MJBizMag August 2020 - 74

" At some point down the road, as a
derivative impact of the pandemic,
we will see companies that are
unable to continue operating, and
that will free up additional real
estate to be purchased. "
- Garrett Graff
Hoban Law Group
The real estate firm in Palm Desert,
California, has a division dedicated to
assisting cannabis companies.
Marijuana businesses looking for
real estate could benefit from enlisting
a broker and looking at several listings.
Opportunities can vary even within a
geographical area because of differences
in zoning regulations, taxes and
economic incentives.
Desert Pacific Properties recently
worked with San Diego-based Royal
Emerald Pharmaceuticals to sign a
lease with the option to purchase a
90,000-square-foot site in Desert Hot
Springs, California.
Royal Emerald previously planned to
set up shop in Vista, California, but ran
into red tape during the licensing process.
The company later considered Palm
Springs and Cathedral City before being
wooed by Desert Hot Springs officials,
Turner said.
" Desert Hot Springs just rolled out
the red carpet and got very creative, " she
said. " Because (Royal Emerald's project)
is a research and development facility, it
was allowed in their commercial zone.
And so, instead of going through the
whole conditional-use permit process,
they got the approvals within two weeks. "
Royal Emerald is expected
to begin operations at the site
in late 2020. The company
plans to build up to 3
million square feet of office
and manufacturing space,
according to Desert Pacific
Properties.
Mike Sassano
TAKE IT SLOW
Major players have had to scale
back or reconsider their operations
in recent months. Canopy Growth,
for instance, pulled back on cannabis
cultivation in Africa, Canada, Colombia
and the United States. Los Angelesbased
MedMen Enterprises closed five
of its eight Florida medical marijuana
dispensaries in May. Other multistate
operators including New York-based
Acreage Holdings and Arizona-based
4Front Ventures and Harvest Health
& Recreation also have scaled back by
laying off workers and disposing of
operations.
Now that the economic situation
doesn't support unbridled growth in
the industry, more cannabis companies
might consider a phased building
approach, said Mike Sassano, founder
and CEO of Solaris Farms.
72 Marijuana Business Magazine | August 2020
The cultivator can build up
to 300,000 square feet of grow
space on its current land in
Las Vegas. Phase One of the
project is currently operating
and consists of 34,000 square
feet of cultivation, production
and operational space.
" We build according to
what the market demands at the
time. And that's how I run these
projects, " Sassano said. " I always tell
people to cut (development projects)
back to a reasonable spend and develop
management first. "
PROPERTY AS AN ASSET
One real estate tool that is growing
in popularity for struggling cannabis
businesses or those needing to access
capital is the sale-leaseback, Sassano
said. (See " Cash Cow " in the February
2020 issue of Marijuana Business
Magazine.)
Under this arrangement, companies
often sell their cultivation, processing
and storage facilities-and, in some
cases, retail stores-to cannabisfocused
real estate investment trusts,
or REITs. In exchange for the upfront
cash, the companies sign a long-term
Deals
Real
MJBizMag August 2020

Table of Contents for the Digital Edition of MJBizMag August 2020
