“A Profitable Marijuana Real Estate California Business” written by Mike Marko
Looking for a new business venture?
Well, there’s the marijuana real estate industry that’s booming lately.
Setting up a commercial marijuana real estate California business nowadays is perhaps one of the most effective ways to earn money.
The legalization of marijuana has given a drastic effect in the real estate industry.
Learn how to make money with the increasing demand for a real estate in this article. Today we‘ll discuss the effects of marijuana on real estate and how can you capitalize on it for your new business.
What Do You Need To Know About Marijuana Real Estate California Business?
Marijuana laws from State to State have been changing rapidly to reflect historical social changes in the United States.
Originally Marijuana in all forms of use, both medically and recreationally, was outlawed by the Federal Government.
In the 1990’s several States including California voters and lawmakers voted and approved cannabis consumption for Medical use only.
With States making profits from the medical sales of Marijuana, lawmakers and consumers in several State including California have voted to legalize cannabis or marijuana for recreational use in their States.
In 2016, California passed Proposition 64 which authorizes recreational cannabis use for everybody in the state. With the recreational and medical use for sales of cannabis, businesses wanting to capitalize on profits of these sales have begun to grow rapidly.
With the growth of marijuana-related businesses, there has been an increased demand for real estate in California to provide land for growth, storage and sales for this type of business. Demand for marijuana-related or zoned properties have had a huge bump in real estate prices due to the legalization of marijuana.
Its legalization has massively pushed up raw land and industry prices, according to James Paine of CNNMoney.
Businessmen and hemp smokers have been waiting for this action for a long time. But before we get into a deeper discussion about making money in this industry, let’s first know what is a marijuana real estate…
What Is Marijuana Real Estate?
Marijuana real estates are properties that are specifically developed and zoned by cities or the State for any kind of marijuana-related businesses.
Specific kinds of real estate properties include warehouses, commercial buildings, developed and undeveloped land, etc. Since the medical and now the recreational uses and sales of marijuana has been legalized in various states, demand for real estate to accommodate this rise in demand is increasing.
This is the right time for commercial land and building owners to capitalize on this growing industry by making use of their properties to earn profits from this ever expanding and booming industry.
Setting Up A Marijuana-Related Business
A marijuana-related business is any business which deals with the legal distribution of marijuana. The main types of business associated with the legal distribution of marijuana are the development of a growing facility, distribution centers, or marijuana dispensaries.
Since the demand for marijuana is increasing the best way for commercial land and building owners to earn money is to sell developed or undeveloped lands for growing facilities.
California is one of the best places to set up a growing facility since Marijuana is now considered one of the major agricultural commodities. The Mediterranean weather and climate of California is perfect for setting up and developing a marijuana plantation.
In fact, California has always had the majority of black market or illegal cannabis grown and sold. The main location for black market cannabis plantations has been known to come from the Emerald Triangle which is located in the northern part of California.
The Perfect Spot
This place is a perfect spot for a marijuana farm because it is close to San Francisco and Los Angeles.
Now with the legalization of marijuana in California, this area has become highly sought after for legalized plantation locations and distribution centers…
Positive Impact Of Marijuana-Related Businesses
Due to the huge demand for the supply and distribution of marijuana, the real estate industry is benefiting heavily from the legalization of marijuana.
Landowners and commercial building owners are able to increase profits by getting their properties zoned for marijuana-related business uses. They are able to sell or lease your properties for marijuana-related businesses.
As a property manager, managing marijuana zoned buildings and properties allows you to capitalize on increased rents and long term tenants in this growing industry.
The following is a list of the most in-demand renting properties when the properties are zoned for marijuana-related business, that can be used in setting up marijuana-related businesses:
o Developed or undeveloped land
o Retail Stores
o Strip Malls
o Rentals in business buildings
o Workers housing
Laws In California
Adult Use of Marijuana Act law was passed by California voters in 2016 and has legalized the use of marijuana by anyone over 21 years old in the state. Anyone 21 years or older can legally consume 1 oz. of marijuana in their private residence or in a licensed establishment daily.
The State law only protects consumers that use marijuana if they purchase the marijuana from a California licensed marijuana type of business.
Any unlicensed purchase of marijuana is still considered a crime and anyone who is convicted will spend 6 months in a county jail with a fine of $500. If you are convicted of running an unlicensed or illegal marijuana type of business then you could also face civil penalties of up to 3 times the amount of the license fee for each violation when operating an unlicensed marijuana-related business.
The Adult Use Marijuana Act also created The Bureau of Marijuana Control within the Department of Consumer Affairs and it will start giving business licenses for sale and distribution of marijuana in January 2018.
Important Things That You Should Know
Here are the important things that you should know about marijuana real estate in California. For real estate to be used for marijuana-related businesses it must be licensed and zoned by the cities and Bureau of Marijuana Control Department.
The types of businesses that can have marijuana-related license include the following:
- cultivation facilities
- testing facilities
Requirements for acquiring a marijuana-related business license are the following:
- Must be 21 years old and must be a California resident since January 1, 2015.
- Persons who are convicted of committing serious and violent crimes are not allowed to have a license.
- Anyone who is convicted of committing crimes including fraud, deceit, embezzlement, providing controlled substances to minors, and drug trafficking with certain enhancements are also not allowed to have a license.
- Individuals who already violated any marijuana-related laws such as illegal farming, production, and selling marijuana are not allowed to have a license.
How Much Can You Earn In Marijuana Industry?
“How much can you earn in marijuana industry?” perhaps, this is the most asked question in this industry right now. It is hard to answer this question because there are many types of businesses in the marijuana industry.
You could open your own growing facility, testing facility, retailing, and distributing business and be licensed by the State to sell or distribute marijuana. Just like any other businesses, there is no certain answer to how much can you earn or profit from in this industry.
However, the most plausible way to turn a profit from the marijuana-related business growth is the sale and or rental of commercial properties for marijuana-related businesses. Landowners and property managers throughout California are cashing in on this new marijuana industry with the increases in demand for properties that can be used for their marijuana business. With increased demand for marijuana zoned properties, you can make a lot of money in this industry if you are selling a real estate.
The estimated annual cost of renting a property for a marijuana dispensary is $105,600, but this price can be reduced or increased depending on the location.
On the other hand, buying a 97-acre raw land on the northern coast of California for an outdoor or an indoor facility of marijuana grow operation can cost up to almost $590,000.
Steps In Setting Up A Marijuana Dispensary
A marijuana dispensary is one of the preferred types of business in the marijuana industry. It can provide a steady income for property owners. Even if you don’t have a wide or spacious land, you can still make a lot of money using your property.
Here are the simple steps in setting up a marijuana dispensary.
Prepare A Business Plan
To attract investors as well as be eligible for license form the State of California you will need to develop a solid business plan for the success of your new venture. Investors will need to be impressed by your business plan for them to want to invest in your project. Your business plan should clearly state your company’s goals, assets, plans, and projections.
You can get an idea of making a business plan by visiting The U.S Small Business Administration’s website.
Before you make a business plan, make sure to study the laws in your area first.
Secure The Needed Funding
The cost of opening a marijuana dispensary varies on the location that you’re in. However, an estimated $250,000 is the average amount for opening a dispensary. This estimation of costs includes or covers the following:
- cost of the application for a license (usually nonrefundable)
- securing a storefront
- growing or purchasing a product
- other expenses
Hire A Certified Public Accountant
Making sure that taxes and all profits from the marijuana-related business are paid and processed correctly are paramount to your business survival. To make sure all tax laws and regulation fees are properly accounted for and paid in a timely manner it’s advisable to hire a CPA, or Certified Public Accountant.
The CPA will help you handle the financial and tax side of your business. They will help you file correct tax forms and they can also help you in managing your overall finances including payroll.
Buy Or Rent A Suitable Place
Once you have secured your financing and set up a good business plan it’s time to rent or buy a suitable place for your marijuana dispensary.
You have a great advantage if you’re a property owner that happens to be in California. Since dispensaries are a high-risk investment, many business owners will only choose to rent your place. You can use this advantage to increase the value you charge for renting your property since the demand for marijuana supply will increase steadily.
Final Thoughts About Marijuana Real Estate California Business
In this blog, we covered the most essential information you need to know when it comes to a marijuana real estate California business. The blog also covered a simple guide in starting a marijuana real estate California business.
Just like any other business, there’s no guarantee that your marijuana-related business will profitable within weeks. It takes often takes time to grow a profitable business.
The only way you can earn huge amount of money is through selling or leasing real estate properties or opening a dispensary.
Therefore, think wisely and be careful in making a decision so you can earn money and make the best of the marijuana industry.
If you have questions about marijuana real estate California, don’t hesitate to leave a comment below.
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