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What Real Estate Professionals Need to Know About Legal Cannabis

It doesn’t matter whether you voted for or against the legalization of cannabis in your area, or whether or not you believe it has medical benefits. Legal cannabis—both medical and recreational—is here to stay.

It doesn’t matter whether you voted for or against the legalization of cannabis in your area, or whether or not you believe it has medical benefits. Legal cannabis—both medical and recreational—is here to stay.

As the fastest growing industry in the country, legal cannabis is becoming a shared reality in more markets every day. Regardless of your area of real estate expertise or your real estate market, the impact of cannabis use and production will continue to reverberate throughout the real estate industry. And that impact is only set to increase with a growing number of states legalizing cannabis use for medical and recreational purposes.

Where is Cannabis Legal?

From legal and illegal grow operations and greenhouses to commercial dispensaries and buildings where residents use cannabis, the cannabis industry invariably intersects with real estate. And as the two sectors grow increasingly intertwined, the demand for both residential and commercial properties will grow as well.

While cannabis remains illegal under federal law, 36 states have passed laws providing for the legal use of medical cannabis. Leafly offers an up-to-date guide of which states have legalized recreational and medical cannabis, which ones only allow medical and which states have not legalized cannabis at all. .

What Real Estate Professionals Need to Know

When it comes to cannabis, real estate professionals don't know what they don't know—and what they don't know can be costly. For example:

  • Do you know the difference between a dispensary and a grow?
  • What about the difference between how a property is utilized to create edibles versus oils?
  • Are you aware of how a tenant growing cannabis will impact your utilities?
  • When you consider utilities, are you including water, waste removal and security?
  • Do you know the special leasing knowledge required when doing business with a cannabis client, whose industry requires distinct building, utility and security needs?
  • Are you aware of what vendors your cannabis tenant is utilizing? Are they qualified, educated and insured?

Whether you’re a broker, investor, asset manager, property manager or a facility and maintenance professional, you’re likely to face extensive challenges when buying, building, leasing to, maintaining or converting property that intersects with the cannabis industry. From the use of medical cannabis in multifamily residential buildings or the purchase of property for a grow house, to leasing to a recreational or medical facility or having to remediate an inherited property that once served as a cannabis facility, real estate professionals and the vendors they utilize are responsible for understanding and addressing every challenge.

What we have found in Colorado is that professional discussions around cannabis are still uncomfortable, and the information remains kept under a shroud.  We have also found that the specificity of this industry cannot be understood by reading an article or by attending a lunch. The information real estate professionals and vendors require is vast and ever-changing. That’s the reason for the National Real Estate and Cannabis (NREC) Summit, hosted by the IREM Greater Denver Chapter. The NREC Summit will provide understanding and education related to the complexity and challenges that surround the real estate and cannabis industries and the growing requirement of their coexistence.

IREM, CCIM, BOMA Metro Denver and the Colorado Association of REALTORS® agree that the discussion around the cannabis industry needs to start. They have reviewed the content of the NREC Summit and have joined the event as Association Partners, allowing all members, nationwide, to enjoy reduced registration costs. The Colorado Division of Real Estate has approved the event for 7 CE Credits.

About the Author
Daniel Murphy, CPM, CCIM, is 2019 president-elect of the IREM Greater Denver Chapter.


Great article! Thank you so much for sharing this very informative and worth reading blog.


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