The first piece of marijuana-zoned land I sold was in 2016 to a paving contractor from Texas. He had no experience in marijuana, and he hadn’t even ever smoked it. I wondered why he would purchase this marijuana-zoned property in the Desert thousands of miles from his home state and invest in a business he had no experience in.
After selling and leasing a number of marijuana zoned pieces of land and properties, I have come to realize that the cultivation of marijuana is now becoming a business for those who believe in the benefits of medical marijuana (MMJ) and have experienced the benefits of it and see the potential for money to be made in this rapidly growing industry.
The demand for MMJ is there. Most of the marijuana approved states allow the usage of this plant with a doctors prescription and residency in the state they are purchasing the product. Numerous dispensaries/cooperatives have opened, so many that some cities have limited the number of them. The cultivators, of course sell to these retail outlets marking up the product like other retail operations.
What’s changing in the industry is who is growing the marijuana. For years, there were many “gray” grows that were largely unregulated and under the radar. Many of these growers were cultivating in homes that were “underwater” during the financial crisis. Rather lose their homes to the bank, they began turning their homes into grow factories. Others leased them out to growers, not wanting to know what they were doing; just needing the funds to cover their cost of the mortgage, so they would not lose their house. It was a “don’t ask, don’t tell” policy.
This went on for years in many exclusive neighborhoods across the country. When the cultivation of medical marijuana became legal, the game changed. The states that have approved MMJ are requiring a CUP and licenses for all sectors of the industry. The city, county and state taxes are hefty and many states are following Colorado’s “track and trade” system, where all the marijuana grown will need to be tracked and reported to the State. If a grower fails to do this, they will be shut down.
This is a game-changer for the industry as most of the growers prior to the state legalization of marijuana didn’t pay any taxes and sold it on the gray market. They lived well on the money they made as they perfected their farming skills. Now, not only will the cultivators have to report their crop, they will have to pay to have it tested and transported to the dispensaries.
Because of this, the cost of cultivation is becoming expensive and many current farmers can’t afford to be in the MMJ business. They are partnering with investors to build/purchase/lease marijuana zoned buildings, build out the grow and meet the state regulations for the operation of the grow. This takes a whole lot of money and depending on the size of the grow it can cost millions before the first crop is sold.
This has opened up the market to private investors who loan the farmers money at a high interest rate and take a significant piece of the grow profits. These investors are lawyers, doctors, stockbrokers, technology executives and entrepreneurs. Public companies are also in the game, though they won’t admit it because it is still not a federally approved industry.
So who are the cultivators? Everyone. Everyone who has the funds to potentially lose and the spirit to win!