Jason Piazza Featured in Create Magazine by National Association of Realtors (NAR)
Featured in the Winter 2023 article in Create, Jason Piazza, Director of Real Estate at WeCann was referenced in a recent article!
Titled “High Times, Low Times: Real estate professionals who specialize in working with cannabis businesses say the THC industry could benefit from a little government TLC”, the article in Create, powered by REALTOR® Magazine, advances best practices in commercial real estate and brings expert insights on business trends, strategies and purchases.
Read the full 24 page pdf here or review all the comments quoted by Jason Piazza in the article below and reach out to us for licensing, applications, and general cannabis consulting support.
This article covers the green rush for properties, what if Federal government legalizes, cannabis mega sites, burning through money, and excess supply with high taxes.
It is an honor for Jason to be represented by this high quality industry publication and their involvement is hopefully representative of a positive market outlook for cannabis industry in 2023.
Jason Piazza Quote Excerpts:
Green Rush for Properties
“If you’re looking to acquire real estate for a dispensary, there will be bidding wars,” says Jason Piazza, director of real estate with WeCann in Santa Ana, Calif. Cities generally limit the number of dispensaries they will license, and this is the most sought-after license to originate in cannabis. WeCann, a fullservice cannabis consulting firm that handles entitlements and licensing, has brokered nearly 100 deals valued at $150 million in the last five-and-a-half years and recently merged with CREC, a firm that has nearly an equal number of transactions. “We got our deals [in Costa Mesa] done early and negotiated a 50% premium on leases,” Piazza says.
“By the time the application period opened, tenants and buyers were paying 100-plus-percent premium.” WeCann was hired as the exclusive leasing agent for an old Barstow, Calif., outlet mall, with 23 buildings, 350,000 square feet, parking and a food court. Piazza describes the vibe as a ghost town or a set from the TV series “The Walking Dead.” “We had a vision for our client: ‘Let’s create a cannabis-centric mall with cannabis dispensaries, hemp clothing retailers, head shops, a cannabis museum.’” Several letters of intent were fully executed, and WeCann was ready to do leases when a last-minute cannabis tenant leased the entire campus, says Piazza.
What if the Federal Government Legalizes Cannabis?
WeCann’s Jason Piazza favors legalization but believes descheduling cannabis from a Schedule I drug to a Schedule III drug would have more immediate benefits. “That would open up banking and interstate commerce and do away with the 280E IRS tax code,” which he says hamstrings the industry and squeezes operators. As written, IRS 280E states, “No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances … .” The regulation “prevents any business involved in Schedule I and II from writing off business expenses after cost of goods sold,” says Piazza. A simple carve-out of 280E for legal operators would create profitability, he says. “We also need to incentivize the gray market operators to move into the legal market, and we need to get rid of the excise taxes and let mom-and-pop operators make money on the investment they made into legal cannabis. As it stands, the states and the federal government are punishing these people who are just trying to do the right thing.”
Cannabis Campus Megasite Opening in 2023
Another WeCann premier listing, PowerPlant Park in Richmond, Calif., is an 18.8-acre cannabis campus, vertically integrated from seed to sale for cultivators or retailers. The megasite is slated to open in early 2023. WeCann has signed 18 leases and sales, using tenant-investor and tenant-grower models. This hybrid indoor mixed light greenhouse model represents the future, says Piazza, where high-quality cannabis—containing 25% to 35% THC—can be purchased through drive-thru windows, allowing growers to sell directly to the consumer and realize better margins.
Burning Through Time, Money, Patience
Still, finding a suitable property isn’t easy—and earning a commission on a cannabis sale or lease can require time and patience. The majority of property owners still won’t consider a cannabis tenant, says Francis. For those that will, you must be familiar with state and local restrictions. Oregon, for instance, doesn’t allow manufacturing and retail operations at the same address and limits the number of plants and canopy size at grow sites. Costa Mesa’s ordinance includes a 1,000-foot buffer zone for sensitive uses, such as day care centers, homeless shelters, playgrounds and K-12 schools. In fact, most cities want cannabis in a zone, Piazza notes, which skews valuations throughout the commercial real estate sector.
… And then there’s the matter of getting paid. Piazza reports waiting four years to receive a commission on early cannabis deals; he now negotiates commission payment terms into all deals. He lays blame at the city level – cities don’t hire enough staff to process applications or evaluate manufacturing plans. “The licensing process for cannabis is a joke,” he says. “They have made this process so difficult and lengthy that deals just die.
Excess Supply, High Tax
“We have a massive oversupply of cannabis flower as it relates to legal shelf space,” agrees Piazza, “because cities haven’t embraced retail, but allow unlimited cultivation, manufacturing, distribution. … It doesn’t work.” Cannabis produced indoors sells for $700 to $1,200 per pound, but costs about $700 to $800 per pound to grow. The margins are worse for outdoor-grown cannabis, says Piazza. “Farms are failing, and nobody will buy.” Again, Piazza says government is the problem. “The consumer is being forced into the illegal cannabis market, because of inflation and state and local excise taxes,” he says. For example, the 7% excise tax in Costa Mesa plus state sales and excise taxes amount to a 30% levy for purchasers.
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