Hurdles in the Cannabis Industry Slow Progress

Learn about some of the obstacles posed against operators in the cannabis business.

When California legalized recreational marijuana use, many in the industry expected a rapid expansion of the market.  Unfortunately, they were soon saddled with obstacles that impeded their growth.  As your commercial realty advisors and cannabis real estate experts, we report some of the major hurdles facing those in the cannabis business.

The major roadblock for those in and cannabis industry are local regulations.  While California state has legalized recreational marijuana use, cities have been banning dispensaries or creating strict regulations to limit where cannabis businesses can open.  Additionally, high taxes placed on licensed operators, a drawn out and expensive regulatory process, and an unregulated black market have all created major hurdles for legitimate businesses looking to gain from the legalization.

To make matters worse, the federal government still classifies cannabis as an illegal substance.  This results in many banks and financial institutions refusing to lend to cannabis operators.  Marijuana’s tenuous legal status also presents a serious risk for commercial and industrial property owners, making them less likely to rent to cannabis tenants.  When landowners do agree to rent to cannabis operators, the cost is usually staggering.  For instance, some landlords require up to six months rent up front as a security deposit.

Despite these setbacks and obstacles that hinder the cannabis industry’s growth, experts still predict that marijuana will become a major economic factor in the state.  While it will take time and a considerable amount of investment to get business operations up and running, operators should see a major return on investment over time.

As your commercial realty advisors and cannabis real estate experts, we can keep you up to date with the latest news and assist you with all your commercial and industrial real estate needs.  To speak to a member of our highly-experienced team, contact us at California Commercial Realty Advisors, Inc. today.

Leave A Comment