Okay greenies, this is one that really hits home for me (pun intended). I recently had to move The Green Baker location. And you know moving… it’s already a pain in the ass. But when you add being a cannabis company to the mix things get even more complicated.
Cannabis and real estate are still struggling to work together. It’s just one more barrier to legitimately having a cannabis business that isn’t in the legacy market. This is especially true in states like Florida. And what are cannabis companies supposed to do? What are the options?
A Growing Demand
Over one-third of realtors are saying residential real estate inventory is tight thanks in part to the cannabis industry–specifically in those states where marjuana has been legalized. Similarly, over 30% of realtors in legal states have seen an increased demand for warehouses, 23% for storefronts, and between 18% to 28% increase in demand for land because of the cannabis industry.
There’s no doubt–cannabis companies are growing like crazy! And with that comes a growing demand for real estate. With that said, it’s still not easy for us small cannabis brands.
First, I had to get a hemp license to sell cannabis edibles. In our beautiful state of Florida you need to have a commercial kitchen to obtain this permit, so no making your brownies out of sweet old grandmother’s kitchen.
- First Option: Rent a Kitchen– Rental by the hour kitchens can cost anywhere from $100- $300 an hour and you’re sharing that space with other businesses that may or may not be cannabis-friendly.
- Second Option: Get Your Own– So let’s get our whole own kitchen, right? Well, a second-generation kitchen can cost from $2000-$5000 a month depending on its size. Oh, and did I mention each permit is $650 EACH! So you wanna do farmers markets? That’s $650! You want to sell to other businesses? That’s $650! You want to just sell to your customers that’s $650. Costs not associated with your kitchen rental begin to add up pretty quickly. So having access to well-priced and safe kitchen space could make or break your bottom line.
A Lingering Stigma
Unfortunately, when I was forced to look for new real estate, I was hit with so many no’s that I started to panic.
Once, I got told no because the location was near a school. For the record, there are no laws or regulations preventing cannabis companies from being near schools. Why should there be?
While opinions like these may be well-intentioned, the bottom line is–there’s a bad stigma surrounding the cannabis space. And real estate is just one more obstacle for cannabis companies like mine to overcome.
In fact, overcoming this deep rooted stigma remains one of the biggest challenges of the cannabis industry today. Successful businesses are forced to take warehouses, kitchens, spaces, etc that are less than ideal all because of perceived security risks. For example, some places have zoning laws that only allow cannabis companies to purchase real estate in very limited areas in certain industrial spaces.
This means it’s super common for us cannabis businesses to compete with each other over a few measly parcels of land.
It’s rough out there!
Financial Implications for a Small Business
Lack of real estate trickles down to the financials too. The cannabis industry is very dependent on real estate. Why? Because cannabis needs to be grown, processed, and sold. Without a physical space to do it, how can I have a business at all? Owning or leasing property is crucial for the financial success and growth of any cannabis business.
On top of that, since cannabis is still federally illegal, financial institutions can’t give loans to cannabis companies–despite the growing adoption of cannabis use and legalization throughout the country. Imagine trying to start a new business without taking out a loan from the bank? It’s hard as hell!
To get around this, most small cannabis businesses have to use tactics that aren’t in their best interest to get things going, like borrowing money from friends or dipping into their own personal savings. And if businesses can find a way around the bank loan barrier, they are still faced with a shit ton of other issues–like the daily management of money.
Imagine trying to pay bills without a business checking account. The cannabis industry has to deal in cash to get around problems like not being able to accept credit card payments, open bank accounts, or pay payroll taxes by check. But having to manage all that cash on a daily basis can attract some sketchy shit. So these companies often have to rely on–and pay for–armored trucks and armed security guards to transport and secure their money.
When Will the Cycle End?
The cycle continues–a cannabis company can’t get a location and can’t get access to funding thanks to banks not being able to give loans. Without real estate, the company has no way to make money to support its business. Then the company is forced to continue in the legacy market, or give up on their business altogether.
It’s a vicious ass cycle, isn’t it?
Waiting for Equity
Florida has a long way to go before we see true cannabis equity. We should look to states like California and Colorado as examples of what we could be doing better. California has generously permitted zones for cannabis businesses to occupy, and both states have implemented social equity programs in an effort to erase the stigma around cannabis.
If we want to see our cannabis market bloom in Florida, we should be taking notes from some of the first states to fully legalize it.
So yes, the struggle is hella real when it comes to real estate and the cannabis industry right now. But no matter the struggles, you can bet yo girl is going to keep pushing to provide quality products and education about the benefits of cannabis! The way I see it, that’s the only way shit is going to change. So stay tuned for my next phase cause I’m not done yet creating and making waves to educate and shine a light on the disparities within the cannabis industry here in the state.