How Does the Pot Industry Affect Real Estate?

by Joe Killinger
CEO, theRRD.com

As the cannabis industry continues to grow many are left asking how it will affect their real estate investments so we compiled a list of questions & answers that we hope will help.

1. Is it OK to have a cannabis facility in my state?

Federal laws supersede state laws so if your state says it’s ok to have a cannabis facility the federal government may disagree and has the ability to take your asset.  Make sure that if you are leasing to a cannabis facility that you have the ability to cancel their lease if there is any federal action taken against you as the owner.

2. How does a cannabis grower approach real estate leasing and acquisitions?

The ability for a cannabis grower to lease a property is quite difficult as many owners do not want the grower in their property or are afraid of seizure by the federal government so many are purchasing industrial properties around the country therefore driving up prices on industrial properties.

3. What kinds of problems are cannabis operators facing when dealing with banks?

The cannabis growers have difficulties when trying to use a federally insured bank as they are currently not allowed to deposit into banks so they have to deal with how to dispose of their cash on a daily basis, some of the smaller growers occasionally get held up and lose their money but the larger growers have an armored car come take their money to a safe holding location. Many states are working on figuring out a way to make the deposits acceptable in local banks or credit unions.

4. What is the impact on residential real estate when a cannabis facility opens nearby?

The residential real estate market has been lifted in areas that have legalized cannabis, in some cases by double digits but as the legalization spreads I highly doubt we will see this kind of change continue.

5. Where can cannabis facilities open up in a city?

The locations for the growers are currently being regulated by the cities so they will tend to be in more industrial areas with clean power and should not have any effects on a neighboring property due to odor.

The cannabis industry is starting to get more traction in more states so it will be something to keep an eye on for future investments.

Image: Paige Filler - Creative Commons License