Whether you want to open a recreational or medical marijuana dispensary, start an outdoor hemp farm, or begin cultivating cannabis strains at an indoor farm, you need to understand the process of obtaining 420 friendly properties.
Keep in mind that laws vary significantly from state to state. In fact, laws often vary a lot from city to city. The details of finding 420 properties in northern California, therefore, don’t look exactly the same as obtaining 420 properties in Michigan.
The following guide will put you on the right track to finding, comparing, and obtaining 420 properties for lease and sale. Make sure you know the rules that affect cannabis businesses in the property’s jurisdiction before you commit any money. You may want to talk to a cannabis lawyer to help you make the decision.
Know What Features You Need in 420 Properties
Your search for the perfect 420 property starts with identifying the features that will help make your business successful. What you need from cannabis real estate will depend on the type of business you want to open. Some of the most common green zone real estate options include:
- Commercial farmland for outdoor cannabis or hemp cultivation.
- Residential farmland for outdoor cannabis or hemp cultivation.
- Greenhouses that extend the growing season and improve growing conditions for cannabis or hemp.
- Warehouse space for indoor cannabis cultivation.
- Industrial space for extraction and production.
- Commercial retail space for selling to patients and consumers.
Take a look at some of the specific features you might want from each of these property options.
Farmland for Outdoor Cultivation
When comparing farmland for outdoor cultivation, many investors look for features like:
- Irrigation systems.
- Access to utilities (water, electricity, etc.).
- Soil acidity between 5.8 and 6.2, which is suitable for hemp and cannabis cultivation.
- Buildings for storing equipment.
- Farmhouse for staying on the property.
- Proximity to a population, which makes it easier to hire workers.
- Access to major roads for shipping products.
Any missing features could add to your overall investment since you might need to pay for adding them. While you might not mind having a 420 property away from a major road, access to water is critical. Without it, you could lose millions of dollars in crops.
Greenhouses for Hemp and Cannabis Cultivation
Greenhouses can help you control the growing environment for hemp and cannabis. When comparing greenhouses for hemp and cannabis cultivation, consider factors like:
- The age of the greenhouse.
- How much acreage the greenhouse covers.
- The greenhouse’s build material.
- Whether the greenhouse already has a heater for growing during cold months.
Greenhouses are often supplemental to larger farms. You might only use the greenhouse to start transplants that you later move to outdoor land. Depending on the temperature, you could also use the greenhouse to grow smaller amounts of cannabis during winter.
Warehouse Space for Cultivation
Warehouses have become popular options for indoor cultivation. When exploring 420 properties in Michigan, Colorado, and other places with cold seasons, it makes sense to move production inside instead of dealing with changes in weather and temperature.
You can buy a green zone warehouse and convert it into an indoor cultivation center. That requires a lot of work and money, though. When possible, investors often prefer 420 properties for lease and sale that already have irrigation, lighting, and nutritional systems in place. That way, they can start cultivating immediately without updating the space.
Industrial Space for Production
Industrial space can serve several purposes for hemp and cannabis businesses. You might use the green zone space to cure flowers before sending them to dispensaries. You can also use the areas to extract cannabinoids and terpenes from raw plant materials. Once you extract chemical compounds like THC and CBD, you can make products like edibles, tinctures, and oils.
When exploring 420 properties for lease or sale, look for options that have enough room for your extraction equipment. You will also need room for storing solvents and your finished products.
Other factors that might influence your decision include:
- The space’s electrical system
- Location near retail or shipping centers
- Security systems
Commercial Retail Space
Commercial 420 properties in California, Michigan, and other states make it possible for retail stores and medical dispensaries to serve consumers.
Most businesses want their commercial retail spaces to have features that appeal to consumers, such as ambient lighting, large rooms, and pleasing décor. More importantly, local regulations can require some features for your commercial retail space. These features often include:
- Single entry and exit points for shoppers.
- Separate lounges to limit the number of people inside the salesroom.
- Computer systems that track inventory.
- Security systems that prevent theft.
Always make sure you know your local requirements before opening a dispensary for medical or recreational cannabis products. Otherwise, you could face hefty fines or even lose your permit.
Understand Permit Requirements in the Property’s Jurisdiction
Permit requirements add a frustrating level to obtaining 420 properties that can help your business succeed. Unfortunately, the cannabis industry can only exist in the U.S. while it follows strict regulations. As of mid-2021, state and federal laws often conflict. While you can buy 420 properties in northern California and operate legally, the federal government considers the operation illegal.
States must take their regulatory requirements seriously to appease the federal government (and state legislators who prefer cannabis prohibition).
The National Conference of State Legislatures offers synopses of cannabis laws in each state. It’s a great introduction to laws that can help you choose a state for your business.
For more information, though, you will need to consult local laws. They do not always agree with state laws. In many cases, state laws set minimum regulations that investors and businesses in the cannabis industry must follow. Municipal governments can establish additional requirements and restrictions. They have the power to fine businesses and take away permits/licenses, so pay close attention to community regulations. Otherwise, you risk losing your investment—and possibly even more.
Does Your Area Have Tier Levels for 420 Licenses?
When you look at listings for cannabis properties for lease or sale, you might see tier levels listed. Some states, including Washington, have different tiers that define how cultivators and dispensaries can operate. Using Washington 420 tiers as examples:
- Tier I licenses typically appeal to small, indoor farms that want to grow high-quality medical or recreational cannabis in canopies up to 2,000 square feet in size.
- Tier II licenses usually go to indoor warehouse cultivators that use mid-sized canopies between 2,000 and 10,000 square feet.
- Tier III licenses go to the largest farms (indoor or outdoor) that want to sell a broad range of cannabis products to consumers in multiple markets. They often have canopies between 10,000 and 30,000 square feet in size, which means they have significant control over pricing and product trends in the industry.
Most jurisdictions have their own versions of tier levels/ They may also refer to them as “grade levels.” Make sure you know the licensing limits for permits in your business’s area.
Compare Your Funding Options for Buying or Leasing 420 Properties
Finding 420 properties that interest you is rarely the end of the process. Next, you need to compare your funding options.
Cannabis retail spaces can easily cost more than $1 million to purchase. Unless you have a few million dollars available, you will probably need to seek a funding option. You can also consider 420 properties for lease, but you will still need to spend quite a bit of money upfront on equipment, staffing, security, and retail products.
Funding a cannabis business poses several challenges. Many banks worry that they will violate federal regulations by working with companies that technically break federal law—even when those companies follow state law closely. A traditional funder’s reluctance can make it hard to obtain the money you need to start your business.
Many investors turn to private commercial lenders that do not need to worry as much about federal regulations.
What You Can Expect to Learn From 420 Friendly Property Listings
Buying or leasing cannabis property usually means that you need to compare several opportunities before you find one that fits your requirements. You probably have a certain property in mind right now (e.g., a storefront in West Hollywood, a rural farm with rich soil and access to water, or a warehouse that you can equip with the systems needed for indoor cultivation). You want to find a listing that matches your ideal as closely as possible.
When you compare property listings, you can expect to find certain types of information. Some information that you should pay close attention to includes:
- The asking price of the property.
- The property’s listing type (e.g., cannabis & hemp real estate, warehouse/industrial for sale, and cannabis & hemp real estate for lease).
- The property’s listing status (active or inactive).
- The size, which typically refers to the size of indoor space written as square footage.
- The lot size, which is usually the amount of outdoor acreage included with the property.
- Available power (e.g., “3 phase,” a common listing for buildings and other properties that have access to electrical grids).
- Whether you can grow cannabis, hemp, or both plants on the property.
- The type of license currently associated with the property (e.g., recreational, medical, or recreational and medical license).
- The city tax rate (this is usually the name of the city that sets the property’s tax rate, not the actual tax rate as a percentage. You may need to contact the city to get the latest tax rate for the type of business you plan to operate).
- Sale type, such as whether the current owner will accept cash, financing, or owner financing.
- The utilities available on the property, such as electricity and water access.
- The name of the current owner, which is often listed as a company rather than an individual.
- The owner’s contact information (e.g., phone number and email address).
Buying vs. Leasing Cannabis Properties
As you explore your cannabis property options, you will likely notice that some of the real estate is listed as “for sale” while others are listed “for lease.” It’s critical to know the difference between these options and how they can affect your business plan.
When you buy cannabis properties in California, Michigan, and other states, you own the real estate, including buildings and land. More likely than not, you will need to fund your purchase by getting a loan. Making monthly loan payments isn’t the same as leasing (more on leasing below) because you own the property after you finish repaying the loan. Once you own the property, you only need to pay taxes to your municipal government, assuming that it charges property tax.
With leasing, you agree to pay the property owner a certain amount of money each month. You and the owner will sign a contract that explains the monthly price, how you can use the property, and how long the lease lasts. Leases often operate on a year-by-year basis, but you can make other arrangements with some owners.
Benefits of Buying Cannabis Properties
- You own the property, so you can improve it without getting someone else’s permission.
- You can sell the real estate to earn a profit.
- You have a lower chance of losing your investment.
Disadvantages of Buying Cannabis Properties
- You might need to make a sizable down payment before you can take ownership of the property.
- You have to pay property taxes in most areas.
- You’re responsible for maintaining the property.
Benefits of Leasing Cannabis Properties
- You get to avoid high down payments.
- You are not responsible for maintaining the property.
- You don’t pay property taxes.
- You can leave the property when your lease ends.
Disadvantages of Buying Cannabis Properties
- You will never own the property.
- You might need to seek permission before making changes to the property.
- Prices will likely increase over time.
Find a 420 Friendly Property Listing That Meets Your Needs
Find a listing for the type of 420 friendly properties that interest you on 420property.com. The website can also help you connect with real estate agents, cannabis real estate lawyers, business consultants, property appraisers, insurance providers, financiers, and other professionals who can help make your investment successful.