The Real Estate Dilemma

One of the biggest challenges start-up dispensaries face is finding real estate.
Cannabis truck and store
Very few landlords embrace the notion of working with a medical marijuana business. Although the industry continues become mainstream, finding real estate remains a huge challenge, particularly for tenants.

Potential landlords fear they will harassed by law enforcement and fear to rent to a business that carries this baggage. any landlords have heard accounts of federal enforcement in unregulated markets like California, and some even fear they could lose their property through forfeiture.

The Cole Memo and other relevant laws should help but often do not; even aside from legal concerns, others issues can be troublesome. Many landlords imagine a seedy business that attracts undesirables. They may also fear scorn of neighbor tenants. Some even equate marijuana business with criminals and dead-enders. Some owners may be initially sympathetic but eventually demur after a partner or lender has a strongly negative reaction.

A little professionalism can help a lot. For instance, show up on time, return phone calls, and do not call a 50-year-old man “dude.” Be polite. With such low expectations from potential landlords, professionalism can go a long way. When meeting a realtor or building owner, be prepared and anticipate the questions and have the answers in mind.

Some studies have shown that dispensaries actually reduce crime, and you can point this out.

Be creative when it comes to finding leads. Use Craigslist and real estate web sites. Get in your car and driving around the neighborhoods where you wanted to rent space.

If possible, speak with the property owner rather than a realtor. Most realtors look at a medical marijuana business and see more complications than in most other industries, and many are will advise a client to avoid potential headaches involved in working with marijuana businesses.

Finding a location for your dispensary or retail outlet involves challenges most small business owners never face but they can be overcome with patience, persistence, and professionalism.

About Douglas Slain

Doug received a JD from Stanford Law School, a MA from the University of Chicago, and a BA from DePauw University (Phi Beta Kappa). After practicing real estate and finance law at then Pillsbury, Madison & Sutro, he founded four national monthly law reporting titles now owned by Thomson-Reuters. He served two consecutive terms as chairman of the American Bar Association’s General Practice section’s Professional Responsibility Committee. Slain was an ABA-appointed rule of law consultant to the Ministry of Economy for the Republic of Latvia as its secured transactions adviser. He taught briefly at Stanford Law School as an adjunct clinical law professor. Slain has been the managing partner of Private Placement Advisors since August 2009. In January 2013 he founded Outliers Network.

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