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Exploring the Potential of Cannabis Real Estate: Market Trends and Opportunities

Photo of marijuana edibles and cannabis leaf representing opportunities to invest in cannabis infrastructure investments as the industry grows.

There’s no way you haven’t noticed that cannabis is going mainstream. A recent survey found that nearly 80 million Americans have tried marijuana at some point, and thirty-five million use it monthly. Even more surprising is the fact that there are now 50% more cannabis users than tobacco smokers in the U.S!

As public acceptance grows, legalization is sweeping across North America. This explosive growth means a massive new niche is emerging in commercial real estate: cannabis real estate. This sector provides the specialized spaces and services that are needed by the rapidly expanding cannabis industry. More than $10 billion was invested in U.S. cannabis real estate in 2021 alone. With analysts projecting the legal cannabis market to reach $41 billion by 2025, the time to get involved is now.

However, complex regulations and financing obstacles make entering cannabis real estate a challenge. In this blog, we’ll explore the key trends and opportunities in the cannabis real estate sector. We’ll also look at how MSO can help investors capitalize on this lucrative trend.

Market Trends

The cannabis retail market is expanding rapidly, with eight states projected to surpass $1 billion in sales this year. New data shows Missouri will join existing markets like California, Colorado, and Massachusetts in the billion-dollar cannabis club in 2023. Beyond these giants, four more states – Oregon, Nevada, Maryland, and New Jersey – are on pace for over $700 million in annual sales. As more states launch and expand programs, total U.S. cannabis sales are expected to reach nearly $30 billion by the end of 2023.

This exponential growth underscores the urgent need for specialized cannabis real estate across the country. Cultivation facilities, processing labs, and retail dispensaries will be in high demand coast-to-coast. With billions pouring into state-legal cannabis annually, this niche promises lucrative prospects for commercial real estate investors.

Growth Opportunities

You may be worried that the rapid growth phase of the cannabis industry has passed. However, data shows this sector remains in the early stages with substantial growth ahead.

As more states open access to legal marijuana, new real estate demands unfold constantly. This creates ongoing potential for investors and developers able to recognize emerging needs such as:

New Market Development Opportunities

  • Developing specialized properties in new recreational markets like New York and New Jersey as their programs scale up – These new markets represent massive potential as they build out the infrastructure to support rapidly growing demand.
  • Cultivation facilities will be essential to meet demand for legal cannabis. Indoor, greenhouse, and outdoor grow sites require ample, affordable space conducive to cannabis cultivation.
  • Processing labs are needed to extract oils, refine products, and package cannabis goods. Lab spaces must meet stringent regulations.
  • Well-located retail dispensaries in high traffic areas are crucial access points for consumers. Storefronts must be adapted for security and regulatory compliance.

Property Conversion

Converting existing buildings to cannabis operations in legal states while still building out official infrastructure is a great way to break into the cannabis real estate sector. Empty warehouses, vacant retail spaces, and obsolete industrial facilities can often be retrofitted into cannabis grow sites, dispensaries, and other facilities at lower cost than new construction.

Investment Vehicles

Establishing real estate investment vehicles tailored to the cannabis niche is another option. As an alternative asset class, cannabis real estate is ripe for financial vehicles like private equity funds and real estate investment trusts (REITs) focused specifically on this sector.

Shared Workspaces

Custom-designed co-working spaces and incubators catered specifically to the needs of cannabis-related companies provide affordable flexible space. These foster the innovation and growth of new cannabis businesses.


Navigating Risks and Regulations

As cannabis remains federally illegal in the U.S., traditional financing options are limited, especially for specialized properties. Zoning restrictions also limit potential locations in many localities. Regulatory compliance adds complexity when it comes to security, product safety, and more. Also, some communities have a stigma when it comes to cannabis businesses, and not all communities welcome them.

However, with proper guidance from the experts at MSO, investors can traverse the complex regulations and risks successfully. MSO offers straightforward advice on navigating zoning restrictions and community concerns to identify optimal properties. Our extensive financing relationships help secure funding for projects despite cannabis’ legal status. The MSO team takes pride in helping implement required security measures, quality controls, and other compliance essentials, so our clients can get a piece of the cannabis-boom pie.

In an industry where successfully maneuvering risks and regulations comes with scary consequences, MSO’s decades of specialized expertise can convert those obstacles into opportunities. Our guidance helps potential cannabis real estate investors like you save time, money, and frustration. Contact us today to learn more!