3. How to Locate a Location?
(Aerial shot of our 17.6 acre pot farm prior to build-out in 2013 in Quincy, WA.)
Opportunity is missed by most people because it is dressed in overalls and looks like work.
Polish off your spyglass and take your pantaloons to the dry cleaners, it’s time to begin exploring. To prepare to start the process in your area you can begin by researching real estate zoning and then identify or acquire properties that will most likely qualify for a cannabis license.
As an entrepreneur or investor, you can look for locations in likely allowable zones, right away. Start by finding listings online in your target area. A good place to look for commercial real estate is loopnet.com.
Once you have identified some appealing properties, check with your county or city planning department online or in person, and find out the zoning of those properties.
Line up as many showings as you can for properties that check all your boxes, within the same geographic area or along a logistically convenient route.
Then all you have to do is hop in your car and make a day or a weekend out of it. This drive would also be a perfect time to catch up on any super awesome audiobooks about the cannabis industry you may have started but not finished yet… not that we’re pointing any fingers.
While you won’t have a final zoning code available if your State hasn’t voted on, or even written cannabis regulations yet, you can greatly narrow down the list by looking at the common zoning factors in different states where cannabis is legal.
Common Sense for Uncommon Zoning
(In 2013, while looking for a location to apply for processing license, we examined the proximity of the address were looking at to sensitive uses.)
Common sense is something that everyone needs, few have, and none think they lack.
While you can’t always expect to encounter common sense when you’re running your business, at least you can get somewhere with common zones.
Retail locations vary the most in terms of zoning requirements, with the most consistent rule being- no residential, no matter how much you pay for a lobbyist.
Outdoor farms should be allowed in agricultural zones, while indoor cultivations, as well as extraction and testing labs, should qualify for one or more of light or heavy industrial and mixed-use zones.
An important zoning distinction is that regulations are usually more permissive in the unincorporated area of a county vs. within the town or city limits.
*If you personally now feel you’re getting vertigo from crossing over into the Twilight Zone please note that we are still just at the very beginning of this voyage.
While zoning regulations are a patchwork of various land-use rules that differ in each state and county across the nation, what they have in common is that they all deal with permitted and prohibited land uses.
These complex zoning requirements may vary wildly, but some are more or less ubiquitous. For instance, proximity to ‘sensitive uses’ exists in every legal cannabis state and is, in fact, even the de facto Federal cannabis zoning policy.
Sensitive uses are those related to groups or areas that could be negatively impacted by the location’s proximity to a certain type of business. For instance, in most cities, a strip club can’t be located on the same block as a preschool, even if they were both otherwise zoned correctly.
Even if the adult dance club predates the preschool, once minors move into their neighborhood, the strippers could potentially have to find new places to take their clothes off, while hanging upside-down from poles.
A simple rule of thumb for understanding what makes something a ‘sensitive use’ is to consider anywhere children or families congregate, be it a business, park, or residence.
While some states have more relaxed zoning, the safest bet, especially in brand new markets which haven’t yet established a cannabis use, is to default to the sensitive use restrictions outlined in the Cole Memo.
While former Attorney General Jeff Sessions technically nullified the Cole Memo, he didn’t replace it with any other policies at the Department of Justice. No new official zoning changes to the Federal position on cannabis were made under the new Attorney General, Bill Barr, or have been made to date, under the Biden administration.
This in essence means that the conditions for which the Federal Government would seek to enforce Federal cannabis law outlined in the Cole Memo, remain the working policy.
The Cole Memo stipulates that from a zoning perspective, the Federal Government will only consider enforcement against a state-legal cannabis business if that business is within 1000 feet of a sensitive use property.
While some States allow for 600 feet, we think another great rule of thumb for members of the cannabis industry is, “Don’t fuck with the Federal Government!”
Perfect Spot in the Wrong Zone?
The road to success is dotted with many temping parking spaces.
Unfortunately, your options are limited. You can try lobbying, but it will probably be a waste of money since the minimum buffer in any state that allows cannabis is at least 600 feet from sensitive uses.
Another possibility is to offer the problematic business money to move. The daycare in your business complex that’s keeping you from opening might be amenable to moving down the street if you offer to pay them enough money.
On the flip side of this, we’ve heard of dispensaries opening daycares and other sensitive use businesses in their competitor’s business complex, in order to effectively zone their competition out of business!
This is an underhanded trick, but it could also happen to you!
One way to protect against this possibility is to thoroughly research your complex and potential neighbors in the location you’re sourcing.
Are there any vacancies in the complex? Are the businesses located there successful or struggling? Have they been in the spot for a while?
You could sink a fortune into your business plan only to have it fall apart at the last minute because of a zoning apocalypse.
Zoning Requirements Change
The secret of change is to focus all your energy not on fighting the old but on building the new.
Zoning, like all regulations, are a moving target. It’s important that you stay up to date on the zoning changes in your state, city, and county. You may need to change your use, or need a special use permit at some point. Municipalities may change the zoning but offer you a limited window to be grandfathered in at your current location for a specific use. You don’t want to miss that boat by being uninformed, out of the loop, or late to the party.
The local ordinances that restrict or prevent cannabis business zoning are often difficult to change and can be tough or impossible to work around them.
Take one cannabis business licensee in a small county in Washington that one of our contributors knows. The would-be marijuana-mogul had thought that he had found a perfect location for his retail store based on State Liquor and Cannabis Board rules. However, this applicant was facing a hostile City Council with heavily restrictive cannabis regulations.
The business owner fought this battle for a long time. He paid rent on a suitable space for a year and a half, started a Political Action Committee, and even gained the support of multiple candidates for City Council positions, but to date still, he hasn’t been able to move the needle, as far as we know.
At the same time that this entrepreneur was bleeding money and opportunity out of his eyeballs, his competitor was able to open in a less high traffic, but completely compliant location, and as a result, had the only dispensary open in the county. Even though they’re in a small area, without any competition, the dispensary that did open is surely making a fortune, while building their brand equity and shoring up their customer base in that region.
Water Rights
Water is the driving force of all of nature.
If you’re buying a property for cultivation, make sure that the property has transferable water rights. Also, find out what the county limit for water usage per day is.
At our farm in Washington, we had an irrigation canal that ran through the property, but we weren’t allowed to use it because it contained Federal water. Repeat, Federal water. They wouldn’t let us use it on our pot plants. It’s a good thing we had a well, and we strongly encourage you to look for a property with a well on it.
It’s like we always say, “Where there’s a well… there’s a way.”
Infrastructure
We shape our buildings; thereafter they shape us.
You’re going to need to carefully plan and budget for your infrastructure needs including, facilities, equipment, personnel, business systems and operations. For instance, your requirements for an indoor vs and outdoor grow will vary greatly with differences including the labor and other recurring costs, how you manage your workflow, and even your ability to maintain quality control.
If you’re going outdoors, you might want to spend a few extra dollars and spring for that American flag wrapped, straw hat, you spotted on the discount rack of your local, country grocery store.
Key Chapter Takeaways
The Do’s and Don’ts of the Dope Industry
- Do– Take the time to learn about zoning
- Do– Double check your prospective property against potentially sensitive uses
- Do– Your homework to identify the type of business, region, and customer base that you think can be successful with
- Don’t– Be shy about reaching out to your local planning commission
- Don’t– Don’t get discouraged by zoning setbacks
- Don’t– Don’t forget to check your land and/or facility for access to water, electricity and other utilities and needed resources