Inside the real estate boom in northeast cannabis

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22

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This article Nadi Sayej was originally published on Leverage.com and is republished with permission.

On March 31, New York Governor Andrew Cuomo announced that the state would legalize cannabis for medical purposes and for adults next year. According to Cuomo, this will create more $ 350 million in revenue and at least 30,000 jobs.

“This is a historic day in New York, a day that corrects the mistakes of the past by ending harsh prison sentences,” Governor Cuomo said in a statement. “It embraces the industry that will fuel the Empire State’s economic growth and prioritizes marginalized communities so that those most affected will be the first to benefit from it.”

New York is just one of 17 states across the country that legalizes cannabis. In the coming months, marijuana-related businesses will sprout across the East Coast, now that New York, New Jersey, Maine and Massachusetts have legalized cannabis, among other states with disabilities (like Pennsylvania).

A boom in the cannabis real estate market is likely to follow. According to the company report, the global legal cannabis industry will reach $ 40.6 billion in global spending by 2024, up 300% from 2019. Arcview marketing research and BDS analytics

But what exactly does this mean for commercial hemp real estate?

According to industry consensus, Difficulty starting a cannabis business; whether it is getting a license or getting a location. While the dispensary boom is over, it will likely flock to tourist cities such as Great Barrington, Massachusetts, known as a ski town, which now has five cannabis dispensaries in a city of 7,000.

With cannabis entering the states of New Jersey and New York, the adult cannabis market is expected to grow starting this year in New Jersey and April 1, 2022 in New York.

“There is great demand, not supply”, Brian Lore of MMLG Consultants recently said:… “It will depend on the operators who have the money and can set up a lot of leverage.”

Just look at Pennsylvania, a state that uses cannabis for medical purposes only (it is not allowed for non-medical recreational purposes by adults). However, sales of medical cannabis rose from $ 40 million in January 2020 to $ 98 million in January 2021, according to the company. headset report… Is this a sign of an impending cannabis real estate boom in other states?

“The short answer is yes,” said Akiva Gottlieb, a commercial broker in Lev Capital in NYC. “We will see top brands fit perfectly into the trendy districts of New York, Jersey Shore and Hoboken, and are quickly understood by hippie-dominated neighborhoods. And very close to private schools and corporate industries. “

Gottlieb explained that the country’s cannabis experts are well aware of market glut in the West and Midwest, from California to Colorado. Cannabis companies are likely to move to or expand on the east coast.

“Experts predict that some kind of medical or recreational cannabis products will be sold in your conventional stores like 7/11 and the like,” Gottlieb said.

Cannabis funding is a key step towards securing ownership to address the challenges posed by the real estate world of cannabis. Gottlieb drew a parallel between the black market and the legalization of products over time. Take the prohibition era, when the 18th Amendment banned the sale of alcohol, and now in 2021, when the sale of alcoholic beverages has already reversed. USD 254,564 million USAaccording to a Statistica report, and it is expected to grow by about 6% by 2025.

After all, the cannabis industry could see the same turnover. Cannabis real estate is not just a pharmacy retail, but a place where the product is grown, harvested, stored, sold and consumed, all within the state. Commercial real estate is in demand not only for shop windows, but also for warehouses and other related lands.

“Previously defined ‘safe’ and ‘safe’ asset classes such as retail and multi-family are now considered volatile,” Gottlieb said. “We have witnessed a major shift in large institutional investment corps that have been forced to reorient their core businesses towards alternative products.”

Can it be protected from a pandemic? He explained that the medical use of cannabis was considered an important business in many states during the pandemic.

“With the closure of companies like Target, Walmart, Burger King and Starbucks, your local dispensary has been reopened, serving the community and increasing their revenues,” Gottlieb said. “And our landlords, most importantly, they pay rent.”

To say that the industry is growing is to say nothing.

“As a commercial finance consulting firm, we are faced with numerous transactions that involve some form of cannabis element,” he said. “Right now, cannabis is everywhere, from a minority tenant in a shopping center to a triple-net (NNN) rented business in an industrial grower.”

Real estate firms such as Lev “approach these transactions the same way they approach any standard commercial asset,” Gottlieb said.

The future of cannabis in commercial real estate is down to finance.

“As the industry develops further, more states will enact secure banking laws, which means government-sanctioned marijuana businesses will have easier access to banking services,” Gottlieb said.

Gottlieb predicted that by the spring of 2022, many major corporate and national banks will receive funding, “and have allocated significant capital from their balance sheets to this particular market.”

Here’s another step forward: many real estate firms add Cannabis Real Estate Department, like Leo, to their sites. Just look at James Capital Advisors, which recently launched a new Los Angeles Cannabis Real Estate Department… Examples of this kind are likely to follow in the footsteps of many other real estate companies specializing in commercial real estate.

“The industry follows cash flow, and cash flow is overwhelmingly available in the cannabis industry,” Gottlieb said. “People, especially those in debt to firms like Leo, need help funding these unique properties, and brokers in our new modern world will fill that void.”


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