Where to Find Real Estate for a Cannabis Business

Dec 20, 2020 | Cannabis Business

You’re looking for real estate for a cannabis business. But with so much competition, it can be a real challenge to find the perfect property.

You likely have several questions. Here’s what we’ll answer here and now:

  • What is green zone real estate?
  • What should you know before you find green zone real estate for a canna-business?
  • How do you lock in cannabis real estate?
  • What property do I need for my cannabis business?

Looking for a green zone property to host your cannabis business’s operations? Contact us today to learn more about how we can help.

If you’re considering starting a cannabis operation, submitting a strong cannabis permit application can ensure your application succeeds. The likelihood of approval is significantly higher if you have a solid lease or property acquisition recorded.

Let’s talk about how you can find real estate for your cannabis business and increase your chances of becoming licensed.

What is Green Zone Real Estate?

Green zone real estate is property located in an area that allows the establishment of cannabis-related businesses. These operations can set up shop and serve the surrounding community, making the properties highly sought-after.

But what makes a “green zone” a “green zone?” Several factors come into play here. Primarily, state law.

For instance, the state law could highlight the idea that cannabis retail establishments aren’t permitted in areas that have been zoned exclusively for residential purposes. Or perhaps the operations must be at least 1,000 feet away from schools for grades K-12.

However, in some cases, local municipalities might reduce this distance requirement. The local municipalities can also impose additional location requirements if they deem them necessary. Some municipalities have even chosen to restrict or ban cannabis retail operations in their jurisdiction entirely.

Essential Real Estate for Cannabis Business Considerations

Most of the time, licenses to grow, process, or sell cannabis are connected to specific real property locations. Thus, it’s quite crucial to find the right property before conducting business in an area–most of the time.

Here are some of the most crucial considerations we outline for our clients regarding green zone real estate:

Green Zone Real Estate Location

Like with any other business, finding the right real estate for a cannabis business means acquiring property in an excellent location. This is also one of the critical factors that come into play for success operating a brick and mortar cannabis operation.

The location should be suitable for your operation as well as state-and-local-law-compliant. While this can be difficult to find as many states, cities, and counties place limitations on cannabis business real estate. This is why canna-business operators reach out to us to act as their cannabis real estate consultants.

Here’s what you can do before spending money renting or purchasing real estate for a cannabis business:

  1. Check the city’s website, meeting agendas, and meeting calendar for insight regarding if and when the city will release cannabis business permit applications.
  2. Check city ordinances to ensure you know where the green zones for cannabis real estate are located.
  3. Check the price of cannabis real estate in the area. Sometimes, cannabis-friendly properties increase their rates by two or three times what the typical business should pay in rent.

The zoning laws can also get rather complicated. So when it comes time to scour through green zone listings, it’s best practice to get advice from experts who understand the law.

Green Zone Real Estate Landlords

The perfect landlord isn’t always easy to come by; most commercial landlords refuse to offer leasing options to cannabis businesses. This is because cannabis is still prohibited federally, meaning landlords could face arrest as they’re violating the federal Controlled Substances Act. They also risk losing their property by way of civil asset forfeiture.

For example, the Harborside case is just one of the horror stories landlords might hear.

With this in mind, the landlord should know about the nature of your operation and the risk associated with renting to you. Without this knowledge, your landlord-tenant relationship could feel the stress. Thus, it’s crucial to find the best green zone real estate landlord who understands what’s at risk.

Boilerplate Lease Agreements vs. Commercial Cannabis Leases

Boilerplate lease agreements can work for some businesses, but if you’re operating in cannabis, they’re best avoided. For instance, common Commercial Broker’s Association leases state that illegal activity occurring on the property constitutes a lease default. As you can see, this wouldn’t work for a business operating in the cannabis sector.

Commercial cannabis leases must offer more details. The lease should solely forbid actions that would violate state law with the exception of the federal Controlled Substances Act. This is something we always include in commercial cannabis leases–and it’s essential!

A commercial cannabis lease should also include a provision that governs the activities allowed on the leased property. For instance, if the tenant has a cannabis retail operation, the permitted use provision should outline that the retail sale of cannabis is allowed. If the permitted use provision is too vague, you’re increasing your chance of being found in breach of the lease for merely operating your cannabis business.

Check the Green Zone Real Estate Property

Performing due diligence is a pivotal component of any business transaction. But before you get too far into the deal, have a cannabis real estate lawyer check it over on your behalf. More often than not, our cannabis real estate lawyers come in to examine the deal, only to have to explain that both sides will require significant changes for the deal to work.

Before you start negotiating, we recommend getting a real property report. This report will outline essential information, including:

  • Ownership history
  • Encumbrances on the property
  • Easements or other restrictions on how you can use the property

For instance, if the land has an unpaid mortgage, the mortgage holder can foreclose the property. This could happen even though the current owner isn’t the person who’d entered the transaction. Even as a tenant renting the property, you should know the property’s history and risks that could come as a result.

How to Acquire Cannabis Real Estate

While the cannabis sector is experiencing rapid growth, we’re seeing many cities still working on their cannabis ordinances. Since it takes some time to pass an ordinance, make sure to keep an eye on city council activity. Budget a minimum of six to eight months to find the right cannabis real estate for your business.

Once the ordinances are released, it’s typically a three-step process. This could take up to three readings before the final regulation passes. The first ordinance should outline zones, rules, neighborhoods, and restrictions regarding cannabis leasing and property ownership.

After the first reading, you should begin searching for your property. Once the final vote happens and the ordinances pass, you should have your property ready to go.

Finding Real Estate for Your Canna-Business

Interested in having our cannabis real estate consultants weigh-in on a green zone property you’re considering? Contact us today for expert assistance.

 

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