MJBizMag February 2023 - 8

FROM THE EDITOR Kate Lavin
The Real (Estate) Deal
Cannabis deserts and the 'green tax' are just some of the ways
lack of marijuana reform hurts the industry
L
ike everyone in the cannabis
industry, the staff at
MJBizMagazine spends a lot
of time discussing the likelihood
and timing of federal marijuana
legalization.
From 280E-the section of federal
tax code that prevents planttouching
companies from deducting
standard business expenses-to
municipal zoning that blocks
marijuana companies from locating
in certain areas, government at
every size puts up obstacles that
inhibit cannabis businesses from
reaching their full potential.
Researching the cover package
for this issue brought to light
even more ways that marijuana
companies are at a disadvantage
compared to mainstream
businesses.
Paying a Premium
As anyone who has launched a
marijuana business in a newly
legal market can tell you: Vendors
smell money the moment you
bring up the word " cannabis. "
And when it comes to renting
space for marijuana cultivation,
manufacturing or retail, the price
that landlords ask per month
seems to magically multiply. Many
landlords also require payments
months in advance in exchange for
renting to plant-touching clients.
Ryan George, CEO of Californiabased
420 Property, told
MJBizMagazine Senior Writer Omar
Sacirbey that the " green tax " often
lessens once regulated marijuana
markets stabilize. But when it
8 February 2023 | MJBizMagazine
As anyone who
has launched a
marijuana business
in a newly legal
market can tell
you: Vendors smell
money the moment
you say the word
" cannabis. "
comes to supply and demand, it's
the landlords who have supply on
their side.
Even those seeking to purchase
property are at a disadvantage
when looking for real estate.
Most states allow municipalities
to opt out of hosting cannabis
businesses. Other locations, such as
Colorado Springs, Colorado, allow
medical marijuana companies but
prohibit adult-use operations. And
still more municipalities confine
plant-touching businesses to
undesirable areas, then stipulate
that they must be far from churches,
schools and other locations.
Real Estate Lending
Those that do find a suitable
location at a price they can afford
will find further difficulty when
purchasing it. Federally insured
banks are leery of lending to
plant-touching companies, which
need capital to grow just as much
as mainstream businesses.
The lack of traditional lending
has created a market for finance
companies willing to service
plant-touching clients. But often,
it comes at a cost greater than
above-average interest rates.
Given the limited lending
options available to plant-touching
companies, some cannabis
entrepreneurs sacrifice board seats
and voting shares in order to access
capital that traditional business
owners can get by walking into
their nearest bank.
Companies that default on
mortgage and rent payments can
find themselves unable to operate,
at best, or losing control of their
businesses, at worst.
Cover Your Assets
Trust is important when building a
business relationship. It's even more
important for entrepreneurs who've
spent their life savings and years of
work to build something-only to
entrust it to someone else in name
and deed.
Bottom line: Conduct thorough
research and make good choices.
Kate Lavin is the editor
of MJBizMagazine. Reach
her at kate.lavin@
mjbizdaily.com.
MJBizMag February 2023

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