Study: My Understanding of Investments

April 11, 2019

Foods & Culinary

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How Will Cannabis affect Real Estate?

For medicinal purposes, marijuana has been legalized in around 28 states. Further, nine states have accepted it for entertainment use. The real estate industry, is also growing rapidly with the growth of legal cannabis business where even growers and sellers are expanding. There is an impact being noticed between the growth of the cannabis industry and the real estate. Rent and sales rates have increased in facilities and warehouses where the cannabis industry is marketed either for medicinal or recreational use.

Properties like warehouse, agricultural, storage and industrial facilities designed specifically for the cannabis industry are suddenly on very high demand partly as a result of the demand for processing and cultivation of marijuana. Because the cannabis industry is on the rise, property demand and interest for those that will allow retail and growth of marijuana will also increase.

In as much as there are many opportunities surrounding real estate, marijuana legalization for recreational and medicinal uses brings about some issues on the transactions of real estate with sellers and growers and with managers, property owners, tenants who must deal with issues on the right for growth and consumption of marijuana, and security concerns.

The amount and extent of retrofits which that be expected to deal with cultivation and growth of marijuana products, the will to make the retrofits should be factored including electrical infrastructure, systems on climate control and exhaust systems. Due to its illegality with some authorities there are banks that may not be ready to finance for the retrofitting of the properties to be used by the cannabis industry, so the owners of the property should check the finance documents before using or leasing the property on whether there are any limitations or prohibitions for cannabis users.

The cannabis operations bring about issues with insurance because the processing methods may be flammable and a lot of water may be used not to mention the high security that is needed. Such properties must have a worker’s compensation insurance and rent insurance all of which must be confirmed by the owners and tenants.

Where insurance is not available, tenants may be expected to insure themselves or get covered by firms that accept the cannabis industry. Acquiring property that is linked with the cannabis industry necessitate insurance on the property as not all companies will accept to cover properties that are handling cannabis.

The fact that there is the cure in marijuana to cure some diseases will make the cannabis business to thrive rapidly and may even overtake the real estate if it continually accepted as it is in more nations and states.
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