Since New York State legalized recreational marijuana in March, operators have been rushing to set up shop. And brokerages have been trying to capitalize.
One, RIPCO Real Estate, has set up a team focusing on representing tenants and landlords looking to lease space for recreational and medicinal marijuana sales throughout New York, New Jersey and Connecticut. The brokerage so far has 35 clients in the cannabis sector who have taken a collective 125,000 square feet across the tri-state area.
“We know of every lot and block that is zoned for cannabis in New Jersey currently, and we’re digging that up from New York now,” said Colby Piper, RIPCO’s director of cannabis real estate. “Connecticut just came online.”
Though it has been almost a year since New York state passed a law to create a legal cannabis industry, some regulations surrounding zoning remain up in the air. In many areas, potential operators are still waiting to see where they can open a store or lounge.
Some regulations are certain: Like tobacco stores, marijuana retailers cannot be within 500 feet of a school or house of worship.
“There is a very, very high influx of cannabis operators looking for space in Manhattan,” Piper said. “And as soon as the regs come out, the interest will increase, obviously, like it did in New Jersey, by three to five times.”
However, not every landlord is equipped to house a marijuana retailer. Because federal law still prohibits the sale of marijuana, properties with federally chartered loans and mortgages can’t rent to dispensaries.
RIPCO’s team is pitching a workaround — connections with banks and private equity lenders offering refinancing that allows landlords to rent space to such tenants.
Still, many landlords remain cautious about leasing to a dispensary or lounge. Eric Fisher, a retail broker at RIPCO, thinks that will change.
“Once the first wave of retail opens up, some of these older-school heads can see the success and the quality,” Fisher said.