It has been just two years since Oklahoma legalized the growth and use of medical marijuana. In that time, the state and our society has changed a lot. One unforeseen consequence of this boom is the commercial real estate market.
More specifically, shortages of plots or buildings to set up an MMJ business.
Oklahoma has approved hundreds of thousands of patient licenses, thousands of growing and cultivation licenses and almost 2,000 processing licenses. That all mounts up to a lot of people looking to set up businesses across the state.
As the needs of the medical marijuana industry is quite specific, there is something of a shortage of real estate.
The real estate requirements of MMJ in Oklahoma
The typical marijuana grower and cultivator needs a lot of floor space. They ideally need high ceilings, a direct connection to the electrical grid, the ability to heavily insulate and have effective air handling.
We are typically seeing requests for spaces anywhere from 1,000 square feet to over 40,000 square feet. Not all of them will meet the requirements above.
Fewer still have landlords willing to lease to the medical marijuana industry. It’s still too new and too controversial for many established commercial landlords to want anything to do with.
Attitudes are changing, but slowly.
In the meantime, there is something of a shortage of potential sites. On average in Oklahoma, around 4.5% of commercial property lies vacant. Of that, only a fraction of landlords are willing to lease to our industry.
Finding your own space
Newcomers to the industry in Oklahoma are having to take a different path. Rather than finding the perfect property, they are looking at applicable properties with potential and adding their own HVAC, strengthening grid connections and building out the spaces themselves.
This opens up more of the real estate market but comes at a cost. Most commercial landlords will make the tenant pay for customization and will only help with mandated repairs or essential building works.
The rest is up to you.
With a super-competitive real estate market, you may have no other choice.
Triple Net Leases
If that wasn’t enough, some landlords are also insisting on Triple Net Leases. This is where you pay your monthly rent, utilities, taxes and insurance on the property. Many of these leases also demand a significant deposit and a month or two in rent up front.
That’s another significant cost of setting up an MMJ business in Oklahoma.
But, with demand still growing for medical marijuana, people are still flocking to the state. If that remains the case, competition for viable real estate is only going to get hotter!