Risky Business: Marijuana Real Estate Boom Or Bust?
The Denver Post recently did a story on how cannabis businesses are having to pay sky-high rents nationwide. In Portland, for instance, commercial real estate that typically rents for five dollars per square foot goes for three times that amount for cannabis businesses. Though rents for cannabis businesses in Washington and Colorado are stable, they are considerably higher than the lease rates for any other business, and real estate investors looking to lease to cannabis businesses are mostly betting this trend will continue.
Several things are pushing up cannabis rents, all of which decrease the available supply of cannabis real estate. The vast majority of commercial real estate mortgages contain a clause mandating that the property be used lawfully, but because marijuana remains federally illegal, a property with a cannabis business on it is not operating legally. This illegality entitles banks that hold the mortgage to deem their loan in default and to...
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