Finding a location will likely be a challenge for those interested in starting one of Connecticut’s first recreational-use cannabis businesses, experts say.
“Operating in the cannabis space is still a little taboo, so when looking to interact with individuals or looking to buy something or looking to rent, it’s become a little difficult,” said Luis Vega, chief executive officer and founder of Wepa! Farms.
Vega said he’s already hit roadblocks in finding a location for his upcoming business. It’s difficult to find a space big enough for cultivation at a reasonable price, he said.
It took him six months to find his first location, and another year to identify the North Haven location when he wanted to transition to a new spot, Vega said.
“One advice I always tell everybody is be as upfront as possible,” Vega said.
“ … We understand that the rent is usually a little bit higher than normal because of the more taboo nature of it.”
Because cannabis sales are illegal federally, banks could face penalties if they accept money garnered from sales of the substance.
The SAFE Banking Act, which has passed the U.S. House of Representatives, would prohibit federal regulators from imposing penalties on banks that accept money from legitimate cannabis businesses.
“You’ve got businesses that are operating all cash — that’s just an untenable and dangerous situation,” said Aaron Smith, executive director of the National Cannabis Industry Association.
Anthony Coniglio, president of NewLake Capital Partners, said much of the cannabis real estate market’s success will be depend on what zoning regulations or bans localities pass regarding recreational-use sales.
“I think No. 1, understanding the opt-out and how many towns and municipalities have opted out will really be important for understanding real estate,” Coniglio said.
Coniglio said he thinks many local leaders may wait to see how the recreational cannabis industry takes off in other municipalities before allowing sales in their community.
Common upgrades include increased water or electricity capabilities for growing, as well as security enhancements, Coniglio said.
“Many require significant security apparatus, so we provide capital for all of those improvement activities,” he said.
Despite the challenges, investors said they expect the market — both through sales of cannabis products and real estate profits — to soar once it gets off the ground.
“I think that’s really exciting and will change the industry as a whole.”
Coniglio said if Connecticut can establish cannabis businesses more quickly than its neighbors it could reap the benefits from inter-state sales.
“If somebody has buying behavior because they happen to work in Connecticut, but live in Westchester, and there’s a dispensary they like to stop at on the way home, are they really going to change that behavior?” Coniglio said.
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