CRE Industry Buzzes with Cannabis Business
“The biggest killer on the planet is stress, and I still think the best medicine is and always has been cannabis.”
– Willie Nelson
One of the largest crowds for a CREW-St. Louis program gathered on Jan. 14 for a lunch time panel discussion on Missouri’s newest market – medical marijuana. After voters overwhelmingly passed an amendment to Missouri’s constitution in 2018, medical marijuana became legal in the state on Jan. 1, 2020.
With an estimated $332 million in economic development and design build impact for Missouri during this first year, the St. Louis commercial real estate market has been buzzing with development plans for months. The rigorous application process for the licenses did not stop 2,163 entities from applying for the 60 cultivation, 86 manufacturing and 192 dispensary licenses available statewide.
The 86 manufacturing licenses were granted on Friday, Jan. 10, when the Department of Health and Senior Services, which oversees Missouri's emerging legal medical cannabis system, informed the 435 manufacturing applicants as to whether they got a thumbs-up — or a disappointing thumbs-down.
Earth City’s BeLeaf Medical LLC was awarded two manufacturing licenses. Mitch Meyers, partner and chief marketing officer for BeLeaf, shared the panel discussion with Gail Choate, St. Louis County, John Schaefer, St. Louis Title, Liz Austin, Green Street St. Louis, and Roger Denny, Spencer Fane. An extra, albeit empty, chair with a sign that read “BANK” rounded out the panel.
Some highlights of the panel discussion:
- Missouri’s amendment was well-designed, driving considerable out-of-town interest in obtaining a license.
- Most St. Louis area communities were quick to adopt and amend the State-defined ground rules and develop a permitting/application process for the various facility types. This enabled the identification of viable commercial properties for the various licenses.
- The types of Medical Marijuana facilities were identified under existing categories: Retail Pharmacies (Dispensaries), Indoor or Outdoor Agriculture (Grow Facilities), Research or Testing, and General Manufacturing.
- Site selection drove the manufacturing award process. The state process identified “bonus” zip codes that were used as tie breakers in the application process – awarding as many as 30 additional points for sites selected in these areas. These zip codes represent areas where the employment rate is below 89.9 percent per the Missouri Census Data Center. Liz Austin mentioned that 50 of the 60 licenses granted in the St. Louis were in a bonus zip code.
- Sites were also selected based on the type of grow facilities (indoor/outdoor), ceiling height, optimized layout, systems and utilities (with availability of power being of importance), security, expansion potential and parking. By state law, the facilities could not be located within 1,000 feet of any existing primary or secondary school, daycare or place of worship.
- The panel stated that as long as cannabis remains federally illegal, the support businesses (banks, title, insurance) in Missouri are best operating on a “don’t ask, don’t tell” basis to avoid federal charges of aiding and abetting by providing products and services to a known cannabis-related business.
- This practice applies to all members of the commercial real estate support team required for these facilities – developer/owner, broker, attorney, banker, architect, MEP consultants and CPAs.
- The Safe Banking Act (HR 1595) was passed by the U.S. House of Representatives on Sept. 25, 2019, and was designed to alleviate many of these issues. The act stated that the National Cannabis Industry Association’s 2,000 member businesses should have access to banking the same as any other U.S. business, The Act unfortunately died in the Senate, and the panel members did not feel the Act would pass before the 2020 election.
Despite an onerous application process, the potential illegality and the cost of developing a medical marijuana business, CREW-St. Louis attendees walked away from the panel with the firm understanding that business is positively blooming in St. Louis.
Photo Album: Cannabis and CRE