The road to cannabis real estate development can be an exciting trek for ambitious and motivated investors. Even if you have an extensive background in real estate or are a seasoned entrepreneur, the cannabis industry can present a unique set of regulatory and technical challenges to which most individuals are unaccustomed. Experiencing delays within the cannabis real estate development process is not uncommon. Still, it can become highly problematic if you can’t get back on track quickly. Here are some ways to get the train back on the rails for a smoother ride ahead.
Strategy 1: Return to A Strategic Plan
Many people who enter the cannabis real estate market have a certain degree of business experience. Still, fewer have experience within the cannabis industry itself (aside from possibly being a consumer). One of the biggest mistakes people make is preparing a high-level business plan that works well in most industries but lacks the technical detail and knowledge imperative to compete in the high-regulated cannabis industry.
Suppose you are finding roadblock after roadblock related to filling out applications for permits and licenses, sourcing materials, or meeting timelines. In that case, it may be time to hit the pause button on your project and take a closer look at your strategic business plan, this time with an expert in the cannabis industry who can help you identify deficiencies on the front-end before you get deeper into the real estate hole.
Early on in the process, minor problems are much easier to address and fix. We have seen more than one cannabis real estate development plan go awry, though, when a small “we’ll get to that later” question on a permit application snowballs months down the line into a full-on, project-halting conundrum. One miscalculation on your Conditional Use Permit can result in the removal of the newly-constructed greenhouses from your property and significant time delays.
If you’re still fairly early on in your cannabis real estate development process and find yourself hitting multiple unexpected delays, this may be a good indicator that your plan needs a strategic review by an industry expert. BeGreenLegal’s team, with over a decade of experience in serving cannabis business owners, offers multiple strategic consulting options, including property suitability analysis, market, licensure, compliance review, and operations analysis.
Strategy 2: Find the Right Project Manager for Your Cannabis Development
Since you may already be knee-deep in cannabis permit and licensure paperwork, you know how much work it takes and how challenging it can be to interpret and complete each of the forms required to simply begin your cannabis real estate development project. Small miscalculations or ambiguous questions with overly-generalized answers may not seem like a big deal at first but can result in significant time delays and budget overruns.
Getting a Deficiency Notice in your application process is almost expected. However, getting multiple notices may signify that you need a Project Manager (or the right Project Manager) to stay on top of each piece of the application process and handle issues both timely and correctly. It is important to have a Project Manager with both the availability to meet contractors and inspectors onsite as needed and the flexibility to handle an inconsistent workflow that may have periods of pause and then waves of projects demanding attention.
Even for seasoned investors, regulatory roadblocks are common due to the ever-changing regulatory landscape that differs greatly by county, state, and political affiliation. But having a knowledgeable Project Manager in place from the start is a necessary personnel requirement to get your project operating and profitable.
Strategy 3: Tighten Your Record Keeping
Training, record keeping, and accountability are three significant factors that should be taken into consideration h and addressed when developing your strategic business plan. Compliance is a vitally important part of the cannabis industry and is not something to be taken lightly. However, if you’re already into your real estate development project and realize your recordkeeping is not up to snuff, it’s time to take control and put some serious policies and procedures in place.
Cannabis businesses are prone to frequent audits and inspections, and for obvious reasons. Even with making cannabis legal, government officials want to ensure that there is control and accountability for the products. Details about hiring practices and background checks, training, internal audits, physical control of the products, record-keeping practices, and security measures are all vitally important parts of owning a cannabis business.
If you do not have detailed and thorough documentation currently in your cannabis real estate development project, know that this is a component you cannot afford to push off until later. Bring in a knowledgeable cannabis industry expert to help find the holes in your pre-operating and operating documentation plan to avoid costly delays in your business. These small details can cause tremendous headaches (and financial pains) down the road if not dealt with in a timely manner.
Strategy 4: Review Your Budget for Accuracy and Keep an Eye on Cash Flow
The most significant stumbling block to most new business ventures is insufficient cash flow. Within the cannabis industry, we have seen many experienced entrepreneurs caught off guard by regulatory requirements, resulting in significant project delays. When it comes to cannabis real estate development, the holding cost of your land, whether leased or owned.
Again, this is where having an expert familiar with navigating the process is so important to achieving profitability. To budget appropriately, you have to understand the local and state regulatory environment you’re operating in and know how to navigate the permitting and licensure process to minimize the carrying cost of your real estate until you’re operational.
Having a thorough strategic plan, which includes the fact that you are starting a cannabis real estate development project and details how you will make money doing so, will instill confidence in your potential investor base and help you secure the necessary cash flow to see your project to completion.
Getting Your Cannabis Business to Market
When it comes to cannabis real estate development, time is of the essence. With the potential for significant profits, once you’re operational, the opportunity cost of being ensnared in the regulatory red tape during the development stage is enormous. Investing upfront in experts with the specific knowledge to help streamline and expedite your time to market is money well-spent in the cannabis industry.
Our team at BeGreenLegal has over a decade of experience helping cannabis businesses overcome industry obstacles and get projects back on track. We offer consultations on all phases of cannabis business development in each part of the cannabis supply chain, from cultivation to dispensaries. If you’re encountering unexpected delays in your cannabis real estate development project, now is the time to contact us and get the information you need for success.