Robert Celt
New Member
As close to 1,100 medical marijuana entrepreneurs await word on their application to grow, process and sell cannabis in Maryland this summer, the hunt is on for office and work space to set up the crops.
But that search may not be easy.
The real estate pursuit has set off a debate among some professionals in the state's commercial real estate community – and their tenants – over whether it's kosher to lease to medical marijuana growers who are seeking to set up shop in business parks and light industrial areas.
At issue are concerns over banking, security, safety and "whether it's a good mix" to have indoor cannabis grown in such a complex that also has retail, insurance and other businesses as existing tenants.
"A lot of landlords don't want to lease to them," said Jim Caronna, a principal with NAI KLNB who is based in Towson and specializes in office and commercial leasing.
Matt Laraway, executive vice president and partner with Chesapeake Real Estate Group, last week echoed that sentiment: "Some institutions say we won't even entertain the use."
Caronna said he began receiving queries in late October from growers and other brokers who were searching for warehouse space to lease or buy for medical marijuana growing and processing.
Specifically, they are looking for Class B or Class C warehouse space with low ceilings, at least 50,000 square feet and heavy electrical voltage. They also need the ability to retrofit the facility with an industrial indoor watering system, Caronna said.
The state has mandated that applicants for medical cannabis licenses have "access to a building" as part of the application process. And some jurisdictions have added a layer of zoning restrictions for such operations. The Baltimore County Council, for example, passed legislation in early September that restricts the location of medical cannabis growing, processing and dispensary facilities in certain districts, and limits establishment to 500 feet from school.
That aside, brokers and warehouse owners are saying there is business and even philosophical resistance to leasing or selling warehouse space.
Besides a shaky perception, one of the major reasons, Caronna and Laraway say is that the growers, processors and sellers of medical cannabis have no access to federally insured banks. The federal government has not adopted legislative acceptance of the growing, processing and sale of weed for medical purposes -- even as 23 states and the District of Columbia have. In turn, federally insured banks do not accept currency for deposit from the businesses.
With a lot of cash on hand, security becomes an issue, Caronna said.
And then there is a basic structural problem. Some of the facilities don't have the amount of power growers say they need to set plants indoors and cultivate them.
"It's a tremendous amount," Caronna said. "They say they need 6,000 to 8,000 amps of power. To compare, 800 amps of power in a warehouse is considered a lot."
Other existing tenants have rejected potential growing facilities as business neighbors. Laraway said he's heard from tenants in the insurance industry and pension fund advisers who lease space from him and they have made it clear they don't want medical marijuana growers to set up shop near them.
In addition, some banks have put up a wall.
"Lenders have told us that they will pull the loan if we lease to medical marijuana growers," Caronna said, of financing on warehouse or business parks.
There are some potential success stories.
Peak Harvest Health has applied for growing, processing and dispensary licenses in Allegany County. With existing businesses in Connecticut and Minnesota, one of the group's partners said they canvassed the Cumberland area where they hope to open up shop in hopes of opening a dialogue to build trust in the community.
"We spoke with the city and county council there, with citizens and business leaders," said Kevin Gibbs, one of the four partners in the Bethesda-based venture. "We looked at them first and then we looked at the real estate component second."
That conversation led to a trip this fall by Cumberland elected officials and some local business owners to Watertown, Conn., where the group has operated a medical marijuana operation under the name Theraplant for two years.
"They watched how we produced the medicine to make sure what we said we did there was what we'd do," Gibbs said. "I think this is a very unique industry and there has to be a high level of confidence in the community that you are going to locate in that you are going to be a very responsible corporate citizen. We have a track record ... very few companies have that and it helps people get comfortable that we can perform and produce great medicine for the patients."
Gibbs said Peak Harvest Health has contracted to buy a warehouse in Cumberland, pending approval of their license by the state. The facility is located adjacent to the Allegany County Sheriff's office, Gibbs said, which will help with security concerns. He said they plan to begin growing in a space that would be between 30,000 and 50,000 square feet with the potential of expanding to 150,000 square feet.
"We plan to redevelop it using the same process we've used in Connecticut and Minnesota to build one of the most state of the art medical pharmaceutical manufacturing facilities in the country," Gibbs said.
Of the perception issues now surfacing in Maryland over medical cannabis as a business venture, Gibbs predicted the nascent industry will soon be more accepted.
"It's a very exciting time," he said. "We can see in Connecticut and in Minnesota the difference we're making in people's lives. There's testimony of that. And from an emerging market standpoint, this will be a section in the history books that will be taught five years from now."
The Natalie M. LaPrade Medical Cannabis Commission has received 146 applications for licensing from potential growers, 124 applications from processors and 811 applications for dispensary licenses. Awards are expected to begin this summer, about six months later than originally expected because of the large number of applicants.
Laraway said he receives at least one call a week from a prospective medical marijuana grower, processor or seller seeking warehouse space.
He tells them thanks, but no thanks.
"We're not pursuing any of those deals. We currently don't have any assets that work for us."
But he added: "I have heard that some guys put down hard cash deposits on buildings to lease or buy."
One such deal was in Woodlawn, where a potential grower from out of state gave NAI KLNB a large non-refundable sum as a deposit this fall to purchase a Class B warehouse at 1620 Whitehead Ct.
"The building was listed for sale at $2.2 million and they offered more than that to buy it," Caronna said. "They also agreed to extend the contract every two weeks with non-refundable cash until the licenses were awarded."
Ultimately, the buyer terminated the contract because he became discouraged by the large number of medical cannabis license applications.
It's all part of what has evolved this fall into a fast game of catch and release, real estate style, in Maryland.
"I've even gotten a call from a guy in California who was saying 'I'm thinking of going into the marijuana business' in Maryland," Caronna said. "And I told him, don't waste my time."
Jim Caronna, a principal at NAI KLNB, stands inside a 57,000-square-foot warehouse that gaining attention as a potential space to grow marijuana.
News Moderator: Robert Celt 420 MAGAZINE ®
Full Article: Maryland: Medical Marijuana Growers Want Lots Of Space. But Will Anyone Welcome Them?
Author: Melody Simmons
Contact: Baltimore Business Journal
Photo Credit: Kaitlan Newman
Website: Baltimore Business Journal
But that search may not be easy.
The real estate pursuit has set off a debate among some professionals in the state's commercial real estate community – and their tenants – over whether it's kosher to lease to medical marijuana growers who are seeking to set up shop in business parks and light industrial areas.
At issue are concerns over banking, security, safety and "whether it's a good mix" to have indoor cannabis grown in such a complex that also has retail, insurance and other businesses as existing tenants.
"A lot of landlords don't want to lease to them," said Jim Caronna, a principal with NAI KLNB who is based in Towson and specializes in office and commercial leasing.
Matt Laraway, executive vice president and partner with Chesapeake Real Estate Group, last week echoed that sentiment: "Some institutions say we won't even entertain the use."
Caronna said he began receiving queries in late October from growers and other brokers who were searching for warehouse space to lease or buy for medical marijuana growing and processing.
Specifically, they are looking for Class B or Class C warehouse space with low ceilings, at least 50,000 square feet and heavy electrical voltage. They also need the ability to retrofit the facility with an industrial indoor watering system, Caronna said.
The state has mandated that applicants for medical cannabis licenses have "access to a building" as part of the application process. And some jurisdictions have added a layer of zoning restrictions for such operations. The Baltimore County Council, for example, passed legislation in early September that restricts the location of medical cannabis growing, processing and dispensary facilities in certain districts, and limits establishment to 500 feet from school.
That aside, brokers and warehouse owners are saying there is business and even philosophical resistance to leasing or selling warehouse space.
Besides a shaky perception, one of the major reasons, Caronna and Laraway say is that the growers, processors and sellers of medical cannabis have no access to federally insured banks. The federal government has not adopted legislative acceptance of the growing, processing and sale of weed for medical purposes -- even as 23 states and the District of Columbia have. In turn, federally insured banks do not accept currency for deposit from the businesses.
With a lot of cash on hand, security becomes an issue, Caronna said.
And then there is a basic structural problem. Some of the facilities don't have the amount of power growers say they need to set plants indoors and cultivate them.
"It's a tremendous amount," Caronna said. "They say they need 6,000 to 8,000 amps of power. To compare, 800 amps of power in a warehouse is considered a lot."
Other existing tenants have rejected potential growing facilities as business neighbors. Laraway said he's heard from tenants in the insurance industry and pension fund advisers who lease space from him and they have made it clear they don't want medical marijuana growers to set up shop near them.
In addition, some banks have put up a wall.
"Lenders have told us that they will pull the loan if we lease to medical marijuana growers," Caronna said, of financing on warehouse or business parks.
There are some potential success stories.
Peak Harvest Health has applied for growing, processing and dispensary licenses in Allegany County. With existing businesses in Connecticut and Minnesota, one of the group's partners said they canvassed the Cumberland area where they hope to open up shop in hopes of opening a dialogue to build trust in the community.
"We spoke with the city and county council there, with citizens and business leaders," said Kevin Gibbs, one of the four partners in the Bethesda-based venture. "We looked at them first and then we looked at the real estate component second."
That conversation led to a trip this fall by Cumberland elected officials and some local business owners to Watertown, Conn., where the group has operated a medical marijuana operation under the name Theraplant for two years.
"They watched how we produced the medicine to make sure what we said we did there was what we'd do," Gibbs said. "I think this is a very unique industry and there has to be a high level of confidence in the community that you are going to locate in that you are going to be a very responsible corporate citizen. We have a track record ... very few companies have that and it helps people get comfortable that we can perform and produce great medicine for the patients."
Gibbs said Peak Harvest Health has contracted to buy a warehouse in Cumberland, pending approval of their license by the state. The facility is located adjacent to the Allegany County Sheriff's office, Gibbs said, which will help with security concerns. He said they plan to begin growing in a space that would be between 30,000 and 50,000 square feet with the potential of expanding to 150,000 square feet.
"We plan to redevelop it using the same process we've used in Connecticut and Minnesota to build one of the most state of the art medical pharmaceutical manufacturing facilities in the country," Gibbs said.
Of the perception issues now surfacing in Maryland over medical cannabis as a business venture, Gibbs predicted the nascent industry will soon be more accepted.
"It's a very exciting time," he said. "We can see in Connecticut and in Minnesota the difference we're making in people's lives. There's testimony of that. And from an emerging market standpoint, this will be a section in the history books that will be taught five years from now."
The Natalie M. LaPrade Medical Cannabis Commission has received 146 applications for licensing from potential growers, 124 applications from processors and 811 applications for dispensary licenses. Awards are expected to begin this summer, about six months later than originally expected because of the large number of applicants.
Laraway said he receives at least one call a week from a prospective medical marijuana grower, processor or seller seeking warehouse space.
He tells them thanks, but no thanks.
"We're not pursuing any of those deals. We currently don't have any assets that work for us."
But he added: "I have heard that some guys put down hard cash deposits on buildings to lease or buy."
One such deal was in Woodlawn, where a potential grower from out of state gave NAI KLNB a large non-refundable sum as a deposit this fall to purchase a Class B warehouse at 1620 Whitehead Ct.
"The building was listed for sale at $2.2 million and they offered more than that to buy it," Caronna said. "They also agreed to extend the contract every two weeks with non-refundable cash until the licenses were awarded."
Ultimately, the buyer terminated the contract because he became discouraged by the large number of medical cannabis license applications.
It's all part of what has evolved this fall into a fast game of catch and release, real estate style, in Maryland.
"I've even gotten a call from a guy in California who was saying 'I'm thinking of going into the marijuana business' in Maryland," Caronna said. "And I told him, don't waste my time."
Jim Caronna, a principal at NAI KLNB, stands inside a 57,000-square-foot warehouse that gaining attention as a potential space to grow marijuana.
News Moderator: Robert Celt 420 MAGAZINE ®
Full Article: Maryland: Medical Marijuana Growers Want Lots Of Space. But Will Anyone Welcome Them?
Author: Melody Simmons
Contact: Baltimore Business Journal
Photo Credit: Kaitlan Newman
Website: Baltimore Business Journal
