How to Invest in Cannabis Dispensaries and Properties

Which Cannabis Business Is Best for You?

The best thing about the cannabis industry is the numerous forms of business it presents. For example, you could cultivate cannabis, start an extraction processing company, or open a retail dispensary.

All these business models have one thing in common: you have to meet the legal requirements before you’re allowed to start your business.

For starters, you have to deal with the downright exorbitant taxes, which vary according to the city and state you’re operating in. And since the IRS and FDA don’t recognize cannabis businesses due to the plant’s I FDA status, you can’t write off cannabis-related expenses on your commercial real estate filings. You also have to deal with the taxes enacted by local states and municipalities that are also trying to cash in on the “green rush.”

So, apart from your facility budget and operational costs, you’ll also have to factor in taxes to your total start-up costs. There is also the licensing issue. Almost all states where cannabis is legal require you to apply for a license to operate legally in the state. You also have to operate within said state lines to exempt yourself from federal regulations.

Zoning Commercial Property for Your Cannabis Business

Different states have varying legal requirements on which types of buildings you can set up a cannabis business in. For example, if you want to cultivate cannabis, the land on which you cultivate must be zoned for cannabis cultivation. Likewise, cannabis processing centers must be fitted with up-to-date property security systems. Some states even require cannabis dispensaries to have a lobby where they can screen their guests before they’re allowed to enter.

It is always advisable to do due diligence when buying or renting any real estate. But, in the cannabis industry, it becomes crucial. This is because cannabis taxes vary according to location. The location you choose will also have a direct effect on licensing, advertising availability, and security requirements.

Most states also have caps on the number of retail dispensaries allowed to operate within state lines. Some impose hefty application and licensing fees for both growers and retailers.

How to Find the Right Cannabis Property

Once you know the type of cannabis business you want to get into, it’s time to find the perfect property. During your license application process, most regulatory bodies will require proof that you have property. Or at least plan on acquiring property to house your cannabis business.

Best Retail Property for Dispensaries

If you plan on buying a retail cannabis business building, you’re also buying the business itself. Outside the monumental costs involved in buying the property and business, you’ll also have to go through the state’s licensing application process for cannabis dispensaries.

Alternatively, you can convert an existing retail property into a cannabis dispensary. While you’re at it, you’ll have to follow your local state requirements when updating the building. Typically, your dispensary will need space for product display. This allows guests to browse your catalog and interact with staff. You’ll also need to set aside space for a lobby where you can screen your guests before you allow them to enter.

Cannabis Cultivation: Indoor vs. Outdoor

The fundamentals of cultivating cannabis outdoors or indoors are basically the same as any other commercial agricultural property.

In that measure, if you want to grow your cannabis indoors, you’ll need a building with proper irrigation and lighting systems. You’ll also need to find a facility that will enable you to cultivate cannabis plants in your desired techniques.

Here, you’ll need to consider whether you’ll be using soil or hydroponics to grow your plants. You’ll also need to consider whether the facility has enough climate control capabilities to facilitate proper airflow and control humidity. The building also has to be large enough to keep different strains separate to prevent cross-pollination.

And most importantly, your plants will require plenty of light to flourish. This includes 18 hours of sunlight and 4 hours of total darkness during growth. They’ll also require an even ratio of light to darkness right before the plants start producing buds.

Luckily, there are tons of readily available facilities on the market. So, that might reduce the logistical headaches of building a facility that can cater to your plant’s needs. As long as the facility is located in an area zoned for cannabis cultivation and meets the state’s legal requirements for cannabis cultivation, you’re good to go.

Best Processing and Manufacturing Facilities for Cannabis

The type of building you choose to go for all comes down to the type of processed cannabis product you want to make.

For an edibles facility, you’ll need a building with commercial-grade, cannabis-zoned kitchens. You’ll also need proper storage.

Regardless of the nature of your cannabis processing or manufacturing business, you’ll still need to meet the zoning and licensing requirements of the state. You should also note that some master industrial leases prohibit the processing of cannabis and its products. Most especially those owned by institutional investors.

The Bottom Line

The cannabis industry is still quite young. And the federal legalization bill hasn’t passed yet. This is the perfect time to start your cannabis business before you start getting serious competition from international investors.

We’ve given you some of the basics in investing in cannabis dispensaries and properties. But, before you start your business, make sure you do some more research. Especially on zoning and licensing requirements.