Cannabis Business and its Effect on Real Estate
Marijuana has been legalized in some 28 states due to its medicinal benefit. For recreation, marijuana has been legalized in nine states in the USA. The legal cannabis industry is continually growing and becoming a big business for sellers and growers and now the real estate industry. There is an impact being noticed between the growth of the cannabis industry and the real estate. By example, there is a marked rise in sale price rates and rents for facilities and properties that are specifically for the cannabis industry and where cannabis is being used for recreation or medical.
Properties like warehouse, agricultural, storage and industrial facilities designed specifically for the cannabis industry are suddenly on very high demand partly as a result of the demand for processing and cultivation of marijuana. Due to the continued growth of the industry, the demand and interest for the property that can be utilized for growth and retail of cannabis is expected to rise.
Even if there are many openings for real estate on cannabis markets, the legalization of cannabis either for medicinal or recreation purposes brings about concerns in real estate operations with sellers and growers and managers, tenants, property owners who all must consider and address on who has the right to smoke and grow marijuana and issues on security.
The amount and extent of retrofits which that be expected to deal with cultivation and growth of marijuana products, the will to make the retrofits should be factored including electrical infrastructure, systems on climate control and exhaust systems. Due to its illegality with some authorities there are banks that may not be ready to finance for the retrofitting of the properties to be used by the cannabis industry, so the owners of the property should check the finance documents before using or leasing the property on whether there are any limitations or prohibitions for cannabis users.
The cannabis operations bring about issues with insurance because the processing methods may be flammable and a lot of water may be used not to mention the high security that is needed. Tenants and owners should ensure that there is a property and liability insurance in place and a worker’s compensation.
There are insurance companies that cover cannabis industry which is what landlords may expect tenants to obtain insurance from in case property insurance does not cover them. Property acquisition that will be associated or used with cannabis industry may cause property insurance because insurance companies will not cover any business including the property linked with the cannabis industry.
Cannabis business will take over the real estate in the decade to come especially if it is legalized in several other states and nations with the sole factor of its medicinal benefits.