3000 SF Warehouse in Wilmington (City of Los Angeles)

    Demand for Hemp Real Estate Expected to Grow after Passage of Farm Bill

    The Passage of the federal 2018 Farm Bill is poised to change things for the better in the hemp industry. The new law removes the Cannabis sativa L plant from the Controlled Substances Act and from oversight by the U.S. Justice Department and places it under the purview of the Department of Agriculture. While still heavily regulated, hemp farming and the manufacture and sale of hemp-based products will now be lawful activities. This opens the door to massive growth and expansion in the hemp industry. It also means the demand for hemp real estate will soon be on an immense upswing.

    Recent and Current Status of the Hemp Industry

    Subsequent to the 2014 Farm Bill, agriculture state departments and research institutions were permitted to cultivate industrial hemp. This production owas limited to research and study purposes, though part of this research included learning about the marketing potential of this crop. Many states initiated agricultural pilot programs to move forward with this production.

    In 2017, the hemp market generated $291 million. In the U.S., more than 3,500 licensed cultivators produced between 23,000 and 26,000 acres of hemp in 19 states. This represented a 163 percent boost over 2016, with 9,770 acres. By this year, the acreage had increased to 77,000 acres.

    Due to the prohibition on the commercial growth of hemp in the U.S., many companies had to rely on imports from Canada, China, Romania, India, Chile, the Dominican Republic and a few scattered European countries. The bulk of U.S. hemp imports – 90 percent – were supplied by Canada. The Federation of American Scientists numbers reveal a 2015 import market of $78.1 million. By last year, that number had dropped to $67.3 million. But with the passage of the 2018 Farm Bill, the amount of hemp imports should decrease substantially. American farmers will be growing their own with the loosened commercial hemp production laws.

    The U.S. hemp product retail sales market in 2017 was estimated at $553 million. This includes a wide range of goods, like personal care products, supplements and food. When clothing, textiles, building materials, auto parts and other miscellaneous products are added, the total is closer to $820 million.

    Projections for the Future of the Hemp Industry

    Hemp farming has great potential. It’s a hardy crop and needs less water, fertilizer, pesticides and herbicides than corn. It succeeds in most environments, making it suitable for farmers across the nation. It also lends itself to organic farming due to its minimal input requirements, fast growth, weed resistance, and endurance against diseases and pests. And with more than 25,000 recognized uses, hemp is the definition of a super crop.

    There are numerous projections on the future of the hemp market. The Brightfield Group is predicting a boom upwards of 450 percent growth by 2021, surging to $6.5 billion. By 2022, the group predicts an increase 40 times over, generating a $22 billion market.

    A driving factor in the projected growth of the hemp market is increased consumer demand for goods infused with Cannabidiol (CBD) oil. Consumer awareness about the potential therapeutic benefits of CBD has recently exploded, and it doesn’t appear that it will be dying down anytime soon. As part of the wellness industry — a powerhouse sector, already – the production of CBD-infused goods is expected to increase in profitability. Forbes estimates that the CBD consumer market will hit $2.1 billion in within two years. This will require the increased production of CBD-producing hemp crops.

    Real Estate Demand

    The full impact of the new Farm Bill on hemp cultivation, CBD-products, the real estate market and other sectors won’t be fully realized for some time. But it’s obvious that changes are coming. With the move to lawful production, there will be an increased demand for hemp and hemp-derived goods. Farmers will soon need more land to cultivate larger amounts of hemp crops.

    Farmers have been noticing the profitability of hemp. For example, one Kentucky farmer explained the disparity in growing soybeans versus hemp. One acre of soybeans would yield about $500 on today’s market. In stark comparison, that same acre of hemp with CBD-rich flowers might sell for up to $30,000. It’s a lucrative cash crop and the new law makes commercial production a reality for a growing number of farmers.

    This year, the top five states with the most hemp acreage are:

    1. Montana – 13,141 acres
    2. Colorado – 5,562 acres
    3. Kentucky – 4,615 acres
    4. North Carolina – 3,263 acres
    5. North Dakota – 2,669 acres

    Hemp-planted land in the remaining hemp-producing states ranges from 12 acres to 726 acres. While this hemp acreage has grown since the passage of the 2014 Farm Bill, that growth will pale in comparison to the boom coming due to the new Farm Bill law. But even small family farms, of no more than 7 acres, will be able to realize a profit from hemp crops.

    The demand for hemp currently exceeds the available supply in the U.S. Established farmers are eager to meet this demand. And with the money to be made in this industry, newcomers are likely to try their hand, as well. This influx of new hemp farmers is sure to have an impact on real estate – specifically, an increased demand for agricultural land.

    These projected changes won’t happen overnight. But industry pros need to be prepared in order to benefit from the expected growth. Education and awareness about the possibilities in the hemp and CBD industry are key.

    Search or list hemp property FREE on 420Property.com!

    December 27, 2018 / by / in
    Demand for CDB Products Having an Impact on Real Estate Industry

    CDB is being added to an increasing number of goods. Some examples include lotions, pain creams, bath products, dog treats, supplements, beverages, baked goods, lip balms, candles, massage oils, olive oil, honey, candy and a broadening variety of foods. The list is virtually endless. As the popularity of these and other CBD-infused items grows, cultivators and manufacturers will need to find more space for production to meet the growing demand, impacting the real estate industry.

    Popularity of CBD-infused Goods

    Cannabinoidol (CBD) is derived from the Cannabis stevia plant. Though it’s related to the marijuana plant, CBD contains no tetrahydrocannabinol; popularly known as THC, this is the psychoactive component in marijuana that delivers the “high” effect. Instead, CBD’s reputed beneficial effects rely on molecular pathways and interactions that are free of the mind-altering effects associated with marijuana.

    Both scientific and anecdotal evidence tout the benefits of CBD, said to have a positive impact on health, wellness, mood, sleep habits, and pain control. It’s no wonder than, that consumer demand for this “miracle” product is high and continues to grow. New Frontier projects that hemp-derived CBD sales may grow to more than $1.15 billion over the next four years. The Cannabis market data firm predicts that changes in legislation under the 2018 Farm Bill will encourage mass market retailers to join the CBD goods industry.

    The Legality of CBD

    The 2018 Farm Bill was signed into law on December 20, 2018. This new $867 billion law makes the commercial cultivation and sale of hemp lawful. It also allows interstate hemp commerce. The law limits the production of hemp to cannabis plants that contain no more than 0.3 percent THC. This directly impacts CBD that’s harvested from industrial hemp, removing it from the controlled substances list and protecting is as an agricultural hemp-derived product.

    The Food and Drug Administration still offers a bit of roadblock. It doesn’t differentiate between marijuana-derived and hemp-derived CBD. Instead it prohibits the addition of CBD to any foods. The FDA also claims that CBD isn’t a dietary supplement, but a drug, and requires FDA approval for use in food, drinks and supplements. This stance is one that bears watching. But, thus far, the FDA hasn’t been aggressive in enforcement of this CBD prohibition. It typically acts only when interstate commerce and online health claims are involved.

    Production of CBD Items

    With the passage of the new farm bill, CBD advocates are predicting a monumental shift in how CBD-infused products are marketed and sold. The legality of making CBD-infused products means large retailers will be eager to add these items to their shelves. This change in the law is likely to impact the entire supply chain, from cultivation and packaging to sales and marketing. Mainstream manufacturers, suppliers and distributors won’t want to miss out on a market as lucrative as CBD products.

    Real Estate Needs for Hemp Cultivation and CBD Goods Production

    To meet demand for CDB products, farmers need to grow more hemp crops. This means a need for more acreage. Once the hemp is grown and sold, manufacturing companies take over production of the CBD oil and CBD-derived products. An increased need for space and manufacturing facilities is anticipated.

    This new law will encourage financial institutions to provide services to professionals in the hemp industry and offer loans to farmers and small businesses involved in the production of hemp and hemp-derived products. This will free up more operating capital and give these businesses and entrepreneurs the funds to lease and purchase necessary land and other real property.

    Consumers are demanding CBD products. Smart business owners are eager to meet that demand and realize the profits associated with this booming market. Real estate needs are poised to increase in this industry in order to support this growth. It’s a fast-developing industry that will gradually impact a number of other sectors.

    Search or hemp properties for sale or lease and hemp/ CBD businesses for sale on 420Property.com


    December 27, 2018 / by / in

    Just one week after the 2018 Farm Bill passed through the U.S. Senate and House of Representatives, President Trump signed the landmark bill into law on December 20, 2018. The Farm Bill is the first piece of federal legislation which unambiguously removes hemp-derived cannabinoids including Cannabidiol (CBD) and tetrahydrocannabinol (THC), the active ingredient that produces the psychoactive effect from Cannabis, from the Controlled Substances Act and moreover, expressly prohibits States from the interfering with interstate sale and transport of such products.

    Visit 420Property.com to search available Hemp properties for sale or lease, or existing hemp/ CBD businesses for sale. 420Propery.com is the worlds largest cannabis and hemp marketplace.

    It’s FREE to use 420Property.com. To submit/advertise available listings all you need to do is register and start submitting listings. 420Property.com offers two types of listings: Property/Business Listings and Company/ Professional Listings. Both types of listings can be upgraded to a FEATURED listing for $29 per month—which generally get listings 10X more exposure.

    Once listings are added,, they are visible to our 200k website users, distributed to our 40k social media followers, and distributed to CannabisMLS.com.

    December 20, 2018 / by / in
    Impact of the Farm Bill on Real Estate and Land Demand for Hemp

    There’s no question that 2018 has been a landmark year for the hemp and CBD industries. With the approval of the Farm Bill presented by Senate Majority Mitch McConnell, hemp has now been taken off the list of federally controlled substances.

    This isn’t a new bill, in fact it is one that has been around since 2014, when a bill was passed to distinguish hemp from marijuana based on the THC content. In 2014, the passing of that bill made it legal to grow and study hemp through various universities and agricultural programs.

    Industrial hemp is defined as any part of a cannabis plant that has no more than 0.3 percent THC based on the dry weight.

    The Growing Hemp Industry

    Thanks to the passing of the Farm Bill, the provision from 2014 will be repealed, which means that now it is possible to expand who and where industrial hemp is grown. In 2017, more than 25,000 acres of hemp were grown across 19 states, which represented an increase of 126 percent since 2016. It is expected that this growth is going to continue with the new legislation that is in place.

    While both chemicals are derived from hemp, CBD is the element that doesn’t produce a psychoactive effect, unlike THC. This means there is no “high” sensation experienced with hemp, especially considering the many uses it has, such as for rope, fabric, paper and more.

    The Growing Rate of CBD Sales

    Thanks to the passing of the Farm Bill, it is expected that the CBD market will grow by more than 40 times what it is now by the year 2022. While federal legalization is great news for CBD companies, the question that many have is how do they prepare for this change, and what are they really hoping to see?

    This is a question that is still being pondered by many in the industry, and for most, it is a “wait and see” situation.

    The Increase in Demand for Hemp Acreage

    With the original bill for limited hemp growing rights the expansion of hemp was significant. While it was still considered a minor crop in 2016, it was rapidly expanding. In fact, in 2017, there were approximately 26,000 acres of hemp being grown in the US (almost double the previous year) and was produced by approximately 1,500 farmers.

    With the amendment to the 2014 bill, which was approved on December 12, 2018, the federal ban on hemp cultivation was lifted with broad and bipartisan support.

    Upon passing, the American hemp industry is projected to balloon in short order and create a huge demand for farmers and land for this crop.

    There are some who believe that in rural areas, the demand for more farm acreage may impact the real estate market. This is another factor that is unknown since the new bill has been passed. While the increase in demand will likely result in a surge of prices for available farmland, no significant change in this particular industry is expected.

    The Establishment of Quality Standards

    While this isn’t a topic that has been breached in the U.S. yet, it is something that Canada (the neighbors to the north) have already done. The fact is, with hemp now being legal, more people are going to be growing it. As a result, eventually there will have to be industry-wide standards regarding the growing process and selling requirements.

    While managing the crops grown by 1,500 farmers may have be manageable, with the new Farm Bill this may not be as possible. With the increase of product that’s projected to come to the market offer the course of the next few years, the need for quality standards is high and something that will have to be considered at some point.

    A Better Understanding of the Farm Bill

    For many, the Farm Bill contains a lot of information that isn’t exactly clear – after all, this bill alone is more than 1,700 pages long. Within those pages, things like pesticides, the SNAP program and other factors – even tariffs – are discussed.

    While the actual impact of this bill on farm land, real estate and farmers in general is yet to be seen, there are many experts and government officials who believe that the bill will be beneficial in the long run. With the increase in demand of CBD oil, hemp products and other related items, the ability to make these in states where it is legal is a huge advantage. Not only that, but hemp is considered a cash crop, which is going to lead to farmers being able to make up the deficit that some of the newly appointed tariffs have created in the recent past.

    So, is it positive for the country, citizens and individual farmers? This is a question that time will answer. Currently, there are many who support what the bill offers and the ability to grow hemp, which is a commodity that is in high demand both in the United States, as well as in other countries.


    December 13, 2018 / by / in
    When the Smoke Settles: Cannabis Property and Sale Issues Explained

    The cannabis industry is in a strong growth phase. By 2027, worldwide spending on cannabis is expect to reach $57 billion, with recreational use making up 67% of the market and medical use making up 33%. Marijuana is gaining more acceptance in the mainstream culture and has become legal in a number of American states. As a result, many investors are interested in acquiring their own operations. The industry offers excellent profit potential, but it does present complications, including legal and property issues. Also, increased competition will eventually cause prices to drop, impacting a company’s profit margin. Those interested in cannabis production and sales need to consider all these factors before entering the industry.

    Real Estate Prices

    Warehouse prices and rents are rising at a rapid rate, and experts say marijuana investors are the driving force behind the increase. Marijuana farmers are willing to pay more to get the facilities they need and are paying higher than the average warehouse leases in their area of operation. Those who already own warehouses are in great shape due to this trend, but those looking to buy or lease will pay more this year than last and more next year than this year. For instance, the prices of small and medium sized warehouses in the Sacramento area have been rising around 30% to 40% each year. Since most marijuana producers prefer to grow their product in warehouses, these prices are a significant factor in an investor’s decision to enter the industry. They must assume that property prices and rents will continue to rise at a fast rate.
    Cannabis retailers are making excellent profits from their shops, which has benefited property owners. In Seattle, which has an established marijuana industry, the average sales per square foot reached $1,513 compared to the US retailer average of $325. Cannabis is still a hot commodity.

    Zoning Issues

    Any potential investor must thoroughly research zoning ordinances in their desired area or operation. Getting a state license for production and sales is difficult enough, but once that hurdle is jumped, local towns and cities can raise other issues. Zoning ordinances in many areas have not caught up to the industry and do not specifically mention cannabis. As a result, some companies have established their operations within the city limits of a certain town and later been told they were violating local zoning laws, often after citizen complaints.
    Some municipalities ban all cannabis business in their boundaries, while others will allow medical marijuana and not recreational marijuana. Some cities will require special permits for cannabis companies, adding substantially to operating expenses. All of these issues need to be completely resolved early in the process of establishing a company. Too many of these businesses have been derailed after they already began operation.
    The issue is complicated by state and federal law. Some states have made recreational and medical marijuana legal. Others only allow medical marijuana, while some forbid any and all sales of cannabis. Also, federal law still makes it illegal to produce, sell and use cannabis, although the government is not currently enforcing these statutes in states that have legalized it. Still, this legal confusion makes some places reluctant to allow any cannabis company inside their city limits.

    Price Pressure

    Currently, marijuana prices are still relatively high, which makes production and sales profitable. As always, increased competition will lower these prices, so those entering the industry need to factor in that element. In Colorado, cannabis has been legal since 2014, so competition is greater than in most other states. In the summer of 2018, the price had dropped more than $400 since January 1, meaning marijuana was below $1000 per pound for the first time. The average price was $846 in June. At the beginning of 2015, that price was $2007 per pound. Colorado monitors cannabis production to prevent oversupply, but the price is still on a significant downward trend.
    Supply and demand largely determines the price, so trying to establish a cannabis business in a state with an already thriving market is risky. States where the industry is relatively new should keep prices higher, at least for a while. Investors must do market research and factor in an inevitable price decline before setting up shop.
    In Colorado and California, the cannabis industry smoke has already cleared somewhat. Businesses are well-established and community norms are set. Competition for warehouses has driven up their prices and their monthly rent. The price pressure on cannabis, or price drops due to increased market competition, also has the potential to affect real estate prices. While the industry is still highly profitable, it is not a get-rich-quick scheme.
    Other states are newer to the process, which means they may offer a more profitable market. Investors will face less competition and be able to sell their cannabis for higher prices. Of course, these areas also pose more complications for investors, particular in the area of zoning.
    As with any business endeavor, research is key to the success of a cannabis company. Investors must know their market as well as state law and local ordinances. All start-up businesses are somewhat risky, but the marijuana industry still promises significant financial rewards.
    September 30, 2018 / by / in
    Budding Across America: Cannabis Property Zones

    One of the oldest industries on Earth – real estate – is about to join forces with one of the newest – the sale of cannabis and hemp-related items. The result is Cannabis Real Estate. Take a closer look at one of the most exciting new sectors for investment in the property market today.

    The profile of states that have legalized marijuana and its derivatives is changing rapidly. In 2018, The majority of states fall into one of three categories:

    • · Marijuana is legal for recreational and medical use;
    • · Marijuana is legal for medical use only;
    • · Marijuana possession in small amounts has been decriminalized.

    In states like West Virginia and Louisiana, the legalization only covers businesses that sell for cannabis-infused products, such as oils or pills. In other states where it has not be legalized, like Virginia, doctors are permitted to write a recommendation, not a prescription, for cannabis-related treatments. In addition, 15 states are considering legalizing or amending marijuana laws by 2020. All of these changes will open up many unique real estate investments related to commercial interests in the years ahead.

    Cannabis-related Property Types and Their Values

    While the first type of commercial real estate that comes to mind is customer-facing, either a retail storefront or a medical dispensary, there are many parts of the supply chain that have to come first.

    Property types include:

    • · Cultivation areas, either on a farm or within a greenhouse
    • · Manufacturing plants that turn the raw materials into Cannabidiol (CBD) oil or other compounds
    • · Distribution hubs that handle secure storage and manage logistics
    • · Delivery companies that assure the right packages are delivered to the right destination within tight windows
    • · Testing facilities that assure quality to meet regulations and the guidelines of oversight bodies
    • · Micro businesses that sell and support the equipment required to operate the retail and medical locations
    • · Offices for online companies such as medical staff that review marijuana prescription cases over the web

    The values for these properties can run from the thousands for a pre-built medical dispensary to the multi-millions for shovel-ready development parcels.

    Once the establishments are built, real estate investments follow the profile of commercial development for any other industry, such as funding for regular tenant improvements of the property and projects to make the business more energy-efficient.

    Cannabis Zoning Requirements

    Even though cultural views have shifted about marijuana, the Drug Enforcement Agency (DEA) still classifies it as a Schedule I drug, which impacts where marijuana-related businesses can be located. 32 states and the District of Columbia have established “drug free” zones that extent 1,000 feet in every direction from the property lines of elementary and secondary schools.

    Many of those states have expanded these zoning laws to protect public parks, churches, daycare centers, and public housing. Map that out and it becomes clear there’s not a lot of options for where these businesses can be located, except far from the city center. In Missouri and West Virginia, the definition of school includes colleges and universities. In Arkansas, the zones include all of those areas plus public recreation centers, skating rinks, Boys’ and Girls’ Clubs, and substance abuse treatment facilities.

    In California, the laws are a bit more relaxed. For example, in Los Angeles “blue zones” indicate where dispensaries are permitted inside areas already zoned for retail and industrial uses. The required set-back area is 800 feet in every direction from schools, public parks, libraries, and drug treatment or rehab centers. In addition, dispensaries must be separated from each other by at least 800 feet.

    Similarly, in San Francisco “green zones” indicate where cannabis retail locations are permitted, which must be at least 600 feet in every direction from public or private schools, both elementary and secondary. “Purple zones” grant permits based on a conditional use authorization and “brown zones” allow these businesses to be located there only with a special microbusiness license.

    Conditional Use Permits and Licensing

    Every state and many municipalities within those states have special laws and procedures covering permits and licenses for specific business types. Entrepreneurs would be wise to invest in a legal/government affairs specialist to do all of the necessary research and meet all of the requirements early in the planning process.

    In some states, these laws are streamlined to facilitate rapid expansion and revenue generation. In California, there are three state licensing authorities: the Bureau of Cannabis Control, the Manufactured Cannabis Safety Branch, and CalCannabis Cultivation Licensing. The type of license required (such as cultivator, retailer, testing lab, and so one) determines which agency will issue the license.

    In other states like New York, it may already be too late, unless there are more changes to the law. Only Registered Organizations can manufacture and dispense medical marijuana and the New York Department of Health is no longer accepting applications to become a registered organization.

    September 30, 2018 / by / in
    How Long Will the High Returns in Cannabis Real Estate Last?

    In the next five years, the legal cannabis industry is expected to have a steady compound growth rate of 27 percent. With a current estimated value of nearly $10 billion and rising, it is not surprising that there has been an upsurge in the acquisition of real estate in America for the purpose of legal cannabis business.

    What may have caused this recent increase?

    It is quite simple: despite the fact that the risks are high, the returns on investment in also really high and this makes investors want to have a part of the industry. In addition, some states now have laws that deem the cannabis business as legal and this has further opened up the market. However, the recent boom in cannabis real estate can be tied to the perspectives and activities of investors.

    The current federal legislation concerning cannabis makes it very risky for the traditional modes of investment to thrive, hence the need for alternatives. Investors would more readily put their money into real estate than into the actual production of the product. This is quite logical because real estate is believed to be safer in terms of investment security in cannabis business than other items involved in the production and distribution of cannabis.

    In addition, the existence of an expansive network of loyal consumers further contributes to the appeal of the industry. Investors are aware of this and the potential effect it would have on the industry in the nearest future and so they want to tap into it in the safest way possible. You guessed it: real estate.

    To provide more fodder for the already burning fire, there have been reports of some private equity fund recording returns on investments of over 50% per annum, thereby prompting more investors to join the feeding frenzy.

    The truth about these high returns

    The cannabis industry is a very fast-paced one, rife with risks but also with incredible returns which could be as high as 25% for cash on cash annual returns. In other cases, the prices of real estate doubled and even tripled in some cities where the production of cannabis was legalized.

    The high returns are real but what about the associated risks?

    It is quite easy to get drawn in by the possibilities of immense profit and incredibly impressive returns on investment. However, it is important to note that the cannabis industry is very complex, still evolving and has a lot of factors at play that could determine the direction of the market.

    Firstly, the industry is regulated by so many regulations that even a slight change could affect the market outcomes. For instance, if more states and cities legalize the business, then the profits would keep increasing but if the regulations are made stricter, then it might impart the market negatively.

    In the same vein, there are a lot of regulatory agencies and the authorities are constantly clamping down on illegal cannabis markets. The current estimated value of the illegal cannabis market is $46 billion (which is one of the reasons investors are so excited) but what happens if these illegal businesses are shut down by the authorities or they overshadow the budding legal businesses? It goes without saying that the small legal businesses will have more room for growth if illegal businesses are shut down.

    Furthermore, the price of marijuana would also determine the market outcome. If the prices continue to fall, tenants would be unable to pay rent and the erstwhile high returns real estate may become a liability for a while.

    Other factors that may impact the industry includes heavy taxations and overbuilding.  These can affect the operations of small legal businesses and also result in oversupply of real estate which would now become a problem due to excess vacancies.

    How long will these good times last?

    The conditions of the real estate market vary from state to state depending on the phase of the market as well as the location itself. States like Colorado and Washington are currently experiencing an oversupply of real estate due to overbuilding while other places like Nevada actually have a shortage. A typical real estate market goes through four phases: expansion, hyper-supple, recession and recovery. California, with the recent legislation is in the expansion phase where the vacancy rates are low and more buildings are springing up. Colorado, on the other hand has high vacancy rates and is in the hyper-supply phase because construction hasn’t reduced.

    With favorable legislations, it is expected that the expansion phase would stretch for a while, maintaining a steady increase in construction and low vacancies. However, it would be difficult to accurately predict when the expansion phase would end because the industry is quite unstable and has too many influencing factors.

    It is important to mention that this boom is also expected to have an effect on residential real estate based on the fact that the expansion of the cannabis industry would result in an influx of people into cities where the business is legalized because jobs would be available and this would translate into a demand for residential real estate.

    This “cannabis boom” sure holds a lot of promised but for how long?

    January 1, 2018 / by / in
    Acquiring a Cannabis-bases Business

    In recent times, there has been an increase in the acquisition of cannabis-bases businesses. The reason for this activity could be linked to the recent laws passed in some states legalizing the business. This has opened up the market space for retail operations to thrive but to do this, they need a license. Some states have provisions for application for new licenses but in most cases, potential business owners would rather buy out existing businesses and take over their license. Some of these businesses are either failing or their owners simply want to sell.

    Whatever the reason, it would seem this is a perfect time in many states to acquire a cannabis-bases-licensed business. This article talks about the process of purchasing a cannabis-bases business on a very high level (no pun intended).

    Most of the existing cannabis-bases business deals were carried out by buyers and sellers directly via 420 Property, or through the small community of cannabis-bases business owners. Brokers have been known to put together such deals. However, they charge processing fees and there are many pitfalls that the unwary could fall into. For instance, your broker only earns their commission when there is a successful deal. You are not expected to pay them upfront when signing an agreement or if you do all of the work of making the deal go through by yourself.

    It is advisable that you get legal counsel when trying to acquire a cannabis-bases business. There are a lot of complex legal issues in the industry and only a good counsel would be able to ensure that your deal covers all the bases. Here are some things that should be clearly stated in a purchase contract:

    • The obligations of all parties
    • Due dates of the obligations
    • Conditions for the validity or otherwise of the obligations
    • Warranties, representations and/or assurances provided by both parties to make the deal go through

    If your agreement contains the above items and they are stated in clear terms, then you may proceed to sign. However, if any of the above is missing, you should probably have a rethink.

    With respect to business acquisitions, the obligations of the parties involved are quite straightforward: you make payments of the agreed price and the seller hands over the financial details, LLC membership, stock, and so on. The challenge usually arises with the duration and how long it would take both parties to fulfill their obligations. One of the factors that could determine this includes the requirements of the state licensing agency because they have to approve the acquisition, run background checks and so on. Additionally, you would not want to hand over your money until you are sure the business is yours, and the seller would also not want to have to deal with any problems that may arise from you. If this is dragged out for too long, it would affect the time the deal would go through.

    It is advisable that rather than wait for one party to finish their own obligations, both parties should do their part simultaneously. Thus, while waiting for the state agency to approve the acquisition, both parties would continue the purchase process. This would ensure that you save some time and all you would be waiting on would be the approval from the state licensing agency.

    When stating the conditions that may invalidate the deal, it is important that you include regulatory approval as a condition. Therefore, if the state approval is not granted, then both parties can go their ways as per the agreement.

    With respect to warranties, representations and/or assurances provided by both parties to make the deal go through, they must be included in the agreement. Some examples of standard representation include:

    • Both parties are certified to sign the agreement
    • Both parties are legally recognized by state laws
    • There is full disclosure of all lawsuits brought against each party and their potential effect on the deal
    • The financial situation of both parties, including their debts, credit, etc. has been fully disclosed

    These warranties are essential to assure the buyer that the company is honestly represented and they have the true understanding of the state and strength of the business they are acquiring.

    These steps are highly simplified in this article but it is very important that you follow due diligence when acquiring a cannabis-bases business.

    December 9, 2017 / by / in
    Blazing Real Estate Demand Ignited by Cannabis

    Unmarked warehouses are popping up across the country, and many individuals are unaware of what they contain. In the past, these structures may have been home to a granite cutter, a screen printer, machine shop, or an industrial business of another type. However, today, they’re now home to many marijuana operations across the county.

    The legalization of marijuana has upset many citizens, as it defies societal norms in the eyes of numerous people. On the other hand, the cannabis industry has become a source of tax revenue that has become extremely lucrative in recent years. But the cannabis industry has gone much further than this–it has significantly altered many real estate markets nationwide.

    More than half of the states have now legalized the use of marijuana (medical or recreational), and this number only continues to grow. As a result, a growing number of structures are being repurposed specifically for the cultivation, processing, and sale of this substance. This includes self-storage facilities, factories, warehouses and strip malls in the suburbs.

    Landlords are cashing-in as a result of this boom. The industry comes with some risks and landlords and property managers find they’re able to charge a premium for businesses wanting to partake in the cannabis and hemp industry.

    What makes this real estate trend so unique is the fact that it is taking place in numerous parts of the country. The marijuana industry is changing the face of the market in diverse parts of the nation, transforming blighted areas into thriving neighborhoods and sending real estate property values skyrocketing. For certain Denver neighborhoods, the warehouse space average asking lease price has increased by greater than 50 percent in a five-year period, and the city is now home to more retail pot stores than Starbucks in a stand-alone building. The ratio is actually five-to-one.

    Investors are taking note of this boom in the real estate market as well. Innovative Industrial Properties, Inc. (NYSE:IIPR), a Real Estate Investment Trust (REIT) was set up for the purpose of acquiring and leasing warehouse space to marijuana cultivators and retailers.

    One reason for the high demand for real estate devoted to the growth and sale of marijuana is the popularity of this substance—another is the lucrative retunes being made in the industry. In 2016, medical cannabis sales in the United States reached $6.7 billion dollars. ArcView Market Research predicts this figure will top $20 billion by 2021, thus as cannabis sales increase the need for facilities to cultivate and dispense cannabis will follow.

    Some experts wonder if a new real estate bubble could be forming. Numerous landlords are converting old warehouses to structures suitable for the cultivation of cannabis at a rapid rate. The strong demand for cannabis properties has created opportunities for startups like 420 Property, which is a Zillow (NASDAQ:Z) like real estate marketplace specifically for cannabis properties, businesses, and professionals.

    The experts, however, wonder if medical marijuana cultivators won’t turn to greenhouses to grow their crops, as this is a less expensive way to do so. Furthermore, as more states allow for the sale of cannabis, federal regulations may be loosened with regards to the transportation of this substance across state lines. Another concern is the federal government may find a way to impose regulations on this industry, and this could have a major impact on the industry and marijuana cultivators. However, businesses currently in the industry don’t appear to be worried about what could happen in the future. They are simply taking advantage of the boost in business and filling buildings that once sat empty.

    Although Denver is a hot spot for those involved in the cultivation and sale of cannabis, this isn’t the only part of the country benefiting from these products. Investment firms are offering properties in California, Nevada, New York, Oregon, and many other areas.  420 Property has real estate business listings available in all 29 states that allow marijuana.

    Before a property is converted, however, risks must be assessed. There is a great deal of capital needed for the tenant improvements needed to convert these buildings, and the cost to run the building once operational is extremely high. For example, powerful 1,000 watt lights are needed to grow marijuana, and this leads to high energy bills and a requirement for an enhanced electrical system. Furthermore, these buildings must be kept humid, which can bring about mold and mildew issues. As more businesses enter the industry prices of cannabis products will inevitability drop due to increased demand and competition, needless to say, diminishing profit margins will be realized by all, and therefore, high rents and property values will be economically unsustainable.

    Today, however, business is booming. Certain locations are bringing in tens of thousands of dollars every day with no signs of sales slowing. Investors are taking advantage of this and profiting while they can, as no one can predict what the future will hold. With so much money to be made, it’s no wonder marijuana has attracted the attention of countless individuals looking to make a profit and be a part of history.

    August 17, 2017 / by / in
    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