The size and growth rate of both the Michigan medical and recreational cannabis industry can be intimidating to many people who want in on this financial success. Aside from the convoluted licensure processes, obtaining the right parcel of real estate can be an extremely difficult yet necessary task.

Maneuvering the variety of state and individual municipality rules and restrictions can prove impossible even for experienced commercial real estate brokers. Thus, Michigan Cannabis Properties (MCP) serves as an all-purpose service provider, from real estate purchase brokerage to working with its team of consultants to best sell your cannabis business, to connecting you with skilled Michigan cannabis attorneys to acquire licensure and service any cannabis business legal needs. Anyone interested in the Michigan cannabis industry should start their property search with Michigan Cannabis Properties.

Types of Cannabis Real Estate

Michigan Cannabis Properties currently offers an array of locally approved or conditionally approved real estate listings for uses including cultivation and processing, provisioning, and micro-business. Of these property types, the micro-business is the least popular among established cannabis industry players as it is restricted from selling its products to other marijuana retail centers, can only sell product directly to consumers, and owners of microbusinesses cannot own other MRTMA grower, processor, or retailer licenses. It remains a popular choice for those just getting into the business, however.

Michigan "Green Zones"

The most valuable type of cannabis related real estate is Michigan green zone property for sale. These properties exist in a minority of Michigan municipalities that have opted-in to approving marijuana establishments in that area of a city, township or village. The “green zone” is cannabis business slang for areas in a municipality that meet the zoning and setback requirements the municipality had adopted. It allows for that area of a municipality to be used for any of the marijuana business license types, from cultivation to processing and provisioning centers to safety compliance and secure transport facilities.

The experts at MCP keep their ears to the ground and know when a certain municipality or city is on the verge of approving a green zoned area. This results in MCP being able to search and discover viable listings in the area that will become ideal cultivation, processing, or provisioning centers once the municipality’s zoning ordinance is finalized and adopted. Keeping track of this data results in cannabis business owners who work with MCP having a considerable advantage over those who don't.

Cannabis real estate for sale in these green zones is valued as many as five times more than properties where the proposed cannabis business is contingent on the municipalities’ choice to opt-in to Michigan recreational cannabis. For certain Michigan dispensary properties in highly desirable areas, it can be as much as ten times the non-cannabis market rate. Unfortunately, most of the state's local municipalities have not opted-in and so are not open to recreational cannabis, making it all the more essential to use the expertise of Michigan Cannabis Properties when seeking real estate for any cannabis operation.

Cultivation and Processing Centers

These are generally larger facilities or plots in a more remote general locations or in industrial areas of more densely populated cities. Similar to dispensaries, cultivation real estate listings generally sell at a significant premium, but not quite the 5x premium we see for dispensary properties. Many of these properties are already approved for their uses as marijuana cultivation and or processing and are just waiting for the right business owner to take over the operation. Some municipalities have begun incentivizing business owners to vertically integrate their operations by providing exceptions to the dispensary caps.

These vertical integration facilities can be a blessing and a curse depending on the type of marijuana business you operate. A large-scale entity, medical, recreational, or both, that controls cultivation, processing, and provisioning centers may jump at the opportunity to acquire listings that allow for vertical integration. This means the entity could bring all of its operations under one roof, from the growing, processing, and selling of products to perhaps even the establishment of a consumption area.

However, if your cannabis business is just one aspect of the industry process, i.e., just a cultivator or just a processing center, the requirement of vertical integration on certain real estate may restrict what cannabis listings are available to you. Requirements like these are further proof that the expertise of MCP is crucial when looking for the right cannabis real estate for your business.

Provisioning Centers or Dispensaries

An MMFLA “provisioning center”, or MRTMA “retailer” are the retail stores of the cannabis industry, generally referred to as dispensaries, which, like traditional real estate, results in the location of these centers being the most important factor in choosing the right one.

Industry data reflects that a dispensary for sale in a dense city center like Royal Oak or Ferndale, which is rare given green zoning restrictions and limited number of available licenses though is increasing in occurrence as more municipalities opt-in, can be worth millions of dollars more than one listed in a distant sparsely populated suburb. The agents of MCP know the dispensary market and are able to assist business owners with either purchasing, leasing or selling one for top dollar.

Micro-business

The cannabis micro-business model is possible in theory, where one small operation cultivates, processes, and retails its products directly to consumers. Unfortunately, the cannabis micro-businesses of Michigan do not enjoy the same legal protections and privileges afforded to industries like the Michigan microbreweries. The largest difference is that MI microbreweries may sell directly to consumers and to other spirit retailers alike, whereas cannabis microbusinesses are only allowed to sell directly to consumers, severely limiting their growth capacity. Owners are also limited to just one microbusiness, meaning they cannot own a chain of microbusinesses.

Thus, many entrepreneurs seeking to start marijuana micro-businesses are running into much better funded competition for the limited cannabis real estate available where zoning for microbusinesses overlaps with dispensary or cultivation zoning. This leads to the premium for these properties being the same as the premium for dispensaries, which can have the affect of making certain properties uneconomical for microbusiness operations.

Capped and Uncapped Licensing

In addition to restricting the location of a marijuana business via green zoning, most municipalities also impose strict caps on the number of a certain type of license they will issue. By limiting the total supply of a certain type of license, a mad dash is created where marijuana business owners scramble to acquire property and get that license before the cap is reached. Alternatively, this can create scenarios where dozens of potential licensees are going after only a couple of licenses, resulting in a highly competitive municipal application process. Of course, in either scenario, capping licenses has an effect on the value of cannabis real estate.

Uncapped Licensing Effects

Some regions find that they are prime locations for certain types of marijuana business operations and may determine the best option is to leave certain license types uncapped. This results in marijuana real estate intended for that type of licensed use actually being devalued compared to capped markets as there is no competition for a limited number of licenses. However, they still receive a premium compared to the non-cannabis market price of the property. It is not very common that a municipality will choose to leave dispensary licenses uncapped as they wish to assert as much control over marijuana in their community as possible, but it is fairly common for other license types.

Capped Licensing Effects

The municipality may choose which type of license to cap. If an area has a small dense population but is then surrounded by rural land, it can choose to limit the number of dispensary licenses issued but allow a great number of cultivator licenses to be issued a distance away from its population. In such a situation, the very limited supply of dispensary licenses will somewhat artificially drive the value of provisioning center listings sky-high as many business owners will be seeking to purchase them quickly and apply for a license. Once an area has reached its cap, however, the green zoned “premium” all but disappears.

However, it is not always immediately apparent that a license cap has been reached in a certain municipality. This can ruin a cannabis real estate purchase in process, if the purchaser were to discover that the license cap for their intended use had been reached, they would almost certainly want to terminate the purchase agreement or lease. This is because the property they are about to purchase is now likely worth a fraction of what it was prior to the license cap being reached. Situations like these are exactly why the expertise of MCP agents is so crucial when finding the very best location for your cannabis business.

Conclusion

Navigating any real estate market is difficult, when you add the restrictions and regulations placed upon cannabis real estate, many find the task becomes impossible. If you find yourself feeling overwhelmed at the thought of finding the right property for your cannabis business, the best choice you can make is to contact an agent at Michigan Cannabis Properties to guide you through the process.

Choosing the Right Location for Your Cannabis Business