Cannabis drives the New York real estate market
The state of New York has already legalized the use of recreational marijuana.The Board that will supervise the implementation of legality has not yet been designated, much less the established rules on how licenses will be issued to cannabis companies.There is still a year for the sale of legal marijuana in the state.And marijuana is still illegal at the federal level.
However, there is trouble to position themselves quick in the face of what could be an industry of US $ 42 billion in one of the richest states in the United States.
Real estate corridors are already talking to owners about the rental of trade fronts to the new marijuana dispensaries.The representatives of the cannabis companies of other states are disembarking in New York to explore the properties.And medical marijuana suppliers are expanding in the hope of being able to diversify in recreational sales.
“Hay un furor de tierras e inmuebles”, dijo Gregory Tannor, director de Lee & Associates NYC, una agencia de real estate que estuvo consultando con propietarios de la ciudad de Nueva York desde noviembre y ya alineó casi 200 posibles ubicaciones para dispensarios.But despite all the emotion, there are important challenges in the cannabis real estate market.
Somehow, what is happening in New York already happened in other states.California was the first to legalize medical use, in 1996;now 36 states allow it.From the signing of the Law on Regulation and Taxes on Marijuana of New York, there are already 18 states that legalized recreational marijuana, although Dakota del Sur's law is being challenged in court.
But the drug control administration (DEA) still classifies marijuana as a controlled substance.Banks are scared by loans to cannabis companies, which limits their ability to buy and maintain real estate, although that could change soon.
In addition, many owners do not rent to cannabis companies, either because of the risk of having a tenant that violates federal laws or for the bad reputation that still clings to marijuana.Those who are willing to do so in general can request and collect special rates for risk.
Zoning laws also restrict the properties available for cannabis companies, often relegating them to industrial areas.The municipalities demand that a business linked to cannabis be a certain distance from schools, places of worship and other cannabis businesses, if they allow it at all.
Support or reject?
In the state of New York, cities and towns have until December 31 to choose to leave the new law, which caused heated discussions among local officials, some of whom “cannot understand the idea of the businesses of'Devil's lettuce' inside its borders ".Neil m said.Willner, co -president Royer Cooper Cohen Braunfeld, a study of Manhattan's lawyers specialized in the cannabis industry.
Pandemia, however, may have softened the position of some officials, given the jobs and tax revenues that cannabis companies can generate after the prolonged crisis has decimated both.The State estimates that the new industry could generate US $ 350 million in annual income and create between 30.000 and 60.000 jobs.
Meanwhile, the funds are reaching the industry in anticipation of a possible federal legalization, some lenders will now do business with cannabis companies and have emerged real estate investment trusts to serve the interests of the marijuana industry.
"There could be between 700 and 900 dispensaries in New York and more than 370.000 square meters of space dedicated to crop."
David Weinstein, Executive Director of Newlake Capital Partners, a real estate trust (Reit)
In part because their access to capital has been limited so far, cannabis companies have tended to rent, instead of possessing, real estate.What they usually do is buy a property that meets their needs, sell it to a reit and then rent it again, in Lease (lease).
But that can begin to change, at least for warehouses that are used for cultivation, processing and distribution.The National Association of Real Estate Agents said that 29% of the commercial members in the states that legalized recreational marijuana had informed an increase in purchases about the LEASE in the last year.
"In the future, when banks become normal to us, when we have the opportunity to obtain real estate debt of the way traditional industries do, we will have a preference for being real estate owners," said Barrington Rutherford, senior vice president seniorof real estate and community integration in CRESCO LABS, a cannabis company that operates in several states.
The real estate of cannabis has also matured in other ways.A "SME" of the field has lawyers, consultants, insurance agents and counters who specialize in helping customers overcome regulatory obstacles.There is even a properties listing service that offers a wide range of real estate, from lots of US $ 65,000 in an industrial park in Lexington, Oklahoma, to a crop house of US $ 109 million and 4200 m² in San Bernardino, California.
The real estate of cannabis evolves
As the marijuana cultivation became more sophisticated, farm houses expanded: they can be 14.000 m² or more, with high roofs, ventilation, lighting and safety.Processing generally occurs in separate buildings with high -tech machinery.
And the dispensaries are increasingly elegant, offering a novel retail experience.Even the consecrated architecture and design companies came into action.There are even companies that specialize in equal dispensaries and other real estate of cannabis.
As marijuana gains a broader public acceptance, and some glamor with celebrities such as Jay-Z and Seth Rogen that open their own businesses, stores are inaugurated in good locations, near traditional retailers.
"We are next to Starbucks in the center of Chicago," said Rutherford."In Philadelphia, the place we open is half a block from Shake Shack and at the end of Macy’s block," he added."We are building a portfolio of locations that would be enviable for any retail organization," he said.
Premises to consume
The Law of the State of New York also provides for licenses for “consumer sites”, and this is expected to give rise to club types and cannabis coffees, predictions that even lead to predicting that New York City could become the nextAmsterdam.
These new uses of business front.
"A few years ago, when the market was stronger, it was more difficult to find owners willing to get into this business," said Benjamin S.Birnbaum, broker of the Newmark real estate services firm."What has changed, due to pandemic, is that all owners are willing to at least talk about it".
Another reason why owners may be willing to do so: cannabis retailers tend to rent large spaces, ranging from 300 m² to 500m².
The big cannabis stores have been very helpful during the pandemic, when overcrowding in a small retail establishment was not an option.But some wonder if the size of the stores will be reduced in the future, given the popularity of Delivery services.Uber is open to explore the delivery of marijuana if the federal government legalizes it, said Dara Kosrowshahi, the executive director, in a recent interview with CNBC.
Regardless of the size, open a dispensary can be complicated and expensive, partly because states have demanded that possible retailers have control of the premises, through a lease or lease option, before they can request a license.But the amount of licenses in some states is limited and there is no guarantee that a company obtains a.
In Oregon, some applicants had to wait for so long, one or two years, said Andrew Deweese, a lawyer from Green Light Law Group in Portland, who finally surrendered and essentially sold their place in line in the row.
"It's a Catch-22," said Kristin Jordan, Cannabis lawyer in New York City."You want to ensure real estate property, but don't want to hurry".Even so, the prospect of operating in New York, a state with more than 19 million residents and an important tourist destination, is so tempting that cannabis companies are rowing.
Companies that have medical dispensaries, which operate since 2016, are in an enviable position because it is believed that they will have an advantage in obtaining additional licenses.
CRESCO LABS has four medical dispensaries in New York, including one in the Williamsburg neighborhood in Brooklyn.It is not clear if the State will allow recreational marijuana to be sold in those places, but Rutherford is covering its bets, adding parking and, in some cases, expanding by leasing a store next to an existing space."We are ensuring that these premises are ready for the future market," he said.
