Landlords Hesitant To Lease Space To Oklahoma Medical Marijuana Dispensaries
Some Oklahoma retail landlords are reluctant to lease space to medical marijuana dispensaries since State Question 788 passed in June 2018. On this week's Business Intelligence Report, Journal Record editor Russell Ray discusses the difficulties banks are facing in relation to medical marijuana.
Katelyn Howard: This is the Business Intelligence Report, a weekly conversation about business news in Oklahoma. I'm Katelyn Howard. With me is Russell Ray, editor of The Journal Record. There's a recent story by one of your contributing reporters Jennifer Sharpe I'd like to talk about. She reports that a number of retail landlords are hesitant to lease space to medical marijuana dispensaries. After the June 2018 passing of State Question 788, the Oklahoma Medical Marijuana Authority says over 54,000 patient licenses have been approved since February 25th. With the medical marijuana industry rapidly expanding, what are some of the concerns these landlords have, and how large is the demand for more dispensaries been?
Russell Ray: Well Katelyn, we're told commercial realtors have been getting scores of phone calls from people wanting to open a dispensary, a growing facility or a processing operation. And that's before the rules and regulations have even been finalized. But a lot of landlords are still reluctant to lease out space for this new industry. Much of that reluctance stems from the fact that marijuana is still illegal under federal law. And in many cases, the lease agreement with anchor tenants, in some shopping centers, prohibit the landlord from leasing space to marijuana businesses.
Howard: And even though some landlords have been reluctant, the Medical Marijuana Authority says over 1,000 dispensary licenses have been approved since February 25th.
Ray: Yeah. According to our story, some commercial realtors are very selective when choosing a tenant in the marijuana industry. Some will only work with those who are well-funded and have experience in other states where the sale of medical marijuana is legal. And because of the perceived risk and opportunity, some landlords are charging higher than normal rental rates for medical marijuana retailers.
Howard: Numbers from the Oklahoma Tax Commission show medical marijuana sales were over $4.3 million in January. The industry appears to be profitable, but one of the main challenges for those looking to establish a dispensary or expand their business is with banks and financing.
Ray: That's right. Selling marijuana, even for medical purposes, is still against federal law so any bank abiding by federal regulations will be reluctant to support any loans on properties being leased to businesses that sell, process or grow cannabis. We're told some banks simply won't issue loans on properties that housed marijuana businesses. So that's why the business of medical marijuana is primarily a cash-only business.
Howard: There have also been some problems with selling commercial properties that are currently leasing to a dispensary tenant.
Ray: Right. Almost any potential buyer would have difficulty getting a loan under federal law. But if you have no mortgage and own the property outright, leasing the property to a marijuana business wouldn't be much of a problem.
Howard: And despite these difficulties, how do some of the proponents who are mentioned in the article feel about the future of the state's medical marijuana industry?
Ray: Well, one dispensary owner told us it could be a year or two before real estate companies feel comfortable leasing to dispensaries. The state legislature is currently working on legislation to establish the rules for this new industry. And we are expecting lawmakers to deal with some of the banking issues we've discussed here.
Howard: Russell Ray is editor of The Journal Record. Thanks for your time today, Russell.
Ray: My pleasure, Katelyn. Thank You.
Howard: KGOU and The Journal Record collaborate each week on the Business Intelligence Report. You can follow both of us on social media. We're on Facebook and Twitter, @journalrecord and @kgounews. You'll find links to the stories we discussed during this episode at JournalRecord.com. And this conversation, along with previous episodes of The Business Intelligence Report, are available on our website, KGOU.org. While you're there, you can check out other features and podcasts produced by KGOU and our StateImpact reporting team. For KGOU and the Business Intelligence Report, I'm Katelyn Howard.
The Business Intelligence Report is a collaborative news project between KGOU and The Journal Record.
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