Investing in Marijuana dispensary properties and related biz's?

Investing in Marijuana dispensary properties and related biz's?

Homeowner · VISTA, CA · Member since 2015 · 727 posts · 340 votes

I know I might be opening up a real can of something on this thread but I need to get some advice from some commercial RE investors if possible. I recently ran across a rather unique biz op. I have a client that's been looking for multiple  commercial locations to rent/lease for a medical Marijuana retail operation/despencery where they will market a wide variety of Cannibis related products. 

This particular geographic area is in the process of legitimizing Marijuana growing and cultivating operations,  dispensaries, wholesale and retail operations, etc. albeit it is still against the Federal mandate.

My question is do you as a commercial property owner/investor think I would I be liable as the property owner and landlord and subjuct to property forfiture in the event of legal enforcement of said Federal mandate even if it's legal on a local Statewide level and my only involvement is as a landlord with no direct involvement in the biz other than a NNN lease?

I know many will answer by suggesting that I seek legal counsel which I've already done and thus have recieved a good cross section of sound legal advice and opinions. However, I'm particularly inerested in knowing if there are any commercial investors who have had any direct or hands on experience in this arena and what your thoughts, opinions and recommendations are.

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Vendor · Denver, CO · Member since 2015 · 63 posts · 20 votes
10y

being here in Colorado the question you have is regularly asked. If there was a change in federal administrations that wanted to crack down on a schedule I drug then yes you property could be seized regardless of your direct involvement. Banks are generally not knowingly allowing tenants in properties that they have loans on due to potential seized but also the fact the feds could take their bank license if the bank was knowingly involved with any aspect of a federally banned activity.

The current DOJ has stated they will not enforce certain laws regarding MJ but again that is subject to change. IMO I think several other states are going to see Colorado's lesson and want to tap into this new tax revenue base. As for the boogie man fear of increased violence, crimes etc, that is just not happening. I have seen no difference from prior to legalization to now.

My advice would be to go into any investment involving MJ with eyes wide open and if you decide to move forward be compensated accordingly.

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  • Homeowner · VISTA, CA · Member since 2015 · 727 posts · 340 votes
    9y

    Well, I've certainly got the best @John 

    @John Thedfordundefined

  • Contractor · Columbia, MO · Member since 2016 · 3 posts · 0 votes
    9y

    There are a number of factors you need to be aware of with marijuana investments.

    DEA - still illegal on the federal level to buy or sell marijuana.  Even if the DOJ/DEA has made raids in "legal" states a low priority, and the purchase of small amounts a low priority.  They hold it in their quiver of charges to use as they see fit.    

    Dept of Treasury - the guidelines issued by the department require that banks/credit unions report and track of all marijuana industry banking transactions.   This is similar to tracking gambling winnings to prevent money laundering.   Again, you have to hope the feds don't crack down and seize accounts.  

    IRS - They got Capone (and most of the Florida cocaine smugglers) for having assets where they couldn't show income.  You can declare drug income and pay the taxes up front.  If your don't declare and pay taxes, the IRS can/will seize all your assets, then try to prove where your cash came from and which assets are legal vs. not legal.  

  • Homeowner · VISTA, CA · Member since 2015 · 727 posts · 340 votes
    9y

    @Patrick K.In my position as a stockholder of a publicly traded company and in view of the recent election legalizing MJ in 7 more stated I'm not feeling to concerned or threatened by the DEA or local law enforcement inasmuch as I merely hold stock which places me far away from the mainstream of the industry.

    Law enforcement would have to peel back layers starting with the SEC to even get near me. I'm a very little fly on a big big wall. If they want to claim a few thousand shares of stock from me for investing in agri greenhouses I guess I'll just have to address that situation if and when it occurs.

  • Flipper · Elmhurst, IL · Member since 2011 · 96 posts · 23 votes
    9y

    @John Arendsen  

    You might want to talk to an attorney specialized in marijuana business before making the investment.  I had a short interaction with an attorney in So Cal last year. His practice is built around advising dispensaries and growers. His legal assistant ran dispensaries in the past and they the business inside out.   

  • Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes
    9y

    @John Arendsen, Call Anthony D'Artiglio or Michael Ansell. They have a Cannabis Law Practice Group that can answer all of your questions. Inbox me for more info, if you'd like.

  • Homeowner · VISTA, CA · Member since 2015 · 727 posts · 340 votes
    9y

    I appreciate your sincere concerns and contribution @KC Zhang and @Jessica Zolotorofe, however, at this time all I've done is purchase stock in a publicly traded indirect subsidiary from a company that builds greenhouses in Colorado for myriad agricultural endeavors one of which is MJ. 

    That stated, however, should I endeavor to venture into other aspects of the industry in California I will definitely follow your friendly advice and reach out to your contacts for advice and direction. My interest would most likely be limited to real estate acquisitions and/or investment opportunities.

  • Attorney · NJ · Member since 2016 · 1k+ posts · 794 votes
    9y

    Great. Best of luck on your journey. With the recent changes in law, that market is about to explode!

  • Homeowner · VISTA, CA · Member since 2015 · 727 posts · 340 votes
    9y

    Let's hope Cali can jump through a lot of the local county and city zoning and regs nonsense. But that would be nice. We're positioned to build greenhouses there as soon as they get their act together.

  • Commercial Mortgage Banker · Los Angeles, CA · Member since 2016 · 36 posts · 10 votes
    9y

    I also think with the legalization in California there is a opportunity to capitalize on the real estate side of the business, but you'll definitely need to have plenty of cash since financing will be challenging. As a commercial mortgage banker, any real estate with MJ business attached to it is an automatic reject for most banks. I know just 1 small regional bank that is willing to do the commercial loans for MJ industry, but they charge a premium with starting rate over 6%. So there is even more risk if you're leveraged on the property and the business is shut down federally for some reason, you may be stuck debt servicing without the property income. 

  • Homeowner · VISTA, CA · Member since 2015 · 727 posts · 340 votes
    9y

    Not too worried about that @Kevin Wong

  • Real Estate Agent · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
    9y

    I guess this old news but Desert Hot Springs went for the grow business in a big way ,Indio soon to follow 

    http://www.latimes.com/local/la-me-marijuana-culti...

  • Homeowner · VISTA, CA · Member since 2015 · 727 posts · 340 votes
    9y

    Would love to learn more about both @Sean Murray and @Steven Picker . Feel free to private message me anytime so we can discuss it in privacy. The company that's building the greenhouses in Colorado may be interested in this and I would certainly be interested in further inactive and indirect investment opportunities.

  • Investor · Lafayette, CO · Member since 2016 · 88 posts · 17 votes
    9y

    If I may ask @John Arendsen what company stock are you holding?

  • Investor · Los Angeles County, CA · Member since 2012 · 962 posts · 279 votes
    9y

    Hey thanks everyone for the great info.  Some time has passed since the original and follow up posts.

    I am contemplating renting out my small retail storefronts to Marijuana Dispensaries now that the Nov 8 Prop 64 has passed in California.  These are on pretty good hipster areas where I think the community is liberal enough to accept a non-medical dispensary.

    It's legal here in Long Beach, CA now but there are some regulations...
    What are all your opinions on rent/SF, structuring leases, lender/insurance, and general stigma.

  • Homeowner · VISTA, CA · Member since 2015 · 727 posts · 340 votes
    9y

    I'd caution and factor in the 45 day moratorium before getting too excited and do keep in mind that we have a republican president about to take the helm and there is still a Federal Mandate do contend with. Additionally, Cali could keep extending the Moratorium should they desire. It ain't over till it's over.

  • Homeowner · VISTA, CA · Member since 2015 · 727 posts · 340 votes
    9y

    A little off my radar @Jose Guevarra. I'm in San Diego and would consider looking at any commercial property there or in Orange and Riverside Counties. But I truly love Santa Barbara. In fact if I wasn't so entrenched in SD I'd be living in SB.

  • Investor · San Diego, CA · Member since 2018 · 55 posts · 25 votes
    7y

    @John D. Any idea why those San Diego shops were getting shut down, if they had permits?

  • Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
    7y

    @Bradley Kirschbaum This is a 3 year old thread, and much of the information is no longer relevant.

  • Investor · San Diego, CA · Member since 2018 · 55 posts · 25 votes
    7y

    @John D. I appreciate the response, and saw that the thread is old... but my question still stands, and is relevant: If they did have permits, does anyone know why were they closed?

  • Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
    7y

    @Bradley Kirschbaum As I mentioned in my post a few years ago, the vast majority of shops in that area were not properly licensed (or licensed at all in many cases).  I assume it was those that were shut down, although I can certainly not claim knowledge of every shop, and each of their licensing and permitting.

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