Med Mari. growers want to lease industrial buildings I have listed. What do I need to ask them?

I am a commercial real estate agent in one of the more rural counties in my state. My state has recently approved a medical marijuana bill and our office has been contacted by a few people interested in leasing out industrial warehouse space for growing medical marijuana. My understanding is that they will grow these in units called "pods" and need maximum open space.

I have been leasing and selling commercial real estate for over 30 years but I do not know what questions I need to ask these folks to make sure (1) the building spaces will work or (2) how to gauge that they have some notion of what they are doing and not wasting the landlord's time. In my state the approved licensee has to come up with $ 125,000 up front as a "pay to play" fee the state charges. I have contacted the county zoning office to make sure the use falls within agricultural use parameters.

I have a few practical questions for the experts here. In a number of industrial warehouses there is a huge (say 50,000 to 100,000 + sq ft areas) split up into 5000 - 10,000 sq ft subdivided sections. Assuming this is the most cost effective (ie cheapest) lease scenario for growers vs leasing a stand alone building is it practical to do a grow operation in a multi-tenant building?

My first concern is security and the image of (at some point) armed gunmen come to take the grower's product by force and endangering everyone in the facility does come to mind. Is this a realistic concern?

My second main concern is the smell. I have heard that growing marijuana has an overpowering odor. Is this smell likely to leak into surrounding units? Bear in mind these warehouse sections are usually subdivided with sheetrock walls, but there is often some airflow between them. They are not hermetically sealed. Is this a valid concern?

Given the above does a grow operation need to be in a stand alone building by itself? What other considerations do I need to be aware of?

Thanks in advance for your replies.

You cannot have a large operation in the same building as other business for the obvious security reasons. Smell is not a problem, it can be filtered.

As far as building comparability, growers will configure the building to suit their needs. They will want maximum electricity and the buildings need to be very secure or retrofitted for additional security. They are going to make a shitload of money so charge them enough to cover you security improvements and some more on top of that, plus a significant deposit or insurance to cover any potential damage especially from water.

It is very difficult to know if they are qualified or even know what they are doing. You can question them but answers are easy to fake and the growers history will be difficult to determine. Just like any lessee, if they have the money and can do the paper work correctly, you just hope they know what they are doing.

Your states regulations regarding the operation of grow rooms for commercial production should help you take some steps to protect the property.

And fire would be the other damage I'd want insurance for.

Smell can be filtered or neutralized with ozone. I remember an article about cops using a sniffer to detect odor levels
http://www.vice.com/read/denver-police-are-using-a-nose-telescope-to-sniff-out-peoples-weed
So maybe you can put odor smell control into the lease.

Monkapotmaus10000 said:

I am a commercial real estate agent in one of the more rural counties in my state. My state has recently approved a medical marijuana bill and our office has been contacted by a few people interested in leasing out industrial warehouse space for growing medical marijuana. My understanding is that they will grow these in units called "pods" and need maximum open space.

I have been leasing and selling commercial real estate for over 30 years but I do not know what questions I need to ask these folks to make sure (1) the building spaces will work or (2) how to gauge that they have some notion of what they are doing and not wasting the landlord's time. In my state the approved licensee has to come up with $ 125,000 up front as a "pay to play" fee the state charges. I have contacted the county zoning office to make sure the use falls within agricultural use parameters.

I have a few practical questions for the experts here. In a number of industrial warehouses there is a huge (say 50,000 to 100,000 + sq ft areas) split up into 5000 - 10,000 sq ft subdivided sections. Assuming this is the most cost effective (ie cheapest) lease scenario for growers vs leasing a stand alone building is it practical to do a grow operation in a multi-tenant building?

My first concern is security and the image of (at some point) armed gunmen come to take the grower's product by force and endangering everyone in the facility does come to mind. Is this a realistic concern?

My second main concern is the smell. I have heard that growing marijuana has an overpowering odor. Is this smell likely to leak into surrounding units? Bear in mind these warehouse sections are usually subdivided with sheetrock walls, but there is often some airflow between them. They are not hermetically sealed. Is this a valid concern?

Given the above does a grow operation need to be in a stand alone building by itself? What other considerations do I need to be aware of?

Thanks in advance for your replies.

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i find somthing very odd about this post so i suggest to stay away

Monkapotmaus10000 said:

I am a commercial real estate agent in one of the more rural counties in my state. My state has recently approved a medical marijuana bill and our office has been contacted by a few people interested in leasing out industrial warehouse space for growing medical marijuana. My understanding is that they will grow these in units called "pods" and need maximum open space.

I have been leasing and selling commercial real estate for over 30 years but I do not know what questions I need to ask these folks to make sure (1) the building spaces will work or (2) how to gauge that they have some notion of what they are doing and not wasting the landlord's time. In my state the approved licensee has to come up with $ 125,000 up front as a "pay to play" fee the state charges. I have contacted the county zoning office to make sure the use falls within agricultural use parameters.

I have a few practical questions for the experts here. In a number of industrial warehouses there is a huge (say 50,000 to 100,000 + sq ft areas) split up into 5000 - 10,000 sq ft subdivided sections. Assuming this is the most cost effective (ie cheapest) lease scenario for growers vs leasing a stand alone building is it practical to do a grow operation in a multi-tenant building?

My first concern is security and the image of (at some point) armed gunmen come to take the grower's product by force and endangering everyone in the facility does come to mind. Is this a realistic concern?

My second main concern is the smell. I have heard that growing marijuana has an overpowering odor. Is this smell likely to leak into surrounding units? Bear in mind these warehouse sections are usually subdivided with sheetrock walls, but there is often some airflow between them. They are not hermetically sealed. Is this a valid concern?

Given the above does a grow operation need to be in a stand alone building by itself? What other considerations do I need to be aware of?

Thanks in advance for your replies.

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getting a feeling we might have a boy in blue stomping around on riu

What state are you in? tell us that and we'll give you everything you'll ever need to know.

abe supercro said:

What state are you in? tell us that and we'll give you everything you'll ever need to know.

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The state is Maryland and I work on the Eastern Shore. I'm not up on the current legislation, but the potential tenant told me the law to allow this has been, or is being approved by the state. In googling per this link below that does seem to the case.

http://www.mpp.org/states/maryland/An-Overview-of-Maryland-s-Medical-Marijuana-Law.pdf

The procedure (according to the potential tenant) is that to get a Medical cannabis grown license you have be approved by the board granting these licenses, then (if approved) have to put up $ 125,000 deposit and tie down a location with a letter of intent. I not have researched this, it is simply what they told me. This is why they are contacting us seeking large warehouse type buildings for grow facilities. Most of the larger spaces I have are in very large multi-tenant buildings. There are relatively few stand alone buildings in the 10,000 sq ft target range the potential user is specifying.

Beyond the front end question of any specific landlord being OK with this (which is by no means guaranteed) the main issues I am concerned about are security and whether this will impact adjoining users. The point re security by CC Dobbs makes it pretty clear that it's going to have to be a stand alone building which is going to be difficult to find in the specific configuration the tenant desires. I was hoping we could do something with a shared use building, but that does not (per his point about security) appear to be feasible. His point about the pricing and extra deposits is also germane.

The bottom line is this. Real estate (at least in my brokerage) is 100% commission based and I can't afford to be dumping my time and effort (and reputation) into tying up real estate if the building isn't going to work, and it's not entirely clear to me that the potential user(s) calling in and wanting to do this have a solid handle on the mechanics of what a sizeable grow operation will require. CC Dobbs input was to the point and much appreciated in narrowing down the issues involved. If anyone else has useful input I'd be happy to take that into account.

I wldnt concern yourself w robberies, the grower tenant will do all they can to keep their whereabouts stealth and have advanced security systems in place. Only one grower tenant per bldg, otherwise it's a cooperative grow and unlikely legal. Get a sizable non-refundable deposit and commitment from tenant before they get approved by state so you're not out completely if things get rejected.

A shared bldg w other regular tenants may be ok as long as there are no shared entrances, or as much separation as possible. Depending on plant counts per state law, can't imagine a grower needing much more than 5-10,000 sq ft., perhaps less. good luck

Abe's post above has hit the nail on the head!

To avoid what are most likely hidden legal issue's you should advise them to search for stand alone property (That's required in my state). By allowing them into a multiple lease rental space. You may open yourself to legal action by the ATF.
It DID happen here in my state and 8 people including the land owner/renter were charged under federal statutes, even though the spaces were self contained and separately locked! The charge had to due with the POSSIBILITY that everything was a single grow op attempting to LOOK legal. The point being that it's STILL against FEDERAL law! The size got the attention by the number of "separate" grows. The part about no shared entrance was a mute point to the ATF as the building was owned by one person and had several entry points to the main building, no matter that each grow was separately contained!

Good choice's would be a former machine shop or the like with available high electrical service. Maybe an old grocery store or meat market would work well also. The key to them (growers) is available electrical amp's.

You MUST see the licenses and validate them as real! YOU must be SURE that ANY # limits to plants are followed to keep YOU from STATE or FEDERAL litigation.

Screw the smell...........
If I were in your shoe's,,,,,it would be a complete SALE OF situation and NOT a rental situation!
The "lease" of a stand alone facility by a single grower would be acceptable.

CYA!!!

I'm in Colorado, I have a friend that just signed a 5 year contract for 20K sq ft for a million dollars. Your in a good business, but I'd say get a lawyer, learn the laws/rules and CYA

Ouch! While the State (Colorado) has the best thing going, and the Feds have been told to not target State "legal" MM grows.
I tend to "fear" for the future when (and I do mean "when") the Republican conservative majority retakes the White House. We may see the new Pres "unrestrain" the ATF in MM matters. That type of investment is risky at least!

RM3 said:

I'm in Colorado, I have a friend that just signed a 5 year contract for 20K sq ft for a million dollars. Your in a good business, but I'd say get a lawyer, learn the laws/rules and CYA

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Wow that backs into $10.00 a sq ft annually! That's what we get for mid level office/retail space around here, larger warehouses are normally $3.00 - $ 5.00 a sq ft. I'll better get my Colorado license.