With Bill C-45 formally approved by the federal government, making cannabis consumption legal, Colliers International has officially started marketing cannabis production facilities.
The cannabis industry has hitherto facilitated large-scale investment either directly or through joint ventures, and by marketing BlueVault Organic Marijuana Ltd. it becomes the first commercial real estate firm to market the nascent industry in British Columbia.
Alan Johnson, vice president of unique properties at Colliers International, says he’s surprised at the reticence shown by the real estate industry —that is, everyone from lenders to realty brokerages—to become directly involved with the cannabis industry.
“We’re involved with leasing and the sale of cannabis operations for indoor growing and/or oil extraction, but never been involved with a facility with an existing license in place,” he said. “We’re not just selling a real estate opportunity and we’re not just a service providers putting a tenant into a property, we’re involved with selling the entire operation inclusive of the license.”
Colliers has done its due diligence. Upon rumblings out of Ottawa about legalization, Colliers started studying the cannabis industry and has firmly placed itself ahead of the fray.
“It’s an emerging market and we are a real estate service provider,” said Johnson. “We facilitate transactions, whether they’re acquiring or selling, and this emerging market is going to become, in my opinion, a significant occupier of real estate and we’re here to satisfy that.”
While other sectors of the real estate industry have been slow to dive headlong into the cannabis production facility market, there does appear to be appetite.
Trez Capital is a private equity short-term bridge lender that primarily invests capital by making mortgages. According to the company’s president, for the right sponsorship Trez would provide short-term acquisition for bridge loan financing of cannabis facilities.
“We are open to it because there’s enabling from federal and provincial legislation that brings cannabis facilities into the mainstream,” said Greg Vorwaller. “When we make a loan, we want to get paid but we have to look at the depth of liquidity in the marketplace for those kinds of facilities at the time of maturation of the loan. When it was not legal, there were issues associated with liquidity.”
Legislation buttressed by federal and provincial powers is paramount, added Vorwaller.
“I have friends in Colorado who opened warehouses that served as cannabis production facilities and it’s a matter of state legislation,” he said. “The issue they had was finding traditional sources of financing for the acquisition or refinancing of industrial facilities used for cannabis production and warehousing, because at the federal level cannabis is still against the law. As a result, the federally regulated banks would not lend to those facilities and, therefore, other traditional lenders would not lend on them as well.”
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