We should see more and more articles touting the advantages of the marijuana trade becoming legalized – real estate sales, tax revenue, and jobs. While it sounds like something only for those desert towns now, let’s note that it’s a world-wide opportunity – the broker says he had buyers fly in from Germany!
http://www.latimes.com/local/la-me-marijuana-cultivation-20160510-story.html
Carlos Bravo, the owner of a tow company here, was at work late last year when a real estate agent came to him offering half a million dollars for 5 acres of undeveloped, brush-pocked desert — five times what he’d paid for the land six months earlier.
“I thought he was joking,” Bravo said.
The man came back the next day, making it clear he was not.
A few days after he had signed the paperwork, Bravo said, another man offered him $1 million.
As the first city in Southern California to legalize large-scale medical marijuana cultivation, Desert Hot Springs has been inundated by marijuana growers and developers. They are buying up dusty desert land — some with no utilities or roads — in hopes of cashing in as California’s marijuana growers come into the open under new state regulations.
“It’s pretty chaotic,” said Coachella Valley real estate broker Marc Robinson. “I’m getting tons of calls from all over the world, all over the United States. My newest clients flew over from Germany.”
Despite a sizable need for new infrastructure to support the indoor growing projects, the rush has officials in this downtrodden town dreaming of new income.
“I can only imagine what we can do with the tax revenue,” Mayor Scott Matas said. “We’re in need of parks, our roads are dilapidated. All around — our sidewalks, curbs, gutters.”
The city is pushing hard to help developers get their projects up and running as it increasingly faces competition from a number of desert cities also eager to bring growers to town.
Read full article here:
http://www.latimes.com/local/la-me-marijuana-cultivation-20160510-story.html
Colorado warehouse space went from 2sqft to 6sqft overnight. Two year’s later it’s pushing to 8sqft if you can find it. Anything remotely “green” friendly (sectioned with power, etc) is impossible to find.
Denver houses in some of the areas I watch went from 300k to 500k in a matter of months. Two years later they sell for 600k.
Weed has been very friendly to the Colorado economy. Also you no longer have to read the silly/stupid articles about how pot should be legal in the local paper anymore.
Denver has been the #1 residential market in the country lately.
Our family has experienced this first hand. We own two buildings in the cultivation zone (top right in graphic cluster of buildings). We kicked out 8 tenants last year and signed a lease with one cultivation group that quadrupled our lease rates, which is probably too low looking back on it(We have electricity). The new group is doing T.I.’s to the buildings in excess of $1 mil. The CEO of this group flies into Palomar on his private jet to sign docs and conduct business. He is a Georgetown Law graduate and a Harvard M.B.A. These are well financed and educated people, not your typical stoners!
The production hard cost (no debt payment) of indoor marijuana is roughly $400 to $500 per pound if you really know what you are doing, and wholesales for roughly $2,200. That will attract investors, which will then cause margin compression. The investor groups coming into the market are paying dumb money prices, can’t execute quality production, and struggle with distribution. If they stick with it long enough and throw enough money at it, they will figure it out and margins will be no different than legit consumer commerce.