Following the Green: How Legalized Marijuana is Transforming the Traverse City, MI Real Estate Market
Written By: Jaymi Naciri
Tuesday, February 26, 2019
Part of the reason for the ultra competitive environment is the lack of inventory. But this isnrsquo;t simply an availability issue; itrsquo;s also a licensing issue. ldquo;In Traverse City and Acme Township, only a limited number of licenses are available for certain types of medical marijuana businessesmdash;and only within certain districts,rdquo; they said.
ldquo;While Traverse City has unlimited licenses available for grow operations, processing facilities, testing laboratories, and secured transportation companies, the city capped dispensary/retail store licenses at just 13mdash;with a lottery scheduled for May 3 to distribute them. Acme, which held its first lottery last year, had 20 total licenses available: five each for grow operations and processing facilities, three each for testing laboratories and secured transportation companies, and four for dispensaries/retail stores.rdquo;
Limitations on what type of properties can be used for marijuana->
Those whose numbers come up are, quite literally, winning the lottery. After all, the stakes are exceptionally high. The marijuana industry in Colorado has brought in 6 billion since recreational use was legalized in the state, generating hundreds of millions of dollars in tax revenue and making millionaires out of many of those in the industryrsquo;s inner circlemdash;and those who have properly navigated the real estate environment.
Traverse City property owners are already reaping the benefits. ldquo;Everything has gone off the charts with value,rdquo; Tom Krause of Krause Realty Solutions told them. ldquo;Wersquo;ve had people from California to Colorado flying in. Wersquo;ve done seven deals so farhellip;four of those were for dispensaries, and a couple were for growers.rdquo; One of those deals was for a property owned by Krause himself; ldquo;While the sale was being finalized, he received another offer that was 200,000 higher,rdquo; he said to The Ticker.
The lack of available properties in high-target areas is creating a speculative environment in which ldquo;buyers are not just targeting whatrsquo;s for sale, but approaching owners of eligible sites and making offers. ldquo;Theyrsquo;re enticing them to sell with high priceshellip;it can be a 50 percent premium to purchase a building above what the market rate would be,rdquo; they said. The Ticker added that other sellers are accepting offers from multiple entities on a property to insure there will be a deal with a licensed buyer.
Despite the potential profits for sellers now and potential windfall for buyers later, disagreements between state and federal laws around marijuana are creating some challenges that give cash buyers a leg up. ldquo;Buyers face the most riskmdash;particularly mom-and-pop businesses and individuals without major financial backers,rdquo; they said. ldquo;Banks typically wonrsquo;t touch marijuana deals since the substance is still illegal federally, so buyers are on their own for financing.rdquo;
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