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Legalised marijuana resulting in real estate high

The real estate industry is booming in states where marijuana is blooming—that is, in states that have legalized the medicinal and recreational use of marijuana. Here is a quick overview. In November 2016, voters in California, Maine and Massachusetts ...

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Industrial space has been in the highest demand due to both marijuana growers and manufacturers seeking out industrial warehouses to cultivate and process their productAlthough temporary licenses for "cannabis commercial activity" will not be issued in California until January 1, 2018, the Golden State has been experiencing a "land rush" for light industrial warehouses, with prices skyrocketing over the last couple of yearsIn the Bay Area, growers are paying at least $2 per square foot for warehouse spaceIn Sacramento, warehouses and light-industrial buildings are selling for twice their usual asking priceIn Salinas, a company paid $3.4 million for 47 acres of land containing several dozen greenhousesWhile California is still in the infancy of its marijuana real estate boom, the legalization of marijuana in Colorado provides a forecast for what the future has in storeColorado legalized the use of recreational marijuana in 2012Between 2014 and 2016, the average effective rental rate for marijuana-growing sites in Denver was $14.19 per square foot on a triple net basisIn 2016, industrial warehouses occupied by marijuana businesses sold for $115 per square foot, which, according to CBRE, represented a "25 percent premium over traditional class-B and class-C industrial spaces." How are landlords and property owners able to charge such a premium? Warehouses provide the amount of space and climate control capabilities that marijuana tenants require to operate their productionWarehouses also provide a private and relatively secure spaceZoning restrictions have also decreased the pool of viable warehouse production facilities, making those in marijuana-friendly zones a valuable commodityAs explained above, because greenhouse cultivation is less expensive than indoor warehouse cultivation, owners of dilapidated greenhouses are also seeing an increase in demand for their propertyAdditionally, inherent risks exist that come with getting involved in the marijuana business, including the business being vulnerable to federal seizure, a lack of financial backing, and the potential for money laundering due to rent being paid from the sale of an illegal federal drugSuch aforementioned factors allow landlords and property owners to charge premiums for tenants who are cultivating, producing and selling marijuana. While it is undoubtedly true that this resulting real estate boom is a positive for the real estate industry, it does not come without riskIn the next part of this series, we will be discussing the legal and operational risks that come with owning and leasing property that is being used by marijuana businesses. This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription. Pillsbury Winthrop Shaw Pittman LLP - James M Rishwain, Brittany Griffith Back Forward View original Forward Print Save ShareFacebookTwitterGoogle PlusLinked In Follow Please login to follow content. Like var lex_script_article_filtersave = true; Filed under USA Employment & Labor Healthcare & Life Sciences Product Regulation & Liability Real Estate Pillsbury Winthrop Shaw Pittman LLP Popular articles from this firm Public Hospital Bankruptcy Under Chapter 9: A Success Story and a Powerful Tool * Five Things Employers Should Know about Tax Reform * Historic Estate Planning Opportunities from Tax Reform * Update on US Investigation of China’s IP Practices * Proyecto de Ley Para Contrarrestar las Redes Ilícitas de Hezbolá en Latinoamérica Podría Resultar en Escrutinio a Instituciones Financieras de la Región * If you would like to learn how Lexology can drive your content marketing strategy forward, please email Send to Prospector Related topic hubs USA Employment & Labor Healthcare & Life Sciences Related USA articles Legalized Marijuana Resulting in Real Estate High * Green Rush * San Diego Issues Guidance for Marijuana Cultivators, Dispensaries and Testing Facilities * Related international articles Cannabis in 2017: Setting the stage for legalization * - Canada Toronto Stock Exchange Issues Staff Notice on U.SMarijuana Companies * - Canada Getting Into the Weeds - Mining Streaming Deals Adapt to the Marijuana Industry * - Canada Lexology Navigator Q&A Compare jurisdictions: Pensions & Benefits USA Italy Germany More... "Lexology is a high quality service; the articles are very relevant and always useful" "Lexology is a high quality service; the articles are very relevant and always useful" "Lexology is a high quality service; the articles are very relevant and always useful" Martha van den Beld Legal Counsel TOTAL Nederland NV Back to Top RSS feeds Contact Submissions About Testimonials Cookies Disclaimer Privacy policy Login Register Follow on Twitter Search

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