As New York grows its medical marijuana program, what are the opportunities for the Westchester County real estate industry?
That was the question posed in a panel May 30 that The Business Council of Westchester President and CEO Marsha Gordon promised would have an unusual twist from typical conversations around real estate. The business group and the Fordham Real Estate Institute presented the panel, which drew about 50 to a café space in Fordham’s Harrison satellite campus off Westchester Avenue.
New York launched its medical marijuana program in 2015, with the state Department of Health awarding medical marijuana licenses to five companies under the Compassionate Care Act, signed into law a year earlier by Gov. Andrew Cuomo. The program has since expanded to add licenses and approved treatments.
There are 1,660 registered practitioners in the state’s medical marijuana program and 56,973 certified patients as of the end of May. That’s up from 38,642 certified patients and 1,358 registered practitioners in December 2017.
There are medical marijuana dispensaries in White Plains and Yonkers and multiple growing facilities farther north in the Hudson Valley.
Meanwhile, Cuomo’s office has promised the state Health Department will release a study weighing the impact of legalization of marijuana for recreational use. Neighboring states on the East Coast in Maine, Vermont and Massachusetts have already followed the lead of Colorado in legalizing recreational uses.
With medical marijuana already here, The Business Council of Westchester and Fordham Real Estate Institute gathered the panel to explore what real estate possibilities could follow the industry’s expected growth.
That included Adam Altman, founder and managing member of New Jersey-based real estate development company KABR Group, Seth Pinsky, executive vice president and investment manager of RXR Realty and Michael C. McQueeny, associate and chair of cannabis practice for the Genova Burns law firm in Newark.
The hour-long discussion was moderated by Michael Stoler, managing director of Madison Realty Capital and host and producer of “The Stoler Report” and “Building New York: NY Stories,” television programs distributed by CUNY TV.
One of the first questions Stoler posed to the two real estate executives was whether they’d want a wholesale cannabis operation — one that processes the product, manufactures and distributes it — in one of their properties.
“Everyone is trying to figure out from the industry side and the outside real estate side how can we approach this space?” Altman said. “Not because we think it’s right or wrong, or good or bad, but as fiduciaries to our companies and investors.”
The two developers agreed there’s a number of issues that would have to be reviewed first. The companies would have to consider whether having a business that is illegal under federal law would create financing issues, whether the company was credit worthy, how the building’s other tenants feel and whether there is community support or opposition to a medical marijuana operation.
Stoler pointed out to Pinsky that RXR will have significant retail space to fill at its new developments in Yonkers and New Rochelle. Could a cannabis operation fit in there?
Pinsky said the company’s focus for that retail space is finding users that add street life and services.
“I think that in the big scheme of things, if we were choosing between a gym or a medical marijuana facility or a food purveyor or a medical marijuana dispensary in these downtowns, because of where they are in their state of development, we would probably choose the former rather than the latter,” Pinsky said. “Just because those very basic services are not currently in many of these communities and that’s really the first thing we need to build up in order to make these areas desirable to our tenants.”
McQueeny pointed out that cannabis operations are highly regulated and laws can vary within both states and individual municipalities.
“Most licensing programs require you to have essentially an impact study or a process for alleviating concern on other businesses,” McQueeny said. “Because, as you’ve rightly recognized, when you’re growing cannabis, as much as you try to cover it up, cannabis is odorous.”
“There’s a lot to consider from a property owner perspective,” McQueeny added. “And if you’re going to take a tenant, there’s a lot of mitigation aspects that you’re going to want to discuss with them and have as part of your lease.”
Altman considered one potential upside to a cannabis-focused tenant: it could fit with the type of vibe residential developers seek in order to attract what he called the creative class.
“One of the things we try to do as developers and entrepreneurs … is you try to create a creative culture,” Altman said. “What I’ll say is that whether it’s cannabis or whether it’s a great bar or artisanal pizza shop or music venue, museum (or) art studio, those are the things that create place and the culture we need in order to have economic success with our project.”
Pinsky jumped in: “So what you’re implicitly saying is that the creative class is entrepreneurial and that the creative class likes cannabis?”
The KABR Group leader paused to think while the crowd laughed, before simply replying “yes.”