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Cannabis and Real Estate: Best Buds

August 8, 2022

Businesses, much like cannabis, need room to grow. Those new to the industry as well as successful expanders and investors understand the importance of visibility. While the internet is helpful for research, it is often physical locations and the ability to discuss one-on-one with a live person that brings in new, consistent clients to cannabis. Cannabis and real estate are two industries that go hand in hand. Explore the world of 420 real estate investing.

420 Real Estate Investing

Those who currently invest in cannabis know that this market, like all others, has its ups and downs. Newly established state legalization will lead to ups, confusing regional mandates often make for downs. First, a review of the industry from a financial level. American companies that have lent money and provided sale-leasebacks to the U.S. cannabis cultivation and retail sectors have raised $517 million year-to-date as of May 19, 2022. This number is 232% higher than the total in 2021, and is an increase in the equivalent period in any previous year. Further, real estate is one of the few sectors in cannabis that has raised more money year-to-date than last year.

In comparison to a similar study conducted in 2020 on commercial real estate in states where both medicinal and recreational cannabis are legal, 35% to 36% of respondents had seen an increased demand in warehouses, 23% in storefronts, and 18% to 28% in land. States with both forms of cannabis that became legal within the past four years have seen the most increases in demand for commercial properties from cannabis-related businesses since the onset of the COVID pandemic. In 2021, the annual recreational cannabis sales of the United States peaked at $8.7 billion, and it is now predicted to be worth a reported $35 billion by 2025.

Also interesting is the perception that cannabis companies investing in real estate actually raises the value of the surrounding area. This is believed to occur for several reasons. One: timeworn, unwanted real estate has found a new life as a cannabis business in many parts of the country. This update leads to more foot traffic, which leads to other new businesses nearby. Two: many entrepreneurs are investing in cannabis real estate as it’s an asset that doesn’t depreciate over time. Three: new jobs increase residential home sales, as countless people prefer to live close to their employment.

It is generally understood the cannabis real estate sector got off to a slower start in 2021 because cannabis stocks were hot and financing was conducted almost exclusively with equity. In such a world, cannabis real estate companies had little need for capital raises due to slow business. This phenomenon all changed, however, once cannabis stocks peaked in February 2021. By the end of that same year, more than 90% of global cannabis financing had shifted to debt. This shift ushered a strong need for available properties, as well as guidance from real estate consulting by professionals for related businesses.

Cannabis Real Estate Services

Understanding the real estate market and actually obtaining a site to operate are two different beasts, and it’s often where cannabis real estate services are the most needed. In fact, legalization is only the beginning. Between jurisdiction rulings, zoning, taxes and community relations, a friend in the field like Canna Real Estate Group (CREG) is always a true asset. 

Need help understanding 280E? Wondering why so much cannabis real estate is listed as a separate entity? Are low-contact, drive thru properties a viable option? Canna Real Estate Group has the right answers for you.

How invested is CREG in the cannabis real estate sector? So much so that this past July, the company announced a call for real estate and property development projects for cannabis business licensees in emerging Northeast markets. One newcomer to this area is New Jersey, which now boasts approved medical and adult-use cannabis laws.

“This process is very much a public-private enterprise,” said Bill Betts, managing partner at Canna Real Estate Group. “We will see collaborative input and approval processes from town, borough, township, and state levels. So it’s in the best interests of our clients and their projects to work with team members who have experience working with cannabis real estate projects.” 

The first month of regulated cannabis sales in the Garden State reached $24 million, with 12 dispensaries averaging about $5 million in sales per week.

Real Estate Consulting Services for Cannabis Companies

Bridging the gap between interested parties are real estate consulting services for cannabis companies. Standing above all others is CREG, the premier service provider for cannabis real estate services, cannabis financial services, and cannabis architecture and construction throughout the United States. Their services span cannabis capital markets, development and consulting. Contact CREG for the best and most knowledgeable expert advice, and start exploring 420 real estate investing!