‘A Land Grab’ for a Piece of New York’s Marijuana Business


It has been only five weeks since New York State legalized the use of recreational marijuana. The board that will oversee the rollout has yet to be appointed, let alone rules set for how licenses will be issued to cannabis businesses. The sale of legal pot in the state is still a year away. And, of course, marijuana remains illegal on the federal level.

But already the rush is on to get a piece of what could be a $4.2 billion industry in the Empire State.

Brokers are talking to landlords about leasing storefronts to dispensaries. Representatives of out-of-state cannabis businesses are flying in to scope out properties. And suppliers of medical marijuana are expanding in the hope that they will be able to branch into recreational sales.

Agricultural land upstate is now marketed as being “in the green zone” for hemp farming or the construction of grow houses for cultivating marijuana.

“It’s a land grab,” said Gregory Tannor, a principal at Lee & Associates NYC, a brokerage that has been conferring with New York City landlords since November and has already lined up nearly 200 possible locations for dispensaries.

But for all the excitement, there are significant challenges in cannabis real estate.

In some ways, what is happening in New York has already occurred in other states. California was the first to legalize medical use, in 1996; now 36 states allow it. With the signing of New York’s Marijuana Regulation and Taxation Act, 18 states have legalized recreational marijuana, although South Dakota’s law is being challenged in court.

But the Drug Enforcement Administration still classifies marijuana as a controlled substance. Banks are skittish about lending to cannabis businesses, constraining their ability to buy and hold real estate, although that may soon change.

There could be 700 to 900 dispensaries in New York and four million square feet of space devoted to cultivation, said David Weinstein, chief executive of NewLake Capital Partners, a REIT formed last year.

Another reason landlords may be amenable: Cannabis retailers tend to lease large spaces, ranging from 3,000 to 10,000 square feet.

Cresco Labs has four medical dispensaries in New York, including one in the Williamsburg neighborhood of Brooklyn. It is unclear whether the state will allow recreational marijuana to be sold at those locations, but Mr. Rutherford is hedging his bets, adding parking and in some cases expanding by leasing a storefront next door to an existing space.

“We are making sure those stores are ready for the future adult use market,” he said.



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