“Will Legalization of Marijuana Affect Property Rentals and Real Estate in Colorado” written by Mike Marko
Ok… Colorado has decriminalized and made marijuana legal for consumption since 2012.
What does that mean to you?
How does it affect your rental properties? And does the legalization of marijuana affect property rentals and real estate value? … or better yet how can you cash in on marijuana real estate Colorado?
I’m sure you have a lot of questions about “marijuana real estate Colorado” and that’s why I want to take some time to walk through the opportunities for increased real estate profits. So let’s get started…
Things To Know About Marijuana Real Estate Colorado
Ok, marijuana is legal in Colorado.
In addition to being legal for medical and retail clients in Colorado, the national movement toward the legalization and decriminalization of marijuana has already happened in 28 other States. It is just a matter of time before the Federal Government to most likely decriminalizes and makes marijuana legal in the USA.
So how does that affect you as a property manager?
It probably won’t directly… most property managers and investors will not want to change businesses and begin distributing or growing marijuana in and begin building a marijuana-related business.
But if you as an investor in real estate want to take advantage of this “cash crop” I’m going to dive deep into how it can affect you. We’ll also talk about the collateral benefits to the average investor.
Some Background First
As more and more States legalize marijuana, there is a marketed increase in demand for land and properties that can or will be zoned to accommodate a marijuana-related business.
According to homes.com Colorado residential population residency since 2007 to present, has increased over 200,000 people living there. This rise in population with already limited rentals and homes has significantly affected both the rental and sale value of homes and real estate in Colorado.
In following Colorado’s history in legalizing marijuana, it would be a good bet to say that you should also expect housing and rental costs to be affected by the new laws, and make rent and property values increase proportionally as the industry increases in the State.
The first step to understanding how and why rentals and real estate values will be positively affected is to first understand the what, why and how marijuana-related business is thriving and growing. The sustained increased growth in the industry it is only making it easier for property managers and investors to profit from the boom that the new market will bear.
What Is Marijuana Real Estate
Marijuana real estate in Colorado are properties that are zoned for the running of a marijuana-related business. These properties could be warehouses, buildings, developed, undeveloped land and areas that are zoned correctly to run a marijuana-related business.
Additionally, as a population has increased demand for limited housing and rentals, the effect of those factors in the market has caused the rental cost to increase proportionally. So in a roundabout way, all residential real estate affected by population and marijuana-related business increases has made almost all residential housing and rentals in Colorado more than ever.
What Is A Marijuana-Related Business
A marijuana-related business is any business that is involved in the legal distribution of marijuana. More specifically since marijuana has increased medical uses and now recreation uses this has caused a boom in the growth and need for marijuana-related businesses.
Many marijuana-related business opportunities come from From the new industry looking to rent or buy properly zoned developed or undeveloped land to accommodate pot dispensaries, grow warehouses, and employees to accommodate the running of a marijuana-related business.
Why The Marijuana-Related Business Helps An Area Grow
To understand the demands and needs to be accommodated for the marijuana-related business you must first have a basic knowledge of what marijuana is and how it uses have expanded.
So first let’s answer the obvious question…
What is Marijuana?
Marijuana is considered to be an illegal drug federally in the United States. However individual States have challenged this law by legalizing marijuana for medical uses and recreation uses. The Federal Government has presently decided to allow the States to enforce this policy and have said the Federal law will not supersede the State’s laws at this time.
Marijuana has been proven to be a good medical drug. Marijuana as a drug has been proven to treat and possibly cure certain types of diseases or conditions.
According to WebMD, medical marijuana can be used to treat a number of different medical conditions, including:
- Alzheimer’s disease
- Appetite loss
- Crohn’s disease
- Eating disorders such as anorexia
- Mental health conditions like schizophrenia and posttraumatic stress disorder (PTSD)
- Multiple sclerosis
- Muscle spasms
- Wasting syndrome (cachexia)
Originally, the positive medical uses were the main reason why voters in the State of Colorado in 2000 made marijuana-related businesses legal in the state. As the medical benefits increased so did the awareness for demand on a recreational side of the marijuana-related business. So in 2012, Colorado voters approved a State law that made the distribution of marijuana for recreational uses legal.
To benefit from this law the state added and has received increased tax revenue from marijuana-related businesses and They saw the good in this plant. And they use that to create more opportunities.
How Growth of Marijuana-Related Businesses Affects Rental and Real Estate Markets
Most property management firms also own a percentage of the land, buildings or rentals that they manage. So as these marijuana-related businesses grow they actually affect the entire rental and real estate markets by increasing growth and demand for properties in the area.
When working with marijuana-related businesses it is best to have an understanding of what a highly demanded property will have as attributes.
Benefiting Marijuana Real Estate Colorado
In owning and renting houses or other real estates for marijuana-related businesses and real estate it is important to understand the needs and uses of those businesses.
A marijuana-related business will be looking to find rentals and property that can accommodate the following:
- Developed or undeveloped land
- Retail stores
- Strip Malls
- Rentals in business buildings
- Workers housing
These types of properties can be the source of location for creating a way to profit from the growing marijuana business industry.
Growth In A Growing Industry
The growth of the industry is the source of potential market for property managers. As the demand for marijuana continues to grow, the supply for rental properties must also be maintained.
As demand for properties to accommodate these types of businesses increase, proportionally rents and property values will also continue to increase with this demand.
How Successful Marijuana-Related Businesses Affects Rental and Real Estate Markets?
Marijuana-related business owners often rent a property because it is zoned by the State for marijuana business-related uses.
When moving into a new building or land parcel the marijuana-related business owners incur large expenses. These expenses include upgrading buildings to handle growing facilities, irrigation equipment, lighting and other expenses to upgrade the property to handle their business. These equipment purchases and building upgrades are essential for a marijuana business owner to grow and make his business profitable.
With this in mind, a property manager can provide what a marijuana business basically needs, a good location, place where all equipment is settled, and a place to cultivate the plant. In providing the basics you will be able to charge a premium for rental of the location as well as work with the business to upgrade the property to fit their needs. Investment into a warehouse, a greenhouse or even a retail store will provide a good place to invest and stay not just for the business owner but also for their customers.
The opportunities in offering real estate can be a good place for property managers to be able to profit when expanding their rental property business.
Banks Just Blow Smoke At You
Additionally, since the legalization of marijuana is relatively new, marijuana-related business owners are finding it tough to get financing. They can’t even get accounts at banks for their businesses. That’s because Marijuana still holds a Federal illegal status many banks. Many financial institutions are unwilling or legally handcuffed into being unable to hold or process their money because of the Federal illegal status of marijuana.
So what is a marijuana-related business supposed to do with their profits and daily receipts if a bank is unwilling or unable to hold or assist them?
The answer is simple but not easy.
Avoiding The Law…?
Now I’m not telling you to do anything questionable or illegal… but let’s look at it this way.
Often marijuana-related businesses have to figure out the best way to secure cash. Often that is buying the property their business is located at and storing or processing the profits and receipts from there.
But then what is the best way to utilize the cash they make from their businesses?
Buying and investing in real estate with a cash buy has been a booming market for realtors in Colorado.
Having cash to invest in real estate has been the hit for utilizing these cash resources.
Why not invest these cash holdings into real estate? It is a legal and thriving way to shelter money and investments as real estate is a sure fire way to protect assets.
Sheltering Your Profits
Let me explain further… since investors who made profits in the marijuana industry can’t utilize banks, a marijuana business owner can expand his or her business by expanding their real estate holdings and rental holdings to make additional profits. Not to mention, real estate is also a growing business. Real estate has a high demand and having a marijuana real estate can give your business an even bigger demand.
This only means that a property manager can provide a good start for someone looking to invest in starting and owning a marijuana-related business. These properties can be converted specifically for a marijuana-related business. A property manager may be able to sell or lease properties that can be used to cater to medical or recreational marijuana users.
By acquiring, renting, and selling the property to potential customers like a marijuana business owner this can bring additional profits into your property management business.
Why Marijuana Real Estate Colorado
You may be wondering… why Colorado? Among the 28 states that have legalized marijuana, Colorado has been showing a lot of improvements.
What’s Special About Marijuana Real Estate Colorado?
After Colorado voted in making marijuana legal for adult use in 2012, the acceptance rate for marijuana has increased. Wikipedia sites that 51% of all Americans have tried or consumed the drug. And since January of 2014, marijuana-related business has been booming in Colorado. The legalization of marijuana in Colorado has created 18, 000 full-time jobs in 2015 and as it continues to expand will create more.
The increase in demand continues to grow for marijuana but the supply for it is not that high. This is the reason why more and more business owners start venturing to marijuana-related business in Colorado.
With all the increases in supply and distribution, there is now more of a need to find adequate housing and rentals for all these new workers and expanding workforces.
Growth Helps Real Estate Growth
The growth of the marijuana-related industry has made it all possible for real estate owners to gain a high demand for properties zoned correctly. As marijuana-related businesses face increased rents for their properties there will be a higher demand for them to buy the property and manage the business without having to pay high rents.
The marijuana business in Colorado is indeed booming. And due to this, the demand for real estate and properties also grow.
A lot of marijuana-related business owners rent warehouse space. They even purchase sophisticated lighting and equipment like irrigation. Even marijuana retailers rely on companies, contractors, lawyers, and even book-keeping services to start their own business.
Providing Properties To Rent
By providing properties to rent affordable, and or offering to find and sell or manage properties for a marijuana-related business has become a solid way of investing in the marijuana industry. It helps a business owner surpass obstacles and regulations of a marijuana business without having to worry about high rents or being evicted from properties after they have invested to upgrade them for their business needs. Owning the property that the marijuana-related business is operating lessens the possibility of having a financially crippling situation for the business owner.
It’s also a good investment for a long-term success in the marijuana industry. A real estate is a simple and time-tested investment. The prices may either hold or increase. It’s a good place to store money for marijuana business owners. Colorado’s capacity to provide a good market for property managers is really big. A marijuana real estate Colorado is a good way to start capturing this huge market.
Final Thoughts On Things To Know About Marijuana Real Estate Colorado
As the legalization of marijuana 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 businesses and selling of real estate is happening NOW.
With a growing marijuana 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.
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