IRVINE, CA—Both the industrial and retail markets stand to gain from marijuana's legalization, but one of the big constraints is the drug's continued illegality at the federal level, Ten-X's senior quantitative strategist Chris Muoio tells GlobeSt.com. Given that this issue is on the California ballot today, we spoke exclusively with Muoio about how legalization would impact the industrial market in states that vote to do so.

GlobeSt.com: How will the legalization of marijuana in some states impact the industrial market in those states?

Muoio: Marijuana legalization will be a boost to industrial absorption in the states that legalize it. Growing at scale requires a lot of space with a consistent climate, which is a need that is perfectly met by large warehouse space. Additionally, the budding edibles business that has sprung up following legalization uses industrial space for packaging and distribution. Right now, industrial space is even used for cash storage, as this business does not currently have access to the banking system.

GlobeSt.com: What other CRE ramifications does this legislation change potentially have?
Muoio: Legalization would also be a boost to the retail sector, which could desperately use a catalyst to demand. Marijuana shops could proliferate similar to liquor stores, providing a boost to absorption in the retail sector and helping to lower vacancies and drive rents. It will also be interesting to see if some sort of “pot tourism” springs up similar to Kentucky's Bourbon Trail or visiting vineyards in Napa Valley, but it is hard to speculate as to where that would take off.

GlobeSt.com: How will markets that legalize marijuana compare to markets that don't?
Muoio: Well, the relative performance of the local economies will still be the primary differentiator between CRE markets performance. However, the markets that legalize it are providing their industrial and retail markets with an additional catalyst to drive absorption and fundamentals that should be fairly agnostic to economic cycles as it is in a secular growth phase. Additionally, some of these markets could establish themselves as marijuana tourist destinations similar to Kentucky's Bourbon Trail or Napa's Vineyards, providing a boost to their hospitality industries and hotel operators.

GlobeSt.com: What else should our readers know about this topic?
Muoio: One of the big constraints still facing the marijuana industry is that while it is legal at the state level, it's illegality at the federal level has resulted in the financial industry shuttering access to it. This has left the space struggling to find banking solutions and operating underground or highly in cash. This lack of banking/finance is going to be a constraint on scaling these operations past a certain point and is something that should be addressed.

IRVINE, CA—Both the industrial and retail markets stand to gain from marijuana's legalization, but one of the big constraints is the drug's continued illegality at the federal level, Ten-X's senior quantitative strategist Chris Muoio tells GlobeSt.com. Given that this issue is on the California ballot today, we spoke exclusively with Muoio about how legalization would impact the industrial market in states that vote to do so.

GlobeSt.com: How will the legalization of marijuana in some states impact the industrial market in those states?

Muoio: Marijuana legalization will be a boost to industrial absorption in the states that legalize it. Growing at scale requires a lot of space with a consistent climate, which is a need that is perfectly met by large warehouse space. Additionally, the budding edibles business that has sprung up following legalization uses industrial space for packaging and distribution. Right now, industrial space is even used for cash storage, as this business does not currently have access to the banking system.

GlobeSt.com: What other CRE ramifications does this legislation change potentially have?
Muoio: Legalization would also be a boost to the retail sector, which could desperately use a catalyst to demand. Marijuana shops could proliferate similar to liquor stores, providing a boost to absorption in the retail sector and helping to lower vacancies and drive rents. It will also be interesting to see if some sort of “pot tourism” springs up similar to Kentucky's Bourbon Trail or visiting vineyards in Napa Valley, but it is hard to speculate as to where that would take off.

GlobeSt.com: How will markets that legalize marijuana compare to markets that don't?
Muoio: Well, the relative performance of the local economies will still be the primary differentiator between CRE markets performance. However, the markets that legalize it are providing their industrial and retail markets with an additional catalyst to drive absorption and fundamentals that should be fairly agnostic to economic cycles as it is in a secular growth phase. Additionally, some of these markets could establish themselves as marijuana tourist destinations similar to Kentucky's Bourbon Trail or Napa's Vineyards, providing a boost to their hospitality industries and hotel operators.

GlobeSt.com: What else should our readers know about this topic?
Muoio: One of the big constraints still facing the marijuana industry is that while it is legal at the state level, it's illegality at the federal level has resulted in the financial industry shuttering access to it. This has left the space struggling to find banking solutions and operating underground or highly in cash. This lack of banking/finance is going to be a constraint on scaling these operations past a certain point and is something that should be addressed.