Hawaii is poised to become the latest state to move forward with a medical marijuana dispensary program, but it won’t be paradise for cannabis entrepreneurs.
The state plans on erecting some stiff barriers to enter the market, including a requirement that license applicants have $1 million dollars in the bank. If that doesn’t deter many entrepreneurs from throwing their hats in the ring, the high cost of real estate just might.
The island of Oahu – home to Honolulu, the state’s largest city – has the lowest vacancy rates in the nation for urban industrial properties, according to real estate market researcher Colliers International. In the first quarter of 2015, tenants had a hard time relocating or expanding thanks to the “severe island-wide shortage of warehouse space,” Colliers said in a report.
The emergence of a medical marijuana industry would likely exacerbate the real estate crunch, meaning cannabis companies seeking buildings for cultivation sites and dispensaries might have to pay sky-high prices.
The costs could be substantially higher for dispensaries that want to locate in tourist-heavy areas where real estate is even more pricey. Given that Hawaii’s program allows sales to medical marijuana cardholders from out of state starting in 2018, many dispensaries will likely target these popular areas.
“Real estate and buildings in Hawaii are very expensive,” said Stephen Pingree, a Hawaii-based lawyer and consultant who works with cannabis companies. “Nobody wants to be in the boonies so everybody is going to try to have a dispensary in a popular area. If you’re looking to the future, you’re going to want something accessible to tourists.”