axxis real estate llc/
November 14, 2023
The legalization of adult-use cannabis in New York through the Marijuana Regulation and Taxation Act (MRTA) has revolutionized the commercial real estate sector, ushering in what many are calling a ‘green rush’. However, for prospective cannabis business owners, this burgeoning market is fraught with unique challenges and nuances, especially within the complex New York real estate landscape. This blog post delves into these complexities, offering insights into navigating the real estate requirements of the MRTA.
Understanding the MRTA’s Real Estate Requirements
A critical aspect of the MRTA is its stipulation that applicants for cannabis licenses must show ownership or contractual possession of their operational sites for the first two years. This requirement spans all license types, from cultivation to retail, placing considerable pressure on applicants to find suitable real estate.
Misconceptions in the Market
Contrary to some reports suggesting skyrocketing leasing rates and landlord hesitance, the real picture is more nuanced. Many landlords are hesitant to lease to cannabis businesses, not due to the nature of the business, but because of federal restrictions tied to their mortgage agreements with federally insured banks, which often prohibit leasing to businesses involved in federally illegal activities.
The Practical Reality
Interestingly, the pandemic’s impact on New York’s retail real estate market has opened doors for cannabis businesses. Landlords, struggling with vacancies, are increasingly considering cannabis tenants, especially those not constrained by traditional mortgage terms. Cannabis businesses, with their potential for high foot traffic and economic benefits, are seen as attractive tenants in this scenario.
The Role of Commercial Landlords and Real Estate Brokers
In this context, the role of real estate brokers knowledgeable about the cannabis industry becomes crucial. They can facilitate connections between cannabis businesses and compliant landlords, saving time and resources and navigating the complex legal landscape.
However, the road is not without bumps. The requirement for an executed lease upon application filing forces applicants to shoulder significant financial risks without any licensing guarantees. Moreover, the MRTA’s setback requirements from schools and churches in densely populated areas like Manhattan limit available real estate options.
The Race for Compliant Real Estate
In New York’s dense urban environment, securing compliant real estate is a competitive endeavor. Specialty brokers are emerging, focusing on the unique real estate needs of the cannabis industry. Local laws and the possibility of municipalities opting out of hosting retail dispensaries or consumption lounges add another layer of complexity.
A Strategic Approach
For prospective cannabis licensees, a strategic approach is vital. While areas like Manhattan pose significant challenges in terms of compliance and cost, regions like Long Island, Queens, Brooklyn, and Westchester offer more opportunities with vacant strip malls and office complexes. Engaging with local communities to foster cannabis-friendly zoning regulations is also a strategic move.
Navigating New York’s real estate market for cannabis businesses is a complex but not insurmountable challenge. The interplay of federal regulations, local zoning laws, and market competitiveness demands a well-informed and adaptable approach. With the right strategy and guidance, finding suitable real estate for cannabis businesses in New York is achievable and can unlock immense opportunities in this growing industry. As the market evolves, staying informed and adaptable is key to success.