Guest Column: How to Break Through Real Estate Roadblocks in the Marijuana Industry

Matthew Walstatter

By Matt Walstatter

One of the biggest challenges my wife and I faced when opening our dispensary in Portland, Oregon, was finding a location.

From July through October of last year, I made calls on roughly 200 properties. Very few landlords were even willing to entertain the notion of working with a medical marijuana business of any type, and almost all of those that nibbled ultimately found a reason to decline.

I discovered that although the industry continues to move toward the mainstream, finding a location for a cannabis business remains a huge challenge, particularly if you’re looking to lease a space.

Over time, I repeatedly encountered the same few roadblocks. But I learned some lessons along the way and developed strategies that ultimately helped me secure a lease for my dispensary.

Landlord Trepidation

I found it crucial to understand a potential landlord’s point of view. Many fear that they will be hassled and harassed by law enforcement. Why rent to a business that carries this baggage when so many other businesses do not?

In Oregon, we have House Bill 3460, which authorizes and regulates dispensaries. But many landlords and realtors that I spoke to remained unaware of the existence of the law. They didn’t even realize that this legislation had passed or that medical marijuana facilities had become legal in Oregon. Many landlords have also heard distorted accounts of federal enforcement action in unregulated markets like California, and they fear they could be subject to prosecution or lose their property through forfeiture.

I tried to educate them about HB 3460, the Cole Memo and other relevant laws and letters, but I found that once words like “federal enforcement” left my mouth, the battle was pretty much lost.

Even if a landlord got past their legal concerns, others issues arose.

Many imagined a seedy business that would attract undesirables. They feared the resulting scorn and disdain of neighbors up in arms over the presence of a cannabusiness. Some thought that because we were a marijuana business, we must be a bunch of criminals and deadbeats. A couple of owners were interested, even sympathetic, but eventually demurred after their partner or lender nixed the idea.

Focus on the Four Ps

To help educate landlords and assuage their concerns, I focused on what I’ve dubbed the four Ps: Professionalism, Preparation, Persistence and Property Owners.

Professionalism: It may sound obvious or silly, but a little professionalism goes a long way. Show up on time, return phone calls promptly, say please and thank you and don’t call a 50-year-old man in a three-piece suit “dude.” Be yourself, but be the polite version of yourself.

I cannot emphasize enough how important this is. As I mentioned, many potential landlords have preconceived notions about the people running a cannabusiness. This can work against you, but it can also work in your favor. With such low expectations from potential landlords, even a modicum of professionalism will seem like a lot.

Preparation:  This can really be lumped under professionalism, but it deserves it’s own mention. When calling on a property or meeting a realtor or building owner, make sure that you are prepared. Know what questions you would like answered. Anticipate the questions that your potential landlord might have, and come with answers ready.

After we heard from several landlords that they feared a dispensary would bring increased crime to the neighborhood, we found studies that showed dispensaries actually reduce crime. We had these ready going forward so that when a landlord raised this concern, we had a response.

Persistence: Of the 200 properties we called while searching for a location for our dispensary – Pure Green – we only looked at four or five. The rest cut me short as soon as they heard that we wanted to open a dispensary.

mjfactbook14storyhorizontal336This will undoubtedly happen many times, so get used to the word no and get comfortable with rejection. Persistence also means creativity when it comes to finding leads. I used the newspaper, Craigslist and other real estate web sites, but I got my best leads from getting in the car and driving around the neighborhoods where we wanted to locate our dispensary.

Property owner: Speak with the property owner, rather than a realtor, whenever possible. I came to think of realtors as gatekeepers – people who stand between me and the ultimate decision-maker. A realtor’s job is to secure a tenant with the fewest possible complications for the property owner. Presumably, the smoother the transaction goes, the more likely that the realtor will be paid well and called upon for the next lease that owner needs to secure.

Most realtors look at a medical marijuana business and see more potential complications than in industries. This means that even if they believe in what we are doing, they are likely to advise a client to avoid the perceived potential headaches involved in working with us. By speaking directly to the owner, we cut out the middle man, something we have all worked our entire careers to accomplish.

Make Your Own Luck

So how did I find the property we’re in now? I was driving to a meeting one afternoon last October, on a road I had traveled hundreds of times. I scanned left and right for signage, which had become reflex for me by then, when I spotted a “for lease” sign. I grabbed my pen and my notebook as I circled the block and hastily scribbled down a number.

I called and found a receptive owner who ultimately chose to rent to us.

This involved some luck, but we put ourselves in position to be lucky. Some say fortune favors the bold. I say fortune favors the prepared.

Finding a location for a cannabusiness involves challenges most business owners never encounter. We deal with the specter of law enforcement, stereotypes about us as proprietors and ignorance about the nature of our business.

This will not likely change any time soon. But with professionalism, preparation and persistence, and by dealing directly with property owners, aspiring entrepreneurs can address these issues and secure a suitable location.

Matt Walstatter and his wife own Pure Green, a dispensary in Portland, Oregon

One comment on “Guest Column: How to Break Through Real Estate Roadblocks in the Marijuana Industry
  1. Avis Bulbulyan on

    Well said. Preparation and Professionalism really do go a long way. When meeting with potential landlords, it’s a good idea to dress in a professional manner instead of jeans and a t-shirt.

    With agents, a lot of them just don’t want to deal with the head ache and certainly don’t want to pass that head ache to their landlord clients. Having said that, most agents do know of another agent in their network that does deal in the industry. If an agent says no, politely ask if he would refer you to an agent that may have properties available for the cannabis industry.

    You could try sweetening the pot a little. Sometimes, all it takes is an extra security deposit to change their mind.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *