Landlords are the Winners in Pot’s Booming Business

Cannabis legalization has seen—to the chagrin of drug warriors at the state and local level—upticks in tax revenue, tourism and local economics, and a steady decrescendo of use among youth. But the people benefiting most from legal cannabis—to the chagrin of folks hoping to break into the newly legal industry—are landlords. Because most cannabis farming is done indoors, massive amounts of warehouse space have to be rented. What’s more, most landlords are still wary of the cannabis industry, so the ones who are willing to rent to cannabis businesses can charge multiple times the market value, which cuts smaller entrepreneurs out.

San Diego

San Diego is one of many California cities that will likely see a booming cannabis trade as recreational sales in the state reach cruising altitude. According to cannabis industry research firm BDS Analytics, cannabis sales in the Golden State are set to surpass beer sales in 2019: Weed is expected to bring in $5.1 billion next year, as beer sales are expected to remain steady at $5 billion. Though some landlords aren’t willing to assume the risk, for Chris Ly, director of alternative investments at the San Diego–based McKinney Capital and Advisory, the profit margins possible are too great to ignore. “There have been no federal raids or forfeitures in four years,” Ly told Our City: San Diego of his company’s willingness to take on cannabis investments. “There is always the potential that something catastrophic could happen. But the worst-case scenario for us is that we have to rent to non-cannabis tenants at market rates, instead of two to three times that.”

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By | 2018-09-08T15:32:13+00:00 August 10th, 2018|News|