Cannabis legalization drives demand for warehousing and retail: study

Demand is increasing more dramatically in states where recreational use is legal

TRD NATIONAL /
Feb.February 16, 2020 09:00 AM
Real estate in states where cannabis use is legal is in high demand compared to states where use is illegal. (Credit: Pixabay)

Real estate in states where cannabis use is legal is in high demand compared to states where use is illegal. (Credit: Pixabay)

Green makes green, apparently.

Investors can’t get enough warehouse, retail, and land in states that have legalized recreational cannabis use, according to a National Association of Realtors study first reported by Yahoo Finance. NAR surveyed 600 commercial brokers across the country last fall for the study.

Generally, the study found that demand was higher for those property types in states that legalized before 2016 than states that legalized after 2016 and demand was higher in both those categories than in states where cannabis use is illegal.

Investors have poured money into real estate in states with legal recreational use. Some investment firms are opening offices and making moves in states where legalization seems on the horizon.

Warehousing is especially hot. It’s used both for storage and growing cannabis. Compared to 2017, last year demand increased for warehouse space in 42 percent of markets where recreational cannabis has been legal for more than three years — Colorado, Oregon, Washington, and Alaska.

Demand increased 34 percent in states that legalized cannabis post-2016. Demand in states without recreational legalization increased by 18 percent. Disparities in demand for land and retail storefronts between those states was less dramatic.

Katie Barthmaier, CEO of cannabis-focused real estate investment trust Green Acreage, said that higher values correlate with higher barriers for entry.

“It is very important to understand the supply and demand, and the regulatory dynamic, in each state. Focusing on states with higher barriers to entry makes a license more valuable and makes that real estate more valuable,” she said. [Yahoo Finance] — Dennis Lynch


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