Cannabis and Real Estate: How Legalizing Marijuana Opened Up Colorado Real Estate Market
When it used to take months or years to find a buyer for pieces of property in the state of Colorado, aspiring entrepreneurs are now gobbling up real estate properties in a bid to cash in on the growing legalized marijuana market.
Searching for Their Own “Pot of Gold”
And in Colorado, “pot” is the operative word. Since marijuana was legalized in the state early this year, real estate agents have been seeing buildings and residences being grabbed at prices much higher than their market rate.
The buyers or renters are usually investors looking to start an enterprise involving the production or sale of marijuana. This is despite the fact that banks will not issue any loans on property bought for the purpose of marijuana operations, since federal law still deems the drug, and its manufacture and sales, illegal. Investors are known to turn to other sources of funding, such as hard money loans.
Residences and Warehouses
Enterprising real estate investors have taken to converting warehouses into “cannabis greenhouses” and charging astounding rental rates per square foot. Upgrades include making structural changes to allow for the demand for increased power for grow lights, dryers, ventilation systems and air condition systems.
The rise in demand for Colorado real estate do not just stop with growers and manufacturers, but also with individuals out-of-state who may seriously consider a transfer to Colorado because they want to enjoy a lifestyle where they can enjoy recreational marijuana without any legal constraints. Real estate agents are offering “pot friendly” residences – houses with good ventilation and are far enough from neighbours and schools.
Changes in State Law
It was in the year 2012, when the citizens of Colorado voted for the legalization of marijuana for recreational use. This January 1, 2014, Colorado stores can legally sell marijuana for people aged 21 and above. The state of Washington also saw its own approval for legalized marijuana last 2012 but will start retailing the drug only this month, June 2014.
Other states are following suit. Alaska, Arizona, Ohio, Oregon and 7 other states are also making their own legal initiatives to pass laws that legalize the drug.
Although the sale of marijuana has been legalized, amendment 64 of the state law still provides local governments with the freedom to place restrictions on the sale. A considerable number of Colorado counties have decided to pass bans on recreational marijuana or have placed a temporary moratorium on marijuana-related enterprises.
In areas where sales of recreational marijuana are allowed, growers are still restricted to specific industrial zones. There are still also a handful of counties that allow existing marijuana shops to sell recreational pot but do not issue licenses to new businesses. Currently, the growth of recreational stores and manufacturers will be concentrated on Denver and Denver Country.