The Canna RE Group has been active in New Jersey cannabis real estate for two years. They have represented multiple licensed cannabis cultivators, manufacturers, and retail dispensaries.
The Canna RE Group believes that the commercial cannabis real estate market has begun to “slow and right-size” as the cannabis market sector sees a “correction” in the marketplace.
Unfortunately, the United States has seen a lot of turmoil in the economy in the last year in the wake of COVID inflation and bank troubles. A mild recession was inevitable to stop it.
NJ Cannabis Real Estate Issues
This correction has produced two inconvenient truths.
In 2022, knowing property demand would be strong, property owners and their representatives promoted artificially inflated asking prices for renting and buying New Jersey cannabis real estate based on the unqualified assumption that operators would pay “premium prices” for quality commercial cannabis real estate property.
Cannabis real estate is rare because most New Jersey towns do not allow cannabis companies to operate within their boundaries. Overall, they wield enormous power in the process. Those that do only allow them in certain Green Zones where cannabis companies are allowed. In many towns, they are quite small. Many suburban towns restrict them to state highways and manufacturing/warehouse districts.
In 2023, demand for cannabis real estate has slowed significantly. Most pragmatic industry participants, such as operators and vendors, have learned that many new cannabis licensees do not have the capital resources or simply put money to open their proposed businesses.
It has become difficult for most small cannabis business people to pay such prices. That is an additional burden on top of paying a high monthly rent and waiting for an unknown number of months from the NJ Cannabis Regulatory Commission and the towns. Then one usually has to remodel a space they do not even own.
Thus, the cost of opening a dispensary to a large-scale cannabis manufacturer and cultivation can range from a low of $500,000 for a savvy political bootstrapper. On the high-end, cannabis industry experts say it takes $10,000,000 before profit is seen.
Some serial businesspeople and those with helpful networks are managing to get by. They are starting to open up slowly, with more expected every season.
Canna RE Group Solutions
So the Canna RE Group continues securing commercial real estate solutions for its New Jersey cultivation and manufacturing clients. They are based in Denver, Colorado.
The Managing Partner is Bill Betts. He believes we will see the growth of a more qualified, experienced retail dispensary tenant/buyer base. It will absorb space at reasonable price expectations as we advance.
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