Securing prime real estate for cannabis operations is a nuanced endeavor, requiring expertise and a keen understanding of local regulations. Meilad Rafiei, CEO of WeCann, a cannabis entitlements, licensing and property brokerage firm, shares insights into this intricate process.
Priorities In Real Estate For Cannabis
Rafiei explained that finding the best cannabis property starts with thorough research and a feasibility study to identify cannabis-friendly municipalities.
Digital mapping tools like ArcGIS help highlight viable properties and create a detailed property database. The next steps involve conducting inspections and negotiating terms with landlords while ensuring compliance with all local regulations.
Thus, finding the right location for cannabis operations, whether retail or cultivation, involves thorough research and strategic planning. "Identifying as many properties as you can that qualify is crucial," says Rafiei.
For retail, key factors include good frontage, ample parking, and proximity to reputable retail neighbors. "Retailers want good signage and shouldn't be tucked away in industrial areas," he adds.
For cultivation, the priorities shift. Being off the beaten path and ensuring robust security measures are essential. However, both retail and cultivation face challenges related to construction costs and timelines.
The Role Of Digital Tools And Data
"We create maps that highlight all viable properties within a municipality," Rafiei explains.
These maps are available via a subscription service, enabling clients to use them independently or with WeCann's assistance. The maps help identify optimal locations based on zoning, demographics, and the presence of complementary businesses.
Understanding local regulations is another critical aspect. WeCann develops feasibility reports that break down tax implications, operational costs, and timelines for different municipalities.
These reports also include economic factors like demographics and complementary businesses. "If a client wants to be near a 7-Eleven, we can customize the map to highlight those specific businesses," Rafiei noted.
Filing Successful Lottery Applications
Winning a lottery for a cannabis license involves more than just luck. Rafiei stresses the importance of thorough preparation and understanding of the local political agenda.
"We've submitted about 200 licensing applications across nearly 60 municipalities. We've experienced a little bit of everything when it comes to politics and regulations," he noted.
"You need a strong business plan and an operational work plan," he advises. Community benefit plans that genuinely address local needs can also significantly enhance an application's chances of success.
Once a company secures a property and state approval, navigating municipal requirements becomes the next hurdle.
"Municipalities often demand a detailed business plan, including operational workflows," explained Rafiei. Additionally, municipalities frequently request a community benefit plan, especially in competitive licensing scenarios.
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Check For Good Bones
Converting properties for cannabis use presents unique challenges. "It's usually better to find existing buildings rather than starting from scratch," Rafiei says, citing post-COVID construction delays and increased costs.
Yet, properties with deferred maintenance can be problematic, underscoring the need for detailed inspections. For example, securing adequate power is a significant challenge in cannabis real estate.
"Property owners might claim they have 12000 amps, but you can't just take their word for it," Rafiei explained. Misjudgments can take up to 18 months. "It's crucial to double-check how power is split and delivered to avoid unforeseen issues," he added.
All About The Legwork
Securing cannabis real estate involves significant legwork, starting with cold-calling property owners who may know little about the cannabis industry. "Winning them over is part of the game," Rafiei explains.
Building credibility often begins with educating property owners about market trends.
Understanding local dynamics is also crucial. Rather than delving into the historical context of cannabis, Rafiei focuses on current events and regulations in the property owner's city and state. "Once they realize their city council and mayor support cannabis businesses, it eases their concerns," he notes.
These markets require navigating evolving regulations and building local relationships. Establishing a connection through relevant, localized information helps build trust. Financial discussions are also inevitable in this process. Rafiei stresses the importance of clear communication about potential earnings and risks.
"Property owners take on additional risks with cannabis tenants due to federal laws," he says. Addressing these concerns, while highlighting the financial benefits such as increased foot traffic for surrounding businesses, is essential. "Cannabis tenants can positively impact nearby retailers," he adds, underscoring the broader economic advantages of retail cannabis.
The Full-Time Job Of Finding Cannabis Properties
Rafiei highlights that finding the right property for cannabis operations is a full-time job.
"You can't just do this part-time; it requires dedicated effort," he asserts. Engaging a firm like WeCann, with specialized knowledge and resources, can be costly upfront but saves significant time and money in the long run.
As Rafiei sums it up, "Time kills deals. Having the right team can make all the difference."
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These issues will be among the hot topics at the upcoming Benzinga Cannabis Capital Conference in Chicago this Oct. 8-9. Join us to get more insight into what the wave of weed legalization means for the future of investing in the industry. Hear directly from top executives, investors, advocates, and policymakers. Get your tickets now before prices go up by following this link.
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