Green zones play an important role in cannabis real estate, which, in turn, plays an important role in winning a license. In fact, many states don’t even accept applications if real estate hasn’t already been secured. However, challenges exist with green zones that can make securing real estate difficult.
In addition to a lack of inventory in green zones, state and federal regulations present themselves as challenges, too. Although the road to success may seem rife with obstacles, it can be navigated with the right research and preparation.
Here’s how to overcome these challenges and find success with cannabis real estate.
The Weight of Federal Regulations
Despite being legal in most of the United States — and all of Mexico — federal legislation has yet to legalize cannabis. As a result, it remains illegal for any FDIC-insured bank to receive or process money that has anything to do with the cannabis industry.
Naturally, this makes life difficult for a cannabis real estate operator: If a property owner has any federally backed loans tied to a piece of property — as most do — they cannot lease to a cannabis operation. Their only option would be to sell, which would mean giving up a lucrative asset.
The Safe Banking Act Offers Relief
Luckily, the Safe Banking Act saves the day. Introduced by Rep. Ed Perlmutter of Colorado’s seventh District, this legislation loosens the government’s grip on cannabis-related finances. Broadly, the Safe Banking Act prohibits the government from punishing banks that work with legitimate cannabis operators.
Specifically, this bill allows:
- Institutions to provide general banking services to cannabusinesses.
- People and banks to sell affordable, federally backed loans to the cannabis industry.
- Cannabis real estate operators to lease their properties rather than be forced to sell.
The Safe Banking Act has opened new doors for operators as well as those in ancillary fields — in particular, cannabis real estate.
State Restrictions, Green Zones & Setbacks
Unfortunately, both the federal and state governments create challenges for cannabis real estate operators. For instance, space in green zones — areas in which cannabis operations can be legally located — is getting harder and harder to find.
Further, cities continue to tighten regulations known as setbacks, which dictate the specific distances cannabis businesses must be located from facilities like schools, rehab centers, and day cares. Denver officials, for example, are adding fitness centers and public swimming pools to their list of setback regulations.
Recently, I worked with a client who had bought a medical-only dispensary attached to a cultivation facility with the goal of switching from medical-only to recreational. When the original owner had won the medical-only license, however, there were no setback restrictions in place for residential areas.
If we had kept the same medical-only license, the client would have been grandfathered into the property regardless of the new setbacks. Since we had to reapply for a recreational license, though, the new setbacks kicked in and we were forced to find a new location.
The Promise of Emerging Cannabis Real Estate Markets
Although shrinking green zones prove to be both a nuisance and a challenge, new states offer opportunities. In particular, emerging states like New York, Massachusetts, Oklahoma, and New Jersey all have potential locations still up for sale.
These emerging markets present new opportunities for securing lucrative cannabis real estate. Doing so may give you a leg-up when the markets take off.
Moving Forward With Cannabis Real Estate
With all of the challenges, finding success with cannabis real estate can seem overwhelming, so we’re here to help. At Higher Yields Consulting, we find opportunities whether or not there’s supply because we create supply.
We go out, knock on doors, and offer creative deals to property owners in green zones. This not only ensures the functionality of the industry but also builds generational wealth for property owners and their families.
Part of making the industry effective also involves tearing down the stigma that surrounds marijuana. By bringing the community together and giving back, we’re building a new, positive image for the cannabis industry.
Are you looking to secure real estate for your operation? Reach out today and get started!