California Cannabis Cultivation. It’s complicated.
There has been surge of interest in converting old flower-growing greenhouses in Monterey County to cannabis cultivation. Though this has brought a welcome increase in real estate values and, in some cases, a lifeline for family-owned greenhouses hit hard by the growing international flower trade, prospective buyers or commercial tenants looking to convert these properties to cannabis grows should take a hard look at the legal landscape and the suitability to the locality before jumping in.
In many ways, dilapidated greenhouses and cannabis cultivation would seem to be a perfect fit. Greenhouse owners see increased property values and a seller’s market. Cannabis cultivators see rural or semi-rural commercial space prebuilt for optimal plant cultivation conditions. And local governments see increased tax revenue and a welcome improvement of rundown properties.
However, such deals are far from turnkey transactions, as there remain important existing controls at the municipal, county, state, and federal level that must be considered and accounted for before putting pen to paper. Here are a few of the many things to consider as part of your real estate business plan:
Local Regulations. This remains by far the most important factor for determining the viability of real property for medical cannabis business use. Under California’s Medical Cannabis Regulation Safety Act (MCRSA), local governments retain control over whether, how, and when cannabis businesses can operate and this is in addition to traditional local controls over zoning, land use, building safety, and occupancy. Monterey County (which has had an interesting history with cannabis regulation), has decided to allow old greenhouses to be converted to medical cannabis indoor cultivation operations, but under a strict set of requirements. Applicants must obtain a commercial medical cannabis permit and a use permit, which is allowed only for greenhouses within certain specific zoning districts and only under certain conditions related toon-site renewable energy generation, water conservation, offsite plant visibility, and security measures, among others.
State Regulations. As we’ve been writing about for a while now, California is in the process of enacting a massive new regulatory regime for all types of medical cannabis businesses, including cultivation. If you intend to operate in California as a state-licensed cannabis cultivator and you haven’t yet formulated a business strategy for making that happen (e.g. corporate form, financing, local code compliance, environmental review, etc.) you are already behind the curve. Under MCRSA, California will Continue Reading
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