One thousand investors attended the Marijuana Investor Summit in Denver earlier this year. Considering Colorado is just one of more than 20 states that have legalized cannabis in some form, the Rocky Mountain High experience is sure to be replicated in many other places.
One entrepreneur alone who attended the Denver pot summit, former video game producer Dooma Wendschuh, who is now producing marijuana extracts that can be used in edibles and vaporizers, says he received millions of dollars of unsolicited offers from investors aiming to capitalize on the fast-growing weed business.
Why not? Sales of legal marijuana for medicinal and recreational use rocketed from $1.5 billion during 2013 to $2.7 billion in 2014. Next year, voters in at least six more states will head to the polls to render their verdicts as to whether pot should be legalized in their states, whether as medicine or just good fun. Surely some of those states will say “yea.” Surely more states will follow with more cannabis campaigns. Surely states that have legalized the herb as medicine will follow through and lift restrictions for recreational use as well.
Surely that is a contributing factor as to why Troy Dayton, CEO of the ArcView Group, an investment and research firm, was recently quoted in the business press crowing: “There is going to be a massive, massive market.”
Of course, it already is. The top cash crop in the United States, weighing in at $36 billion annually, is marijuana, easily outdistancing second place corn at $23 billion and third place soybeans at $17 billion. Those numbers are a bit dated, an average value from 2003–2005, as calculated by DrugScience.org, an organization promoting the reform of cannabis laws. They could be smoking the drapes, for all I know, but no one disputes pot is a huge cash crop, the vast majority of which is conducting commerce afoul of the law.
With legalization spreading across the country, those fields of gooey buds are yet another option for investors in both farmland and industrial real estate (not to mention startup companies that package and merchandise the stuff, and tech companies finding new growing techniques and uses for the herb suspected of being a key component smoked in Native Americans’ famous peace pipe. Biotech companies are reportedly working to isolate certain active ingredients that can be turned into treatments to ameliorate ailments as devastating as diabetes.) That helps explain why there are about 300 publicly traded companies in the cannabis business.
All of this commerce naturally has a real estate component, from retail storefronts and laboratory space, to warehouses and farmland. Since marijuana was legalized in Colorado, there has been an “unprecedented demand” for warehouse space in Denver because Colorado law requires all pot growing be done indoors.
T.J. Smith, a principal at Colliers, was quoted in the Denver Business Journal stating: “Investment demand is as high as it’s ever been for industrial properties. Even the vanilla warehouse market is on fire.”
Denver’s present warehouse vacancy rate is less than 5 percent.
The Denver Chamber of Commerce estimates these legal marijuana operations will consume 1.5 million to 3 million square feet of commercially zoned warehouse space in industrial areas around Denver.
When it comes to real estate in states that have legalized marijuana, where there is smoke, there is likely to be property on fire.
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