Space To Grow Is Hard To Find (Crain’s Detroit Business)

Samantha made it on the front page of Crain’s Detroit discussing her work with Medical Marijuana Business Owners. Click the link here or read the full article below

After David Greene came up with an idea for his manufacturing company, he set up a 23,000-square-foot lease at a building on the brink of foreclosure.
Was it a perfect real estate deal?

Not so much.

The term “manufacture” is loosely used to describe the business, which grows medical marijuana. And after a 12-month effort, culminating with a public hearing in Royal Oak, Greene’s company, Your Comfort Care LLC, was not approved to use the warehouse.

“This is the perfect use for a building that’s one of thousands that will never get leased unless we find an alternative use for it,” said Greene, who is also the director of brokerage services for Southfield-based real estate company First Commercial Realty and Development Co.

“I have a perfect business model. Michigan created a $1 billion industry and it’s missing out on $950 million of it when medical marijuana is not grown here.”

Greene is one of many in Michigan’s new medical marijuana industry running into roadblocks trying to find real estate for growing operations and dispensaries where medical marijuana is distributed.

Landlords in some areas have shied away from taking on tenants in the industry and local government regulations have added layers of complication.

So those landlords accepting marijuana-oriented tenants not only have to be tolerant, they need to be flexible, said Samantha Moffett, a recent law school graduate waiting to be sworn in as an attorney.

She works for the Walled Lake-based Ambrose Law Group, and has been dedicating most of her time to medical marijuana businesses.

“Cities are requiring a lease as part of the application,” she said. “So we have to go to the landlord and negotiate the terms, but then ask them to hold the space for a period of time while the application is being considered.”

She said the rules vary from one city to another — including outright bans in Birmingham, Bloomfield Hills and Livonia. Ferndale, Roseville and Walled Lake have been receptive, Moffett said.

David Price recently opened a retail space for his business, Cannabis Connection, in Warren to distribute medical marijuana to people certified to acquire it. He opened the business in Warren after being turned down by roughly 70 landlords in Sterling Heights.

“I covered that city and talked to so many landlords, and nobody was willing to work with a medical-marijuana business,” he said. “They wouldn’t take that chance, even with most of the rent up-front.

“They said they were worried about the stigma, worried about giving the other tenants a bad name.”

For Dominic Comer, the challenge was finding his way through the regulations in Walled Lake.

This week, he will open his dispensary, Bazonzoes, a 1,000-square-foot retail space in a strip center. Opening of Bazonzoes marks the end of a four-month effort to get an application approved by the City of Walled Lake under its newly approved ordinance.

The trick: Comer had to have a signed lease in place before the city would consider his request.

“It was a gamble and it was stressful to be paying for rent on a building but not knowing if there was going to be an approval,” Comer said.

Even before getting to the point of a government application, Comer had to find a location.

“There were people who wouldn’t even call us back once they knew what we were doing with the space,” Comer said.

Michael Ziecik, a principal with Southfield-based real estate brokerage Principal Associates-GVA, said landlords who are receptive to medical marijuana uses tend to be those who have investments in one or two buildings as opposed to the institutional landlords with large portfolios and higher rent.

“If you’re a well-financed institutional investor, you probably won’t be interested,” he said. “The thought is, this will attract law enforcement and criminals, so why do it?

“The more mom-and-pop owner, the smaller investors who are having a hard time leasing their buildings in places where this is accepted, like Hazel Park and Ferndale, they’re more than happy to take the lease.”

Ziecik found real estate for a dispensary in Ferndale and said he knows of several landlords willing to do such deals.

The idea of leasing space to a marijuana grower is fine, so long as it is legal and the local government has completely agreed to the idea along with the local community, said Gary Roberts, CEO of the Plymouth-based DeMattia Group, a real estate ownership company with 2.5 million square feet of space under ownership and management.

“But I’d put them in a single-tenant building, not a multi-tenant building,” Roberts said. “I wouldn’t want to add a special tenancy like that where it could be disruptive to other businesses in the mix. A situation with picketers, for example, would be a disruption other businesses shouldn’t have to deal with.”

In Greene’s case, the landlord was more than happy to do the deal, but the city wasn’t.

He proposed to lease a 23,000-square-foot warehouse at 2521 Torquay in Royal Oak, a property delinquent on its loan and at risk of foreclosure.

Greene planned to grow medical marijuana in the warehouse and then create a series of sub-divided spaces in the warehouse to sublease out to other growers.

Royal Oak was one of many local governments that filed a moratorium on medical marijuana uses shortly after the measure passed in November 2008.

After a public hearing packed with residents Aug. 9, the city commission Aug. 12 decided not to give Greene a variance from the moratorium, opting to continue studying the issue.

Despite recent raids of dispensaries in Oakland County, Comer said he’s not afraid of any legal repercussions.

“I’m not nervous at all,” he said. “I’m doing this the right way, doing it by the rules, and it’s going to pay off in the future.”

Daniel Duggan: (313) 446-0414, dduggan@crain.com

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3 Comments

Filed under Ambrose Law Group In the News, Marijuana, Medical Marijuana

3 responses to “Space To Grow Is Hard To Find (Crain’s Detroit Business)

  1. Pingback: More Municipalities Want To Ban Medical Marijuana « Ambrose Law Group

  2. Pingback: Lansing Enacts One Year Moratorium On Medical Marijuana | Ambrose Law Group

  3. Pingback: Another City Overrides The Will Of The People | Ambrose Law Group

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