Generally, the biggest expense you will incur as a new cannabis operator is the cost of acquiring property in the city or township you are pursuing licensure in.
Since cannabis zoning requirements in most municipalities are highly restrictive, the available properties within a city's "green-zone" are often quite limited, and thus, very sought-after. As a result, the value of these properties increase drastically, and in turn, end up costing far more to acquire.
This poses a significant obstacle for new cannabis operators on a limited budget, who must secure property before obtaining their municipal and state licenses.
Fortunately, with the right experts on your side, there are ways to overcome this hurdle and obtain green-zoned property at a reasonable price.
How the Green-Zone Works
When a city or township opts-in to cannabis, they generally establish set zoning requirements that cannabis businesses must follow. This usually includes specifying a limited number of zoning districts in which they can operate and setting minimum separation requirements from public schools, churches, parks, residential zones, and other cannabis businesses.
After taking these restrictions into account, the remaining areas within particular city which comply with these requirements become known as the "green-zone".
Inevitably, the value of parcels within this green-zone increases drastically.
Option 1: Timing
One of the keys to overcoming this obstacle is to acquire property in a newly or soon-to-be opted-in city as early as possible, before property values in the green-zone have inflated.
Finding such a city is much easier said than done, and will require expert help. An experienced cannabis consultant will have the knowledge and resources to find these cities for you.
What they will look for is a city that presents a good market for cannabis, is currently opted-out, and who's city council is either entertaining the idea of opting-in or actively engaged in drafting a cannabis ordinance.
After they've conducted thorough market research to identify prime cities, you must then actively monitor those cities for updates. This consists of sitting-in on in city council meetings, regularly checking-in with various contact points, and building strong relationships with city officials so as to make it easier to obtain information.
Once a city finalizes its cannabis zoning restrictions, ahead of the ordinance being adopted, you'll want to be the first to know.
The goal here is to obtain that information as early as possible in order to commence the property search before property values in the green-zone have had a chance to inflate, allowing you to get them at fair market-value.
Option 2: Cities With Large "Green-Zones"
Usually, if a city's green-zoned property values are fairly reasonable, this indicates one of two things.
One, simply that this city is not highly sought-after. This is probably because the city does not have a strong market for cannabis due to its location, demographics, or other various factors that are disadvantageous to prospective cannabis operators.
Its generally best to stay away if this is the case.
On the other hand, reasonable green-zone values may indicate that the city has relatively lenient cannabis zoning restrictions and high license availability. When the demand for cannabis licenses in a city is higher than the number of available cannabis properties, the value of those properties naturally increase, whereas when the number of available cannabis properties in a city is higher than the demand for licenses in that city, the value of those properties inherently decrease.
In these cities, green-zoned property can often be obtained at a reasonable price. However, you'll want to ensure that the regulatory scheme in that city is advantageous to you as a new operator and that the city is not over-saturated with licensees.
Ready to Begin the Licensing Process?
Whether you are interested in learning more about the licensing process or ready to pursue property in a city, our team of expert consultants provide industry-leading licensing, market reach, and real estate services to operators of all types and sizes.
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