The legalization of cannabis in California has been followed—andin some ways even preceded by—a rush of real estate investment tosupply the new demand. However, while there is excitement andstrong appetite for cannabis-related assets—which includes retailstorefronts as well as industrial facilities formanufacturing—investors are also preceding with caution as the newasset class also poses significant challenges.

“Appetite is strong but cautious,” SethWeissman, a partner at law firm Jeffer MangelsButler & Mitchell, tells GlobeSt.com. “There aresubstantial challenges that can counterbalance some of theopportunities. First, cannabis uses are heavily regulated. Thesestart at the land use level.  In many places, cannabisuses require a conditional use permit or other similarentitlements. Such CUPs can be saddled with numerous conditions ofapproval. Grow operations need a lot of power, so operators mayneed to upgrade their amperage. There can be substantial costs tobuild out appropriate space, including canopy systems.”