannabis use–when you factor in existing tenants and owner users and existing cannabis dispensaries –not many properties are available for new cannabis businesses. And as basic economic principles dictate–what lacks in supply when in high demand must increase in price… But in one of the most expensive cities in the world, how much higher can real estate get? Well, there is not enough data available (yet) to state a factual number as any such number would be impacted significantly on the demands and ambitions of both the buyer and seller in any given transaction, BUT in some instances, agents in San Francisco have reported as much as a 30% premium for desirable “Green Zone” locations.

Overvaluations are just one difficulty of buying a cannabis real estate– financing is a whole other issue. Because there is no true asset type or risk baselines established for real estate specifically used for cannabis, in conjunction with the fact that institutional financing is not yet available due to the federal legality of cannabis, the only financing available for cannabis-based business is from private investors, or private money lenders, which only lend on the asset. A typical private money loan will not exceed 65% loan-to-value (LTV) of the market value/ appraised value OR the 65% of the cost (LTC) of the property–whichever is less. These loans are short term (3-5 years, with hefty prepayment penalties, fees (between 3-6 points), and interest rates (between 8.99-14.99%). This is where things tend to get more complication–even know the lender is making a loan based on the value of the assets–the borrowers need to provide verification of funds needed for the loan–which can be problematic if you have been denied access to bank accounts like many of those in the cannabis industry. Now, if you are lucky enough to get in contract on a compliant property and get approved for a loan, one last hurdle to overcome– the appraisal of the property. If you are in contract to purchase the property of a reasonable value– you have nothing to worry about, but if not, the appraiser will not take into account of the value of the property for cannabis use. However, if you have the capital and the capacity to pay cash, and don’t mind paying a premium–most of these hurdles can be eliminated. And once you own the property, you can tap into your equity if needed (using private money of course).

The cannabis industry is still maturing and buying real estate for the specific use of cannabis may be difficult–but not impossible. Aligning yourself with the right professionals and capital sources will always be your first step. For a free real estate financing consultation for your cannabis business submit a request for financing on 420Property.com.

October 29, 2016 / by / in
Buying and Selling Cannabis-based Businesses
Cannabis is rapidly evolving from an illegal, counter-cultural activity into one of the prevailing industries in many states in the U.S. today. It’s no news that the normalization of cannabis laws is becoming realistic among many states, spawning a massive multi-billion dollar industry, and attracting a high traffic of venture capitalists, entrepreneurs, and individual investors.
It is high time to start investing in the emerging and fast-growing cannabis industry before it develops tremendously and the barriers to entry for organizations and investors get pricier.
Primarily, cannabis businesses are among a group of lucrative investments with tremendous room for multi-year growth. And since it is being legalized in many states, it had become the fastest-growing industry in the United States, based on ArcView Group’s latest research. The report has it that legal cannabis in the United States grew from $1.5 billion in 2013 to 74% increase in 2014 to about $2.7 billion. Now, imagine if cannabis business is legalized in all 50 states in the United States of America, there is an indication that cannabis will generate a “jaw-breaking” annual revenue than any other industry.
Due to this rapid growth in the cannabis or marijuana industry, the real estate industry has started to consider and take notice of this sector. And with respect to the high demands for it, the real estate industrial sector attribute extra-strong demand for the purchase and sales of this product. According to ArcView CEO, Troy Dayton, investors nationwide have placed their attention to the cannabis as a prospective explosive growth market. “It isn’t necessary for a rocket scientist to see that the marijuana industry is going to provide a lot of economic benefits,” Says Dayton. He went further to add that “one of the highest business sectors to observe has been the real estate sector.”
Apparently, industrial brokers have seized this opportunity to explore. Diverse marijuana growers are absorbing large square feet of landed properties or industrial spaces to plant cannabis legally. Studies have shown that the cannabis industry independently hiked up industrial property prices in many regions to an unusual level. Property prices have gone up to about four times higher than the usual sales before the sales of medical marijuana – the legitimate cannabis industry.
How about it? Do you want to buy or sell your cannabis business or property? Do you want to make that whooping sum of revenue you ever desired? Or do you want to go beyond the present challenges of locating and procuring the right facilities and financing necessary for you to operate? Then, we are here for you! 420 Property aims to eliminate any challenges you may face by serving as the most comprehensive commercial cannabis and hemp real estate marketplace dedicated to empowering consumers with data, inspiration, and knowledge around their business.
Search, post, and enjoy. Thank you for choosing 420Property.com.
May 9, 2016 / by / in ,
Demand For Real Estate in the Marijuana Industry Outweighs Supply

An apparent lack of “420 Friendly” Real Estate has been realised nationwide as many legal growers and dispensary owners scramble to locate properties to lease or purchase at affordable prices. Strict zoning requirements have put constraints on the supply of compliant retail, industrial, and land properties for cannabis-based business use, and not all building owners and landlords will accept medical marijuana tenants because of implied risk associated with cannabis-based businesses and moral reasons which make locating a complaint space even more challenging. Many of building owners and landlords who are “420 Friendly” are reaping the benefits of the Green Rush as they are collecting premiums on the property leases and have the upper hand in negotiations when selling a cannabis complaint property. Due to the lack of Federal support, banking and financing solutions are not easily obtainable unless obtained from a non-traditional institution which also has led to the increased difficulty of purchasing properties for many medical and recreational marijuana dispensaries and grower.

Previously undesirable industrial buildings are now a hot commodity in many U.S. States due to the emerging legal cannabis industry. Medical and recreational marijuana operations have fed a growing demand for industrial spaces of roughly 3,000 square feet to 40,000 sq. ft. and underutilised retail spaces are now home to many cannabis dispensaries which have helped fill empty buildings, drive down vacancy rates, and push rents to higher levels.

420Property.com, a “420 Friendly” real estate and professional marketplace launched in March of 2016 to assist in relieving the difficulties many cannabis-based business owners are facing when it comes to locating “420 Friendly” properties. 420Property.com is now the ‘go-to’ real estate resource in the cannabis industry and assist in locating “420 Friendly” properties for sale or lease, existing businesses for sale, business/ franchise opportunities, landlords, real professionals, real estate lawyers, property insurers, financing providers, and investors.

Get started with 420Property.com today.

April 7, 2016 / by / in ,