LOCATION, LOCATION, LOCATION. Find The Real Estate Your 420 Business Needs, ASAP
In this series you’ll learn the tools to use, strategies to implement and tactics to apply when finding, negotiating and ultimately securing a lease on your ideal commercial cannabis business location.
Whether you’re looking for a space to bring your master cultivator into the lime light, a beautiful retail storefront that will make Apple stores swoon, the manufacturing facility of your dreams, a place to build your pristine testing lab, or any other use…
In every city across the country, real estate is the key that gets your business off the ground.
Southern California-based 420 Real Properties focuses exclusively on cannabis real estate and has fulfilled their goal of simplifying your property search process for countless entrepreneurs since their founding in late 2016.
Their team works tirelessly to weed out ideal So Cal properties from within the haystack of non-compliant, dilapidated and overall unusable real estate.
They take the headache out of securing the real estate cannabis entrepreneurs need so you can focus on building your empire.
And now, their team is sharing valuable, time-tested methods with you.
Let's get into it.
Only a handful of city ordinances enable a cannabis business to apply for a license without having first secured an address. And, once you do receive a license in those cities, you’re still going to need a city and state compliant location in order to get things off the ground.
So sooner or later, you’re going to need a space that is not only in the right area, but has the essential elements your business will need for the next 3-15 years.
Figure out where you WANT to be and where you're ALLOWED to be.
(CLIFF NOTES: Study the ordinances of the city and state you want to grow your roots into and you'll avoid serious headaches down the line. Pursue a city that has a defined cannabis ordinance so you know where to look and what to look out for.)
In some cases, this is the easy part.
In California, start with the Bureau of Cannabis Control’s site and dig into their emergency regulations.
Look out for:
- Buffer distance requirements
- Defined sensitive use areas
- Specific license types allowed
- Medical vs. recreational cannabis
- Zoning designations
- License application deadlines
After you’ve pinpointed your ideal city, you need to find commercial real estate listings that meet your needs.
(CLIFF NOTES: Use all the resources you can find and cast as wide a net as possible when searching for space. Then, narrow it down with the criteria you learned from city/state ordinances to ensure you're looking at compliant spaces.)
Most well-organized cities, where commercial 420 businesses are allowed to operate, will provide you with maps that define and outline cannabis zones and may even list known sensitive uses.
Search for city websites and call the city if you can’t find maps and zones online.
If you have access to them, use them.
Then, verify that nothing violates city and state defined buffers by using:
- Google Earth
- City-provided resources for identifying where established businesses are located (Like Zimas in Los Angeles)
- By physically walking the area around your desired location
- And you’ll want to work with a compliance group to make sure you don’t miss anything (See Green Consulting Partners if you’re in the US). More on this in a future post.
Once you know the appropriate zones within your ideal city, you can search for available space.
This is where is gets tricky.
If you’re not working with a licensed broker, Loopnet is your next best bet.
Other resources like Craigslist, 420 Businesses and sites geared specifically to cannabis businesses will come in handy as well. A quick google search for “cannabis real estate” or “420 real estate” will bring a wealth of sites up that will help you
PRO TIP: If you or someone on your team is a licensed real estate broker, you can take advantage of CoStar’s wealth of commercial listings. Or, work with 420 Real Properties as this is what they do day-in and day-out.
Then, make sure you’re asking the right questions:
(CLIFF NOTES: Ask as many questions of the space as possible. Think out 5, 10 and 15 years. What will you want/need and why? Get as many of those items as possible.)
- What’s the layout of the space?
- Will you have to demo walls and do major construction in order to achieve your desired floor plan?
- Is it large enough to meet your needs for the next 3-15 years (Most experienced agents include lease renewal options so you can stay in your space after you’re built-out and set up. We'll dig more into this in another post as well.)?
- Do you want concrete floors for easy clean up? Does the space have them?
- What about floor drains?
- How much power is currently going to the space? Do you have the funds to upgrade the power if it's not enough?
- What about parking - certain cities require 2 parking spaces per 1,000 square feet of cannabis business space. Do the properties you’re considering meet that guideline?
- How secure is the space?
- What outer structure do you want? Concrete block wall? Brick? Corrugated steel?
- Does it have a fenced lot where your employees feel safe parking and getting to and from the space?
- What’s the surrounding neighborhood like?
- How much foot traffic does the area get (especially important for retail)?
- Do you need a commercial kitchen or a detached building?
- What other criteria specific to your use do you need?
Once you’ve identified spaces that look compliant and meet your needs, it’s time to make some calls.
(CLIFF NOTES: Be transparent about the fact that you're growing a 420 business and start off your relationship with owners on the right foot. Be personable. Be professional. Win them over early and they'll be more inclined to choose you over another tenant. It's a VERY competitive market.)
First, you’re going to want to call the listing agent or individual who posted the properties that peeked your interest to…
- Find out if the spaces you found are still available
- Introduce yourself and see if the owner will allow a cannabis business in their space
- If 1 and 2 are “YES’s” book a time to see the space
It’s imperative that you’re transparent about what your business does from the very beginning in order to prevent MAJOR issues down the road.
Because cannabis is still federally illegal, owners are still very hesitant to lease their space to a 420 business. If they have FDIC insured loans on the property and the lender becomes aware of a federally-illegal activity in the space, that lender can call the loan - meaning the owner has to pay his/her/their balance in full. This can be to the sum of $Millions and for that reason alone, most owners avoid cannabusinesses like the plague.
In fact, 420 Real Properties shared that owners not allowing a cannabis use is one of the biggest hurdles they face once they’ve found spaces that work for their clients’ needs.
That said, there are owners with spaces in cannabis business zones who are excited to see the industry grow and will welcome you into their space.
(CLIFF NOTES: Just keep swimming. It may take you 6 months but if you work at it consistently, you'll find what you need. Or, just call the pros.)
This process is not for the faint of heart and is exactly what makes 420 Real Properties such a valuable resource.
Last, be flexible and remain constantly aware of new cities that are opening up for cannabis business licensing. You may find that a little longer commute will put you in a more desirable city.
Eventually, you’ll likely find a space that checks off most of your criteria.
Then, the fun part of negotiating your lease terms, price per square foot, prepaid or discounted rent, purchase option or first right of refusal and more begins.
And know that if at any point the process of finding space becomes more of a project than you want to handle on your own, you have access to dedicated teams who do this every day.