What Kind of Real Estate Do You Need for Your Cannabis Business?
With a compound annual growth rate (CAGR) of 21% and a consumer base that’s growing with each new state that passes cannabis legalization legislation, the cannabis industry is one of the most explosive new markets in the United States. So, it’s no surprise that investor interest in buying or starting a cannabis business is growing in pace with that booming market. If you’re an investor interested in claiming your share of this projected $41 billion market, here’s the kind of real estate you’ll need to look at.
Greenhouses
Greenhouses enable cultivators to experiment with innovative techniques like crop steering — where growers manipulate conditions and feedings to optimize production yield — and just generally have more control over the growing conditions from the nutrient profile of the soil to the humidity and temperature.
Investors interested in the plant-touching side who want more predictability and control during cultivation should look for real estate that already has functional greenhouses built on it like this 72-acre lot in upstate New York with fully operational greenhouses.
However, the cost of buying real estate with greenhouses already on it may be too high for some investors. With a higher initial investment, it will take more time to earn your investment back. For those who want to get into the cultivation side of the cannabis industry at a lower entry price, land might be a better place to start.
Land
Open field cultivation is a lower-cost alternative to greenhouse cultivation for investors who want to get into the plant-touching side of the cannabis industry but with less time and capital sunk into property and equipment.
Open field cultivation has almost no construction costs associated with it and is much easier to set up, even with little experience. The tradeoff is that you have little control over growing conditions. Your crop is more vulnerable to pests, natural disasters, droughts and other issues that can end up costing you money later on.
Even so, growing cannabis outdoors on fertile acreage like this 20-acre tract in Oklahoma is a good way to keep initial investment costs down — without ruling out the possibility of upgrading to a greenhouse later on.
Warehouse Space
The processing and distribution side of the industry can be just as lucrative as growing. Warehouses are key for storage and distribution but can often be turned into laboratories and processing facilities where businesses can turn plant material into a range of cannabis products including CBD oil, edibles, beverages, and so on.
With the right licensing and zoning, warehouse space can even be used for indoor growing, which makes them a versatile pick for investors who want a business that handles the entire process from cultivation to sales. This Northern California-based warehouse, for example, is eligible for storage, distribution, laboratory, manufacturing and cultivation — giving investors endless opportunities to build a full-service cannabis business.
Retail Space
Whether an investor just isn’t interested in the work and risk that come with the cultivation and processing side of cannabis or they want to add a storefront to their existing business to handle direct-to-consumer sales themselves, retail space is key.
When choosing storefront real estate, the key points to consider include location, interior and exterior layout, and local licensing requirements and laws surrounding retail sales of cannabis products.
This last point can be tricky — cannabis’s unique legal landscape is highly fragmented at the moment, with local-level policy varying quite a bit. This makes it difficult to know exactly what to expect when looking for eligible real estate. That’s where sites like 420property come in handy. Exclusively featuring real estate listings that are eligible for use as a cannabis business, you can browse through storefront listings without wasting time with real estate that isn’t eligible.
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