This article originally appeared in the August 2018 issue of Cannabis Dispensary. To subscribe, click here.
If you are worried about making the wrong choice when it comes to selecting a location for a dispensary, you’re not alone. Too many lessons on selecting and acquiring property for retail cannabis locations are learned the hard way. To shorten your learning curve and help you avoid some common real estate mistakes, Cannabis Dispensary turned to real estate experts focused on the cannabis space. Their insights can help you make real estate decisions that position your dispensary for success.
Tim McGraw, CEO and Founder
Canna-Hub, California
1. Avoid selecting a location where you’re not wanted.
“Everybody knows securing a location is top priority. But … you want support from the local community when possible. Not having that boots-on-the-ground support can become a terrible headache and a real source of stress if you locate in a city that doesn’t want you there, barely passed cannabis legislation and has ordinances that are onerous and tough to deal with. When possible, you want to be where you’re wanted.”
2. Don’t forget your due diligence on local ordinances.
“In cities like Los Angeles or Sacramento, you’re beholden to the same rules as everyone else obtaining a license to operate in that area. But when you get outside of some of the larger cities, the rules and regulations can become more nuanced. Each individual city is going to have its own ordinances.
“Make sure to read the fine print and pay attention to what fees they impose—those are going to have a major impact on the profitability of your business. If you’re paying a local tax of 15 percent, but the neighboring town is only charging 5 percent, that’s something you need to consider on your pro forma.
“In addition, some cities require that half of your employees live within city limits. This might not be a big deal if you’re in LA, but if you’re in a small town, a mandate like that can become problematic depending on the type of labor you need and what skill sets are available. Always make sure you’ve done your due diligence on the local ordinances.”
3. Don’t underestimate time lines for obtaining permits.
“Ideally, you’ve already started this process at least a year and a half ago. If not, get on it. It’s a process, especially in California. Once you’ve picked your site, if the ordinance isn’t already passed and the CUP (conditional use permit) isn’t already issued, you may have a long road ahead of you. Those time lines add up and can further delay you from being operational in this rapidly expanding market.
“A lot of operators underestimate the time line for getting their conditional use permit from the city and having the ordinance finalized. It’s an arduous process. It’s also important to budget for the cost of legal fees, man hours and overall time it takes to get through that process.”
To read the full article in Cannabis Dispensary's August 2018 issue, click here.
Top photo courtesy of Adobe Stock
