Wednesday, September 30, 2020
Cannabis, Code, Confusion, and Constraint

Photography by Matthew Bourgeois

Cannabis, Code, Confusion, and Constraint

So much is up in the air in the Maine cannabis real estate market. There is no denying that the Maine cannabis program is complex. Licenses to cultivate, process, or sell medical or recreational cannabis are typically tied to a specific piece of property, making due diligence crucial. Navigating the intricacies of zoning, caps, buffers, opt-ins/opt-outs, licensing, and moratoriums is essential.  

 

Maine has taken the approach to let local towns hammer out their own guidelines, which is great, but since there is no exact formula, this can be daunting to a prospective renter or buyer. Most states, cities, and towns limit where marijuana businesses can operate, and buffers and local zoning laws can significantly restrict location options. Finding a state and locally compliant location for a cannabis business can be difficult, especially when navigating local code enforcement offices. In my experience, it has not been uncommon to be given false or misleading information from cities and towns. It is disconcerting to call a town and be told that my prospective property is in an appropriate zone for a medical or recreational retail cannabis business, only to later find out that a moratorium is in place. This is frightening, as business owners and investors have great financial stakes based on the information provided to them by their town governments. When you can’t rely on your local government offices to provide accurate information when asking all the appropriate questions, your job becomes much more difficult and could potentially lead to a financial catastrophe.

 

Working with municipalities where zoning laws and community leaders strongly support the development of cannabis businesses can make all the difference. Just because a city or town has decided to opt in does not mean the locality is supportive of cannabis development. This has become clear in cities like Portland. Other towns, like Turner for instance, directed me to their website where I could find a cannabis checklist and offered services from a town employee who could help a potential buyer/tenant navigate the process. Although this was at the cost of the buyer/tenant, it was still much cheaper than hiring an attorney, and I had a very informative and productive conversation with the Turner Code Enforcement Officer. It goes to show that if a town with roughly 6,000 residents and a conservative budget can successfully navigate and endorse the will of Mainers, Portland — with a population more than 10 times that — should certainly be able to do the same. I sat at a Portland board meeting one evening and watched a member of the board resign because they simply couldn’t get on board with the will of the town’s people. This is no longer about personal views regarding the morality of marijuana.    

 

Stigma not only exists within city and town governments but also among local commercial property owners. I’m shocked when I speak to a listing broker and they express that the owner is morally opposed to allowing a cannabis business to operate in their property. A cannabis tenant has more to lose than most, with licensing that is time-consuming, expensive, and highly sought after. Deep pockets are required. I’ve heard stories from clients that the rate per square foot happened to double when the property owner learned that the space was going to be used for a cannabis business. We may see some changes in the moral compasses of these owners whose once sought after commercial space remains vacant. Some sort of change in attitudes toward cannabis is necessary, but it seems to be happening as slowly as implementation of the legalization law…

 

The commercial real estate market has taken a hit with COVID-19, changing retail and office markets as we know them. Landlords may come to depend on cannabis dispensaries to fill their vacant retail spaces, cannabis cultivators to fill their vacant warehouses, cannabis producers to fill their vacant commercial kitchens, and cannabis distributors to fill their vacant office spaces. One thing is certain: after the smoke clears, cannabis will be driving the markets.