Advisory Services Overview

Zoned Properties offers clients advisory services related to Real Estate Development, Project & Facility Development, and Sustainable Development. Our team of experiences professionals assists clients with navigating an extremely complex and high-risk process of developing a project in the Regulated Cannabis Industry.

 

Regulated Cannabis Project Life Cycle

The Regulated Cannabis Project Life Cycle outlines the process that all Clients will go through when developing a Regulated Cannabis Project. Each Stage describes a required element to bring a project from Concept to Cash-flow. The Project Life Cycle will navigate a Client all the way from Pre-Legislation to Post-Profit, and provides an overview of the Timeline, Funding, and Action Items that will challenge a Regulated Cannabis Project.

Stage One Legislation Adopted

Regulated Cannabis Legislation (Medicinal & Adult-Use) has been gaining significant support on a state-by-state basis over the past decade. 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.

Stage Two Regulations Adopted

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 have been development under the authority of either the State Department of Health Services or the State Department of Administration and Finance. 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.

Stage Three Property Identification

The Real Estate/Zoned Property is at the epicenter of any Regulated Cannabis Project. Almost every regulatory & compliance elementrelated to a Regulated Cannabis Operation (Cultivation, Manufacturing, Distribution, Laboratories, or Retail)depends upon the Real Estate/Property/Facility (i.e. Requirement to storeproduct in a secured location).Finding a property that meets the needs of the contemplated operation AND meets the requirements of all municipal & state regulations can be extremely challenging. These zoned properties can be few and far between. Successfully identifying an adequately zoned property for project development is a significant hurdle in the project life cycle.

Stage Four Property Zoning

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.

Stage Five Property Control

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.

Stage Six Property Permit

In addition to property identification, zoning authorization, and property control, a regulated cannabis operator may be required to obtain a local cannabispermit 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.

Stage Seven License Submittal

Selection of Application Area:

  • Cultivation facility – Manufacturing/Processing facility – Lab testing facility – Distribution
  • warehouse facility – Wholesale/Retail sales dispensary storefront

Property/Real Estate Requirements for Complete Application: (Will likely require)

  • Property identification – property zoning authorization – property control
  • (Lease, Option, or Purchase) property permit issuance

Stage Eight License Award

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.

Stage Nine 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.

Stage Ten 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 planning. This process 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.

Stage Eleven 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

Stage Twelve 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