October 26, 2009 – Real estate brokers say that Colorado’s medical-marijuana law has sparked a land rush, as entrepreneurs lured by a growing number of licensed users search for properties for growing or selling pot.
In a down real estate market, landlords who might otherwise wait for more conventional tenants are snapping at the opportunity presented by medical-marijuana dispensaries, said Darrin Revious, a broker with Shames Makovsky Realty.
“I am working a couple of these deals right now,” he said. “It is absolutely crazy how many of these deals are in the market. I can’t believe it.”
Since voters approved Amendment 20 in 2000 allowing the use of medical marijuana to treat eight specific conditions, the number of people legally allowed to buy the herb has steadily climbed. In 2007, 1,955 people held medical marijuana cards; the following year, there were 4,720 people on the Colorado Department of Public Health and Environment’s Medical Marijuana Registry. The number has grown to about 13,000, health department spokesman Mark Salley said.
On an average day, the department receives 400 requests for medical-marijuana cards, and some days applications are as high as 600, Salley said.
Revious said he receives at least one request per day from brokers representing people seeking property suitable for grow operations or dispensaries, where medical pot is sold to card-carrying patients. Over the past three or four months, he said, demand for the properties has soared.
“I need (5,000 square feet in) LoDo, or there about . . . retail,” says one e-mail he received from a broker. “Wellness center — yes, medical marijuana. A group expanding out of California — a real one.”
Warren Edson, an attorney who handles medical-marijuana cases and advises people trying to set up cannabis collectives and cooperatives, said he believes the rise in demand is related to the increasing number of patients approved to buy the drug.
“My share of stoners”
Many people became more aware that pot was legal for those with medical conditions this summer, when the state Board of Health rejected a move to cap at five the number of people a medical-marijuana caregiver can supply, he added.
“It was publicity,” Edson said. “It meant the average Joe was seeing it discussed on the news, and saying maybe I should go to my doctor about this; it isn’t just for crazy people.”
Six months ago, Edson said, many of those seeking the cards were terribly sick, or were “hippies” looking to get high. “Now we are seeing a greater cross section of individuals.”
Laurel Alterman opened AlterMeds at the Colony Square Shopping Center in Louisville earlier this month, just before the City Council approved a moratorium on new dispensaries.
Alterman abandoned her real estate business, which has done poorly recently, to open the dispensary. “When the Board of Health expanded the roll of caregivers this summer, the opportunity to open became very attractive, and my son was working in a dispensary in Denver and knew the business,” she said. “I just jumped off a building without a parachute.”
Paul Tamburello, a broker’s associate with Distinctive Properties, said he gets three calls a week from business people who want to lease a building he owns at West 32nd Avenue and Zuni Street to use as a dispensary.
“Some are really legitimate businesspeople, but I certainly run into my share of stoners,” he said.
There are four dispensaries within a mile of the building, he said. “There certainly seems to be a plethora of dispensaries trying to open. I call it the new gold rush. A lot of these guys are seeing dollar signs. I don’t know how lucrative it will be if the velocity of growth continues on the path it is on.”
Alterman said she expects to earn twice as much as she made annually in real estate by selling medical marijuana.
One businessman said he has been approached a number of times by people who wanted to rent space for a dispensary in his Colfax Avenue business. He refused. “We don’t rent space,” said the man, who asked that his name and business not be published because marijuana has negative connotations for many.
Some Californians who wanted to open a dispensary in the area asked him what he thought his building is worth. When he said it was appraised at $850,000 they offered $750,000 in cash at closing.
Tighter regulations loom
Concern over the mushrooming number of dispensaries is growing, and some cities and towns are studying regulations to limit them, while others have passed outright bans.
State Sen. Chris Romer, D-Denver, plans to introduce a bill next year that would clarify regulations involving pot-using patients.
Alterman said she wouldn’t object to some regulation in the industry that could make the shops operate more like licensed pharmacies. And she sees a need for properly zoning the establishments.
Tight security measures are necessary to operate the shops and grow operations, which are natural targets for thieves, she said. “Zoning laws are important,” she said. “This is a business that is inappropriate for a residential area because, yes, it is dangerous.” Source.