Michael Walters, executive managing director, corporate services group, NAI James E. Hanson, Teterboro, NJ
TETERBORO, NJ—The rising use of medical marijuana, a burgeoning trend to legalization of recreational use of marijuana, and the legality of non-hallucinogenic hemp-derived cannabinol oils, or CBD, for consumer use are opening up opportunities in the retail market, but state and local regulations are still tricky to navigate, according to Michael Walters, executive managing director of NAI James E. Hanson's Corporate Services Group.
Walters recently represented Fort Collins, CO-based Palm Organix, which sells premium, pharmaceutical grade CBD products, made from organically grown, industrial hemp in the location of a story in New York state, and he says New Jersey rules are challenging, too.
You can listen to our exclusive audio interview with Michael Walters in the player below. If you don't see a player below, you can click here to listen to the interview.
|“Changes to laws and regulations surrounding CBD have made it one of the hottest retail offerings on the market today. However, misconceptions and confusing rules surrounding the usage of retail space for CBD distributors have made it difficult for them to open brick and mortar stores in the tri-state area,” says Walters. “Therefore, it has been vital for these types of operators to work with a brokerage team that has both deep experience in negotiating and advising on leases for a wide range of property types and the required knowledge to provide strategic counsel to clients on this challenging process.”
For example, Paramus, NJ, does not allow sale of cannabis related products, Walters says. “That's unfortunate, certainly, with all the malls in Paramus,” he says.
National greeting card retailer Hallmark will not allow franchisees of its Crown stores to stock CBD-related products, which are legal nationally and used as homeopathic treatments for a variety of conditions, Walters says. Retailers need to know if their franchise agreements contain any such restrictions before they commit to the product line.
Retailers looking for locations for stores that stock CBD products should explore opportunities with landlords that own multiple malls nationally, Walters says.
“Contrarily you may find a one off landlord who doesn't have a strong opinion and wants to lease space, and then it becomes the process of ferreting out the landlords that will be receptive, and finding the municipalities that are receptive to it,” he says.
While it is still premature for retailers interested in legal recreational marijuana, which does not appear likely to be approved in New Jersey before the fall, retailers of CBD products are actively looking for locations in the Garden State, Walters says.
“We spend a lot of time talking about demographics. We spend a lot of time talking about whether a kiosk is is appropriate or a full-blown store is appropriate,” he says. “So you start out with, A, is it legal in the town you're working on, B, next is working the landlords, and it just takes legwork and knowledge and then the biggest one is, how do you get the customer with the disposable income to spend on it and how do you position yourself in those areas?”
Walters thinks legalization of recreational marijuana sales in New Jersey will only increase the pressure on an already tight industrial property market. Industrial property space is needed for cultivation of marijuana for both medicinal and recreational use.
“I've even seen some landlords quoting rates for cannabis in the future going forward at 25 to 40 percent above current asking rate,” he says. “It's going to have a big impact on New Jersey, it's going to be interesting, with our very low vacancy in industrial right now. Any available site, people are going to scramble to build as much as they can, because even with the cost of construction this is going to be a very lucrative industry for landlords.”
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Steve Lubetkin
Steve Lubetkin is the New Jersey and Philadelphia editor for GlobeSt.com. He is currently filling in covering Chicago and Midwest markets until a new permanent editor is named. He previously filled in covering Atlanta. Steve’s journalism background includes print and broadcast reporting for NJ news organizations. His audio and video work for GlobeSt.com has been honored by the Garden State Journalists Association, and he has also been recognized for video by the New Jersey Chapter of the Society of Professional Journalists. He has produced audio podcasts on CRE topics for the NAR Commercial Division and the CCIM Institute. Steve has also served (from August 2017 to March 2018) as national broadcast news correspondent for CEOReport.com, a news website focused on practical advice for senior executives in small- and medium-sized companies. Steve also reports on-camera and covers conferences for NJSpotlight.com, a public policy news coverage website focused on New Jersey government and industry; and for clients of StateBroadcastNews.com, a division of The Lubetkin Media Companies LLC. Steve has been the computer columnist for the Jewish Community Voice of Southern New Jersey, since 1996. Steve is co-author, with Toronto-based podcasting pioneer Donna Papacosta, of the book, The Business of Podcasting: How to Take Your Podcasting Passion from the Personal to the Professional. You can email Steve at [email protected].
