“The Effect of Cannabis on Real Estate – Colorado” written by Mike Marko
You’ve heard that the cannabis industry is growing…
If you are a property manager or own real estate, you’re probably wondering the effect of cannabis on real estate in the state of Colorado. Is it going to help or hurt your business?
You probably found this article by searching for “cannabis real estate Colorado”. And I can understand why you want to learn more.
Since there are so many unanswered questions, I’ve decided to spend some time to write an article to help you better understand the effect of cannabis real estate Colorado.
Opportunity In Cannabis Real Estate Colorado
Cannabis is a Federally regulated drug and is considered illegal in the United States. The exception is where specific States have superseded Federal law and made the drug legal for Medical and recreational uses. In 2012, Colorado became one of the first states to legalize cannabis for both medical and recreational uses.
Cannabis Real Estate Colorado
Colorado initially legalized cannabis use for medical purposes in 2000. Demand was not high and the State looked for ways to generate tax revenues by expanding the use of cannabis into recreational legalization. In 2012, as I detailed previously, Colorado legalized the use of cannabis for both recreational and medical purposes. Since the initial rollout of recreational use in Colorado, demand for cannabis has grown exponentially in the state making the industry a huge tax revenue windfall for the State.
As the cannabis industry continues to grow, the owners of cannabis-related businesses have encountered resistance from banks and financial institutions to hold money and profits made in the business because of cannabis illegal status deemed by the Federal government.
Profits In Cannabis Real Estate Colorado
As the cannabis industry in Colorado continues to grow, ways to shelter money from profits made in the business are in high demand.
Unfortunately for cannabis business owners, most banks are Federally run or subsidized. The result is that the banks cannot accept money from businesses that the Federal Government has deemed illegal… like with cannabis.
Real estate used for cannabis-related businesses have had a difficult time expanding to meet demand because of Federal laws and regulations. Acquiring bank loans or lines of credit from financial programs normally gets turned down by the banks because of cannabis illegal status. Until the Federal government eases laws and regulations against cannabis or makes the drug legal to consume most banks won’t lend money to cannabis producers.
What to Do with Profits In Cannabis Real Estate Colorado
Cannabis business owners were in a quandary as what to do with money and profits from the industry. Banks and major financial institutions were turning them down or closing their accounts. They had to find a way to protect and shelter these money and profit from them.
Cannabis owners have had to discover ways to keep their money safe without banks.
The initial response was to hire accounting firms, book-keepers, and private savings institutions to keep money and profits safe. Another method used was to upgrade the property where the business was located to have major bank vaults installed. In each case, security issues and concerns have limited these alternatives.
As profits keep rolling in, cannabis owners have to find innovative ways to shelter their money made from the cannabis industry.
The perfect legal marriage for these profits was actually found in the real estate investment industry. Let me explain further…
The best ways to use profits from the cannabis businesses was to use them for real estate investment in commercial properties and residential properties.
Many real estate purchases can be made with cash sales. Since cannabis owners have an actual regulated by the State business, these cash sales are an acceptable way of buying commercial and residential real estate in Colorado.
As the cannabis industry continues to grow to have a large amount of cash in profits is becoming more available than ever.
Finding ways to shelter these profits is the key for any cannabis related business to succeed and grow. Since the demand for both commercial and residential real estate in Colorado has continued to grow rapidly this option seems the best for cannabis business owners.
Uses of Commercial Real Estate
Since legalization, cannabis growers have been renting warehouse spaces. Spending large amounts of cash to purchase sophisticated lighting equipment, irrigation equipment, and other warehouse improvements to help maintain a better cannabis growth and demand.
According to CNBC, cannabis has already dramatically boosted the warehouse rental business in Colorado. However, as rental warehouses are filled and demand for these types of locations continues to grow with increased rents. Cannabis business owners have pushed back against the high rents and regulations of renting and have begun to build and develop their own warehouses. In owning their own warehouses they are able to control rental costs and other property management expenses themselves.
Cannabis real estate or properties are considered a place or location that houses production of cannabis. It can be any property zoned for the production of cannabis like a greenhouse, warehouse, or a retail store.
Many cannabis owners have decided to buy zoned land for their operations, invest into upgrading the land for the operations of their businesses for their operations.
Commercial Marijuana Real Estate
What is cannabis or marijuana zoned land and how do you find them?
Commercial Marijuana Real Estate, or more commonly known as CMRE, is the #1 cannabis real estate Colorado directory. They provide an online directory for cannabis business owners looking for properties and real estate investing opportunities to help their cannabis business to grow.
CMRE provides a directory for properties in Colorado, California, Oregon, Washington State, and Hawaii. The Commercial Marijuana Real Estate directory has features for marijuana-eligible properties. These include the following:
- industrial warehouse
- commercial kitchens
- businesses and licenses for sale/lease
The CMRE organization has licensed real estate professionals, attorneys, and previously-licensed marijuana business owners who can help in providing a better growth for cannabis business owners.
CMRE has the experience and knowhow to guide cannabis business owners. They will help business owners through the complex regulatory environment that comes with the cannabis business. May it be a starting or growing a cannabis-related business.
The company works with the following people:
- Marijuana-focused certified contractors
- American-Made greenhouse manufacturers
- Consultants and industry leaders
- Attorneys who specialize in Cannabis and Water Law
- Consultants with licensed industry experience
- Financial Planners who will help develop business to build a portfolio
- Greenhouse Architects that will design/construct the greenhouse of eco-conscious and sustainable cultivation dreams
CMRE will be a good business partner for a property manager planning to build a cannabis real estate in Colorado. The company can help you find the potential customer who will buy or lease your property.
Property Management Opportunities Working with the Cannabis Industry
As the cannabis industry continues to grow, there will be high demand for zoned properties and properties for rent that allow cannabis-related business. A property management company can profit greatly by owning cannabis zoned properties, and then charging a premium rent for properties or buildings that have been upgraded for cannabis-related businesses.
Many new cannabis-related businesses don’t have the profit level to invest in buying their own warehouses. They have to look into facilities already set up for the cannabis industry business.
Growing Your Business
If a cannabis business owner who is planning to expand his or her business, it only means the business owner has enough funds to pay and invest in real estate properties. Finding new business owners and investors to rent cannabis upgraded facilities can be a windfall of profits and business for property managers.
Remember that as the cannabis industry in Colorado continues to grow there is more demand for business owners seek properties where they can have complete control over their business, control rents and grow their business bigger. A property manager can still gain a good profit from helping a new cannabis business owner in Colorado. Often the property management firm could enter into lease to own contracts with these new types of business to help secure rents and profits from a later sale.
Building An Empire
As the cannabis industry grows real estate is a good investment for cannabis business owners to buy and to shelter their profits. There is an additional opportunity for property managers to make land and properties available for rent that is zoned and upgraded for cannabis industry use.
With real estate, cannabis business owners are provided a secured place where they can start and expand their business. Property managers can acquire properties of specialized industrial medical cannabis facilities. This can help provide cannabis business owners plenty of capital for their business. Property managers will be able to provide a good place to house these cannabis businesses.
Another opportunity was real estate investment in residential homes that could be used to house employees, make rents, and otherwise shelter their monies legally.
Investments into Residential Real Estate
With the continued growth of the cannabis industry, there has been a big increase in population moving to Colorado to support the industry. As more and more people move to Colorado the need and demand for residential housing are booming. It has become an excellent way for cannabis industry owners to shelter their profits by buying houses and rentals for their employees and also for the increased demand for housing.
Since the legalization of cannabis in Colorado it has provided a lot of jobs for the state’s residents. Washington Post states that in 2015, the cannabis industry has opened up more than 18, 000 new full-time jobs in Colorado. The effect of which generated a total of $2.4 billion in Colorado’s economic activity.
It was also stated that the indirect impact of marijuana’s legalization in Colorado came from an increased demand from consumers of cannabis. The population of Colorado since 2012 has added 400,000+ state residents and need for housing these new residents and providing rentals for them has caused the rental market to be inundated with new applications.
Another opportunity in residential real estate investment has come from the increase in demand for local goods and services. This has been ever expanding and has made a big impact on the legalization of cannabis in Colorado.
For instance, all the cannabis retailers rely on companies for contractors, lawyers, and even book-keeping services just to conduct their own cannabis business. The increase in demand of all these services has also made a demand to find adequate housing and rentals for these professionals moving into Colorado.
Final Thoughts On Cannabis Real Estate Colorado
As the legalization of cannabis continues in the United States, there will be expanding opportunities for growth in property management and real estate sales. Since Colorado has become the model for the legalization effort, the opportunities to profit from property management business and selling of real estate is happening now.
With a growing cannabis real estate Colorado industry, it’s the right time to profit and benefit from these changes.
Feel free to comment below with any questions or thoughts you may have.
If you need help marketing your business online then check out IM Consultant Services.
Disclaimer: This commentary is a matter of opinion provided for general information purposes only and is not intended to be taken as investment or trading advice under any circumstances. Information and analysis above are derived from sources and utilizing methods believed to be reliable, but we cannot accept responsibility for any losses any person may incur as a result of this analysis. Individuals should consult with their personal financial advisers. By using this website or any information contained in it, the user specifically and expressly agrees that no advisor-client relationship is created between said user and any author, owner, executive, or principal of this web site by either use of this web site, or by any information, product, or service offered by or on this web site. No express or implied guarantees or warranties as to investment or trading results are made, and any perceived insinuations of such are hereby expressly disclaimed.