Recreational Marijuana Creates New Buzz For Local Commercial Real Estate Market

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Rockland County Brokers, Property Owners, Landlords, Assessing the Potential of the Coming Boom

ECONOMIC NEWS

Now that New York is among the states that legalize recreational marijuana, including New Jersey, real estate owners and brokers are vying to take part in what is likely a new gold rush. The new laws are expected to boost demand for acreage, processing centers and retail pharmacies. But they also pose challenges for the commercial real estate industry that has not yet dealt with the complexity of this newly regulated industry.

Industry insiders say New York, and the Hudson Valley in particular, has the potential to be a major player in the cannabis market. Some analysts predict that New York could have a bigger marijuana industry than California, one of the earliest states to legalize the drug.

While much remains to be ironed out, one thing is certain: cannabis companies need real estate, whether it’s buying land, buildings, or leasing.

“Everyone’s talking about it, but there are a lot of strangers,” said Donny Moskovic, director of Katz & Associates and the agent who hired Rockland’s only medical cannabis dispensary. “How many licenses does New York get – is it a big state? And there will be a steep learning curve, as there is with any licensed industry. “

New York has not yet finalized the details of the rules that will govern the industry. The number of licenses that will be issued remains uncertain. Municipalities can block retail sales within their borders or impose their own restrictions. And because operators can only sell marijuana made within state lines, in some cases demand can outperform supply and slow the growth of the industry.

However, in order to obtain cannabis licenses in New York, companies must provide evidence that they have a location specified by the provision of a lease, deed, or sale agreement. Prospectors and companies already involved in the industry, including pharmacies, are looking for industrial warehouses for growing or processing cannabis or store fronts to either retail or consume marijuana on-site.

According to a report released last month in which the National Association of Realtors surveyed its members and found that states where prescription and recreational marijuana use are legal had 35 percent increased demand in warehouses, 23 percent in storefronts, and 18 percent Percent in 28 percent on land.

“We see a lot of land grabbing,” said Moskovic. “If applicants need a license first, they have to get real estate. We see a lot of land speculation. Everyone is talking about it. “

New York’s upstate boroughs with undeveloped and available land may have an advantage for facility growing, but retail locations can pop up anywhere depending on the number of licenses issued and the temperature and tolerance of each city. In addition, New York needs a 500-foot buffer from schools.

Moskovic rented Sunnyside, formerly Remedy, a medical cannabis dispensary in Bardonia in 2019. Medical marijuana became legal in New York in 2016, and although the law has expanded over time, it is viewed as unusually restrictive. Currently, only 13 diseases are qualified for medical marijuana use. The drug is forbidden to smoke (vaping is allowed but not in public). However, medical pharmacies will be among the first to be ready to expand to adult cannabis.

Cannabis companies large and small are watching the tri-state area. According to industry experts, the Hudson Valley will be a competitive component of the market. Rural counties will benefit from the need to build vertical operations. New York says 50 percent of cannabis licenses are issued to minority or women-owned companies, distressed farmers, or veterans with disabilities.

New York landlords face both state and federal restrictions and zoning issues. The US government continues to characterize cannabis as a List 1 drug. Properties with loans or mortgages from nationwide chartered banks are still not allowed to be rented to marijuana dispensaries. And buildings with commercial mortgage-backed security loans cannot be rented to cannabis companies.

Developing an adult cannabis industry in New York State under this legislation has the potential to create significant economic opportunities for New Yorkers and the state. Tax revenue from the adult cannabis program is expected to reach $ 350 million per year.