Zoned Properties CEO: Exclusive On Recent Developments In Cannabis Real Estate

Bryan McLaren, chairman and CEO of Zoned Properties ZDPY, talked about the latest in real estate development at the Benzinga Cannabis Capital Conference on Thursday.

As an expert in urban planning and zoning, McLaren got into the cannabis industry as a real estate investor and apparently never looked back.

His company, the Scottsdale, Arizona-based Zoned Properties is a strategic real estate development firm whose primary mission is to provide real estate and sustainability services for the regulated cannabis industry.

With a core investor base that funded the original investment, the company acquired and developed a portfolio of properties.

Chino Valley Expansion Project

Today, Zoned Properties is "wrapping up a pretty exciting expansion with our primary tenant" at its cultivation facility in Chino Valley, Arizona, that will have a "meaningful and material impact on our business," McLaren said.

The project, worth over $8 million, is in the completion stage and is expected to more than double the size of the current facility under operations.

Once the expansion is finalized, the lease revenue from the facility is poised to increase from  $393,600 to $957,550, representing a $560,000 increase annually or 4.6 cents per common share.

Identifying Voids

"When it comes to large-scale real estate companies, there's really two forks In the road," McLaren said.

There's the "capital financing route" with real estate trusts providing financing for cannabis businesses and there's the real estate development and services route.

"We're very intentionally not a REIT," he stressed, adding they are going "down that second route."

Zoned Properties supports cannabis operators by covering everything from finding real estate to navigating, zoning, and securing permits at the local level.

Despite the bureaucratic headaches of the above, legalization is one of the most troubling issues facing cannabis businesses these days, McLaren lamented.

"The changes in regulations happen on a whim at the state level and the local level, and that trickles down and ripples to impact the real estate."

Nevertheless, the company persists in coming up with solutions for cannabis businesses. 

"Looking at where the hockey puck is moving, rather than where the pocket is" is how the company evolved to what it is today, he said. "Everyone was stumbling upon real estate," while raising capital to start a business. 

He admitted the road has been rough. From identifying "voids in the marketplace brokerages" that weren't working with cannabis, to figuring out how to "interface with the local communities." 

Zoneomics Partnership

In an attempt to soften the bumps, Zoned Properties partnered with Zoneomics and its CEO Matthew Player who is an expert in urban planning and zoning. The two companies are combing McClaren's real estate and property knowledge with Zoneomics' successful zoning platform to ultimately help cannabis and other regulated industries.

"We're going to provide the partnership with just under $100 000 of investment capital, and Matthew and his teammates at Zoneomics are going to take everything in their platform, all their proprietary software and data, and put it all toward a cannabis solution," McClaren said, adding that the partnership is "a huge opportunity."

He said that they are intending to create a nationwide platform for brokers, land use attorneys, appraisers, developers as well as cannabis companies.

The Open Dør Partnership

In December, Zoned announced the launch of another partnership with dispensary retail franchisor The Open Dør.

Co-founded by international franchisor Kathryn Blackwell and cannabis compliance expert Chelsea Mulligan, The Open Dør has come a long way since its establishment in 2020 with its team that collectively boasts over 30 years of experience in the franchise industry.

One of their main goals now is to help cannabis license holders enter the market faster and more efficiently by simplifying the process.

Earlier this year, Zoned provided The Open Dør with an additional $100,000 in investment capital, for the company to undertake data projects that use zoning and geographic information systems.

By overlapping different data, the company seeks to "unlock an efficient and effective way for real estate owners and cannabis operators to figure out where those kinds of 'green zones' are," McLaren recently told Benzinga.

"We're going to be in a position where we can help them do some kind of an initial private capital raise," McLaren said.

Once The Open Dør closes its first private investment round, Zoned Properties will be able to convert its investment into a potential 33% equity stake.

"Given the progress, we have a strong likelihood of looking at converting that equity, but also we get to be the real estate arm," McLaren concluded.