Why this is the Right Time to Invest in Cannabis Real Estate Sector?
As the cannabis industry emerges from prohibition into a legally operating industry. Many opportunities start to emerge with these regulatory changes. The cannabis industry can be a challenge to invest in because the plant remains federally illegal. Furthermore, many states with legally operating cannabis programs for medical or adult use will strictly prohibit non-residents from making investments directly into cannabis companies such as dispensaries, grows, or processors. With these regulatory caveats, real estate has become a perfect avenue for investors to get skin in the cannabis game with a bit less liability. Let’s take a closer look at the cannabis real estate sector and see if this is the best time to invest in a cannabis-related piece of real estate.
An Emerging Industry
One fantastic aspect of the cannabis industry is the fact that it is a brand new emerging industry. There are not huge institutional operators in the space because it is coming out of prohibition. In the grand scheme of things, the states legalizing cannabis really are just starting to. Furthermore, the sector is far less competitive. At least at first when the industry opens up in a new location from regulatory confinement. Thus, this makes it a fantastic time to invest in expanding state cannabis programs.
There are many states pushing for new legalization laws including Michigan, North Dakota, Missouri, and Utah. While each location may have pros and cons to it specifically, opportunities are abundant. Finally, there will only be one time in which the cannabis industry will be so new to the market. With that in mind, now is the best time as ever to secure your cannabis related real estate.
While cannabis remains federally illegal, there is some risk for investors seeking to make a profit from the cannabis industry. This risk varies depending upon the investor’s residency and state laws around cannabis. The Cole memo has kept a light safety net for state-sanctioned adult use or medical marijuana programs. We are seeing more investors enter the cannabis industry with even a few stock listings for Canadian based companies on the NYSE.
There is further protection in owning the real estate behind the cannabis industry more so than as an operator. With this in mind, investing in cannabis real estate can be seen as a somewhat safe investment with regards to the federal prohibition of cannabis in effect still.
The cannabis industry saw the first implemented and state-sanctioned adult-use cannabis programs at the start of 2014. Since then, cannabis markets which have come online have seen a boom in the commercial real estate in their markets. Estimates suggest the Denver real estate market is now occupied with 4.2 million square feet of warehouses exclusively for cannabis grows.
This immense amount of demand for cannabis grows is great news for would-be investors. It has benefited warehouse owners across the many legally operating cannabis programs in different states. We expect this sector to only become more popular. As the cannabis plant goes from prohibited to regulated the same as alcohol. With this in mind, it is a great time to purchase real estate in cannabis markets which are not operational yet. It’s important to do your own due diligence but in our opinion, there is no time like the present for cannabis investment opportunities.
Note: This article is for educational purposes only and should not be seen as investment advice.