ANJA Presents: Insights from NECANN 2023 - Navigating NJ Cannabis Real Estate Landscape

Introduction

The recent NECANN 2023 conference was an eye-opener for anyone involved in the cannabis industry, especially in New Jersey. One of the standout seminars focused on the intricacies of real estate within the cannabis sector. This blog post aims to share key insights from that seminar, focusing on the challenges and opportunities in securing real estate for cannabis businesses in the Garden State.

Supply and Demand in New Jersey's Cannabis Real Estate

The cannabis industry in New Jersey is largely driven by supply and demand dynamics. On the supply side, only 20-30% of towns have opted into allowing cannabis businesses, each with its own set of ordinances. On the demand side, as of 2022, 58% of licenses were for retail spaces, 26% for Class 1 spaces (30K feet + Class A Space), and 16% for Class 2 spaces. Interestingly, manufacturers seem to have the easiest time finding suitable locations.

Obstacles in Securing Real Estate

Securing township approval is often the most significant hurdle, especially in the northern parts of the state. While retail spaces are more common in the north, cultivation and manufacturing tend to be located in the south. Other challenges include the availability of suitable properties and finding willing and able property owners.

Ordinance and Property Value

Local ordinances can significantly impact property values and the scalability of operations. It's crucial to understand how a particular part of town views cannabis businesses and what that means for your venture. Some towns, like Union, have limited retail spaces to specific routes, making small towns with willing and able property owners more appealing. The ideal scenario 

would be a rent-to-own agreement, offering long-term stability.

Pricing and Market Saturation

Retail properties in the cannabis sector command a premium price, ranging from 130-180%. In areas with caps, this can skyrocket to 200-300%. However, not all towns are ideal for setting up shop. For instance, Franklin's uncapped market is a double-edged sword, and Plainfield is already oversaturated with dispensaries.

Key Takeaways

• Municipality Attitude: The most crucial factor in securing real estate for a cannabis business is the attitude of the local municipality.

• Expect More Opt-Ins: As the industry matures, more towns are likely to opt into allowing cannabis businesses.

• Team and Strategy: Having the right team is critical, and failures are an essential part of the learning process.

• Local Preference: Municipalities prefer local businesses that can generate revenue and be good neighbors.

Conclusion

The NECANN NJ 2023 conference provided invaluable insights into the complexities of real estate within New Jersey's rapidly growing cannabis industry. From understanding the dynamics of supply and demand to navigating local ordinances and property values, securing the right real estate is a multifaceted challenge. One of the most crucial takeaways is the importance of aligning with a municipality that shares your business vision. Attempting to change a municipality's stance on cannabis can be an almost insurmountable uphill battle, making it critical to find a town that already supports your type of business. With the right approach and a deep understanding of the local landscape, cannabis entrepreneurs can find opportunities to thrive in this exciting market.

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