Aspiring Pot Retailers Say There’s Nowhere to Open Shop

By Amy Radil

Initiative 502 allows the state to license marijuana stores. Many aspiring pot retailers are scouting for real estate. But they aren’t having much luck finding space. Legislators say they may need to open up more real estate for the stores if I-502 is going to succeed.

The new state law says you can have a licensed retail store for recreational marijuana. But it can’t be located within a thousand feet of many facilities: schools, parks, transit centers, arcades, libraries….In Seattle, that thousand-foot rule means most of the city is off-limits. Smaller cities may have NO eligible sites.

Carter: “We have cannabis people who are, you know, raising their hand and wanting to come out of the shadows and into the light of what 502 allows us to do.”

Greta Carter is an advocate for marijuana legalization. She says marijuana businesses expect to pay a premium – they know landlords are taking a risk since marijuana is still illegal under federal law.

Greta Carter (Photo by Amy Radil)But she says she knows of one landlord who is charging a retailer $50,000 in cash in addition to the terms of the lease. Carter says the new tenant doesn’t want to go public, but the case highlights the roadblocks they’re facing to become retailers.

Carter: “and in order to comply with 502 you need to have a location.”

You can’t operate on the sidewalk or out of your car.

Some state legislators are concerned that the thousand-foot rule could doom the state-licensed stores to failure. If there aren’t enough of them, or they’re tucked into industrial neighborhoods far from people, then they won’t be able to compete as well against someone who’s under the radar, operating outside of the law.

Democratic Representative Christopher Hurst of Enumclaw wants to amend Initiative 502 this year. That would take a two-thirds vote in the legislature. He hopes to cut the 1,000-foot rule to a 500-foot rule, opening up more real estate to the marijuana stores. But it’s unclear whether landlords will jump on board.

In Seattle, commercial real estate brokers say the “land rush” for marijuana businesses has already come and gone. For some landlords, the price was right. One Seattle broker said his client was having trouble leasing a space last year. But a marijuana business agreed to pay market rate for what the broker called a “B-minus” location.

Scott Soules is an agent and landlord in Seattle. He says his phone started ringing in the last couple years with vague proposals from prospective business tenants.
Greta Carter supports marijuana legalization, but says there’s nowhere to open new stores. (Photo by Amy Radil)

Soules: “They would say, oh, it’s a medical use, it’s a service business, they would come up with euphemisms and finally after I’d had a few of those calls I would just say, ‘are you talking about a medical marijuana dispensary?’ and they’d go, ‘yes, well that’s what it is.’”

Soules says he and the landlords he represented weren’t comfortable with the idea of leasing to dispensaries. For one thing the law seemed unclear. And he says the dispensaries didn’t seem like a good mix with other retail. It wasn’t the kind of place where people would window-shop and drop in.

Ellen Mohl is a commercial real estate broker with Yates, Wood and MacDonald in Seattle. She says she used to get three calls a DAY from marijuana businesses, now it’s down to about three calls a week. Some of her clients consulted lawyers and insurance companies before deciding to pass on marijuana businesses.

Mohl: “I’ve represented landlords who have looked into leasing to medical marijuana and after reviewing all that was involved were made uncomfortable – as much as anything because of the security issue. Because when you have a tenant saying ‘yes I will have a guard there at all times,’ that’s an indication that they expect trouble, and most landlords do not want to be in a situation where there’s that kind of trouble.”

She says in general landlords didn’t view dispensaries as legitimate businesses.

Mohl: “Most people who are in leasing know that there just cannot be that many people with medical conditions.”

But Mohl says I-502 might “bring sanity” to the situation, or at least more clarity under state law. And some landlords may feel more comfortable hosting the new state stores. It’s the landlords for medical marijuana dispensaries that could face problems. Some dispensary owners in the right locations could apply for a retail license. State Representative Hurst says if they don’t get that license, they have no legal protection.

Hurst: “Once the state starts issuing certificates for the legal sale of marijuana, I think the feds probably will crack down on – and I think the state may consider cracking down on – anybody that’s operating outside of a certificate.”

He predicts even tolerant cities like Seattle will want to go after dispensaries for tax evasion once they’re competing with state-licensed stores. 

But changing the 1,000 foot rule to allow more state-licensed stores may not reassure landlords or tenants. Violating the 1,000-foot rule still means a stiffer sentence under federal law. Last year the Drug Enforcement Agency sent letters to 23 dispensaries in violation of that rule, telling the businesses and their landlords to cease operations or face prosecution.
Download
Currently Playing
Schedule Grid KPBX 91.1
Weekend Edition Saturday
6:00am 10:00am
Schedule Grid KSFC 91.9
Weekend Edition Saturday
5:00am 7:00am
Click for Spokane, Washington Forecast
SPR Family of Underwriters: