Cannabis usage is officially legal in California—and demand is high for real estate to support the new industry, from retail dispensaries to industrial growing facilities. While there are ample opportunities in the space, there are also challenges ahead. Regulations and licensing guidelines are still being determined, and Jeff Rinkov, president and CEO of Lee & Associates, says that the first six months will be like the Wild West. We sat down with Rinkov for an exclusive interview about the new space and how it will impact the real estate market.
GlobeSt.com: Cannabis legalization is officially legal in California. It is early, but what are your expectations for the market this year?
Jeff Rinkov: The demand is tremendous for cannabis real estate, and it is going to be a little bit overwhelming. It is going to be the Wild West. It is going to be an absolute may lay from January to June until the city or the county or the state gets a hold of it. The problem is that there are no resources to manage a completely new multimillion-dollar industry. We are going to try to manage it with the same staff and the same business licensing process and the same taxation laws.
GlobeSt.com: Which areas of Los Angeles are seeing the most activity?
Rinkov: The cities that have gotten out in front of it and created overlay zones, like Long Beach, are going to have the most success. We have seen property values increase three-fold in Long Beach. I think that you will continue to see that.
GlobeSt.com: How is legalization going to impact the commercial real estate market?
Rinkov: From a commercial real estate standpoint, I think that landlords that accept that use are going to be huge beneficiaries. Cities that accept the use will see great tax revenue, and I think there is going to be huge demand. I think that L.A. just adopted their plan for cultivation and for retail dispensaries. I think it is going to be huge. The usage of cannabis product in California will be larger than all other states that have legalized recreational marijuana combined.
GlobeSt.com: Are there still concerns about working in this space with Federal legalization seemingly far away?
Rinkov: We are getting advice from our counsel that says to represent tenants but not to draft the leases. They say: let attorneys draft the leases because with the legal ambiguity between federal and state, you really don't want to be part of it.
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Kelsi Maree Borland
