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Cannabis Property Demand Slows Down in Los Angeles.

by Roger Tower on December 20, 2018
Cannabis Property Demand Slows Down in Los Angeles.

At the beginning of 2018, California experienced a huge spike in cannabis real estate sales due to the high demand for commercial spaces in a newly lucrative industry. Prices were high and commercial properties few. Entrepreneurs trying to get ahead of the game were investing in cannabis real estate and green businesses were rapidly emerging all over Los Angeles neighborhoods.

Prices are now going down in cannabis properties due to lower demands in real estate after almost a year of recreational marijuana being legalized in California. Lease and sale prices are slowing as cannabis licenses are being issued. The City of Los Angeles Department of Cannabis Regulation has issued 169 temporary approvals for retail licenses and 15 for testing labs. One of the reasons for this decrease in demand is the licensing process, which can be difficult to navigate through.

The Los Angeles County Department of Regional Planning has identified areas where commercial cannabis businesses can potentially be established, but one of the biggest hurdles in cannabis rea lestate currently deals with marijuana still being considered an illegal drug ona federal level, which means there are very limited lending opportunities for investors and business owners. Federal banks generally won’t offer lending on properties with cannabis tenants. These federal restrictions are a huge obstacle within the industry. This is also an issue that presents itself in other states with legal cannabis.