- Services Overview
- Legislation Adopted
- Regulations Adopted
- Property Identification
- Property Zoning
- Property Control
- Property Permit
- License Submittal
- License Award
- Real Estate Transaction
- Real Estate Development
- Certificate of Occupancy
- Authority to Operate
Advisory Services Overview
Zoned Properties® helps clients navigate the extremely complex & high-risk process of developing a project in the Regulated Cannabis Industry. We have recruited a team of experienced professionals and formulated a proven methodology of best practices to provide clients with a wide range of real estate and sustainability services for Regulated Cannabis Projects & Regulated Marijuana Projects including:
- Project Development Services.
- Sustainability Services.
- Real Estate Transaction Services.
Every client developing a project will undoubtedly go through what we call the Regulated Cannabis Project Life Cycle as they contemplate and initiate a Regulated Cannabis Project. Each Stage of the Life Cycle provides an overview of many required element to bring a project from Concept to Cash-flow.
Regulated Cannabis Legislation (Medicinal Marijuana, Adult-Use Marijuana, & Agricultural Hemp) has been gaining significant support on a state-by-state basis over the past few decades. As of Year-End 2018, 33 U.S. states plus the District of Columbia have passed laws permitting their citizens to use medical cannabis. Marijuana remains classified as a Schedule I controlled substance by the U.S. Drug Enforcement Agency (the “DEA”), and the U.S. Department of Justice (the “DOJ”), and therefore it is illegal to grow, possess and consume cannabis under federal law. Adopting legislation at the state-level creates a call to action for operators to implement a Regulated Cannabis Project.
The majority of state-legislation language includes a guiding framework for a specific State Department to create, enact, and implement rules and regulations that will govern a Regulated Cannabis Project within the state marketplace. Typically the rules and regulations for medical or adult-use marijuana have been development under the authority of either the State Department of Health Services or the State Department of Administration and Finance. While the rules and regulations for hemp tend to be placed under the Department of Agriculture. Additionally, State Departments that oversee alcohol and pharmaceutical regulations have been increasingly involved in regulatory structures and implementation. Rules and Regulations act as the foundation of the state-by-state Regulated Cannabis Industry, establishing the system by which a Regulated Cannabis Project can proceed through its Life-Cycle.
Real Estate and/or properly zoned properties are at the epicenter of any Regulated Cannabis Project. Just about every regulatory and compliance factor related to a Regulated Cannabis Operation (Cultivation, Manufacturing, Distribution, Laboratories, or Retail) is dependent upon the variables related to the Real Estate, Property, or Facility (e.g. Requirements to store product in a secured location as often defined by municipal code language). Locating and identifying zoned properties that meet the needs of the contemplated operation AND meet the requirements of all municipal & state regulations can be extremely challenging. These zoned properties can be extremely limited by local real estate zoning codes including setbacks, size limitations, etc. Successfully identifying an adequately zoned property for project development is a significant hurdle in the Regulated Cannabis Project Life Cycle.
Navigating the realm of zoning regulations for a Regulated Cannabis Project can be an extremely daunting task, and one that many owners, investors and developers underestimate. Zoning approvals real estate entitlements, and/or use-permitting can make or break a cannabis project development. While experienced real estate professionals will likely ensure that a contemplated project meets existing standards for local zoning requirements at the time of acquisition and planning, emerging industry professionals and investors may overlook this part of the process. This has become a primary challenge for the Regulated Cannabis Industry. In locations where the zoning and permitting process has not been comprehensively defined, the project team can attempt to work with local representatives to collaboratively establish regulatory language to guide future developments.
Gaining control of zoned properties that meet the requirements for regulated cannabis zoning and permitting authorization can be extremely valuable. When the highest-and-best use of a property can be determined for regulated cannabis, the value and cash-flow generationpotential may be significantly increased with a premium. While this can be extremely valuable, it also creates a significant amount of risk for an operator that is attempting to use a zoned property to complete zoning authorization and submit an application for a state-regulated cannabis license. While some operators can access the capital required to buy an adequately zoned property or pieces of real estate, most operators don’t have access to enough capital due to federal lending and banking restrictions. This means that most operators will need to gain control of the property without the ability to enter escrow or contractually secure rights to the property. Securing the right to operate a zoned property is typically a requirement to submit a state-level cannabis license application.
In addition to property identification, zoning authorization, and property control; a regulated cannabis operator may be required to obtain a local cannabis permit at the municipal or county level. Often these permits exist as a hybrid process between a conditional-use permit and a business license permit. Local cannabis business permits can be a required item for state-level application, compliance, and periodic cannabis license renewal. Intelligent and collaborative strategies for securing local development and business permits can significantly increase the potential value of a Regulated Cannabis Project.
Selection of Application Areas:
- Cultivation facility
- Manufacturing/Processing facility
- Lab Testing facility
- Distribution/Warehouse facility
- Retail Dispensary storefront
Property/Real Estate Requirements for most Complete Applications:
- Property identification – property zoning authorization – property control
- (Lease, Option, or Purchase) property permit issuance
If a Regulated Cannabis Project team can be successful in the beginning stages of the Cannabis Project Life Cycle, they may be lucky enough to be awarded one of the State Cannabis Licenses. In some states, these licenses are few-and far between, and can yield significant value for the operator. Licenses in some states such as Florida and New York, have been sold for tens of millions of dollars.
Real Estate Transaction
Following the receipt of a State Cannabis License, an operator must now move forward with completing all of the transactions that were contemplated and/or conditional as part of the Licensing application submittal and project preparations. These transactions include one of the most capital intensive stages of the Regulated Cannabis Project Life Cycle, the real estate transaction that could include property and equipment acquisition and/or securing capital financing instruments.
Real Estate Development
Once the State Cannabis License has been awarded and the real estate controlled, zoned, and permitted; the project team must move forward with implementing operational facility designs and development processes. This stage will include multiple interactions with 3rd party service providers, contractors, and local regulators in order to adequately secure building permits and completed facility construction and development. It is extremely important that any project team includes an internal or external advisor to help guide the process and avoid costly mistakes that can waste both capital and time.
Certificate of Occupancy
- Building + facility development or retrofit
- Utility permits, installation and/or retrofit
- Waste + environmental protocols
- Noise + odor mitigation
- Security installation + protocols
- Master plan for mid-long term expansion
Authority to Operate
- Implementation of safety protocols
- Implementation of standard operating procedures
- Implementation of operational maintenance program
- Implementation of corporate social responsibility program
- Creation of dashboard software to track project date