Metallurgist and assayer Matthew Stevenson coined the famous phrase, ‘There’s gold in them thar hills and there’s millions in it’ in 1849, when he tried to dissuade workers at a branch of the United States Mint from absconding to join the California Gold Rush. History does not record if he was successful. His words do however make a useful introduction to California’s latest real estate investment break.
Writing in Marijuana Business Daily on July 20, 2016 Omar Sacirbey reports a surge in interest in leasing marijuana farms. This is great news for emerging entrepreneurs currently unable to afford land, but with agricultural skills to turn over a good profit. Omar describes how the demand for leased property ‘is large and growing, fueled by increased demand for cannabis and the need for land to grow the plant’.
This opinion gains ground in the light of comments by the CEO of Denver-based Americann, which describes itself as a national leader of sustainable cultivation, and processing infrastructure for the medical marijuana industry. CEO Tim Keogh thinks that
‘Cannabis is going to be a $20 billion industry in 2020. Someone is going to have to build millions of square feet of infrastructure, which is going to take billions of dollars to produce the product that will generate that forecasted revenue. As of now, the infrastructure isn’t there to meet those numbers.’
The California Medical Marijuana Regulation and Safety Act MMRSA touches on the landowner where it says
‘Applicants for a cultivator … license, must also provide a statement from the owner of real property or their agent where the cultivation … activities will occur, as proof to demonstrate the landowner has acknowledged and consented to permit cultivation … activities to be conducted on the property by the tenant applicant.
The possibility of getting in early and making a lucrative passive investment is attracting large and small investors in growing numbers, with Tim Keogh’s company investing $4.1 million in a cultivating / processing facility in Freetown, Massachusetts in April. His multi-pronged approach suggests an added dimension to the business model. Marijuana tenant farmers expect facilities such as (at least) electricity, water and power, and drainage as part of the owner’s obligations.
The numbers are attractive and there is a gap in the investment market. However, law enforcement still catching up with the will of the people. We advise holding back on admitting marijuana cultivation tenants, until sighting proof of approval of their license to grow and sell.