Marijuana Business Magazine July 2018

¬ t can take months for a marijuana dispensary or other business to get its license approved by regulators. A key requirement: A company must first have the location for the business nailed down. Paying rent on space before you have your license can cost a lot of money, unless steps are taken early in the process to minimize costs. The good news: By choosing the right place, working with the current build- ing owner and having a knowledgeable team in place, it is possible not to pay rent before the license is approved. However, be aware that a landlord has less incentive to work with you in a tight real estate market. Still, there are ways to mitigate the upfront costs, even in such a market. And, when you make the right moves, the savings can be substantial. “In Illinois, our rent was $9,500 a month (for a medical medicinal dispensary), and we didn’t pay any rent during the year we spent waiting for our license to be approved,” said Brian Fox, managing partner of St. Louis-based Greene Fox Enterprises. “You can do the math and see that we saved more than $100,000 by not paying rent in the first year,” said Fox, who also is CEO of Cannavations, which recently opened medical mari- juana dispensaries in Maryland. Can- navations also didn’t pay rent during its one-year waiting period for license approval there. Licensing Requirement In many markets, prospective busi- nesses can’t even begin the licensing process until their locations have been decided. Daniel Shortt, an attorney with the Seattle office of law firm Harris Bricken, said it typically takes three to six months to get a license approved, but he has seen it take as long as a year in Washington state. “In Washington, you are required to have your real estate identified before you can apply for a license, and I suspect that is true” in most states, Shortt said. That is because real estate is an integral part of the licensing process, he said. For example, the building for a dispensary must meet state and local By John Rebchook EXECUTIVE SUMMARY You can save money when leasing a building while awaiting your marijuana license. Since it can take up to a year for a license to be approved, defraying the lease costs during that period can easily save you six figures. To avoid throwing away money on rent, consider these tips: • Lease a building in a depressed market, where the building owner is willing to give you free rent in return for an above-market lease once you are fully licensed. • Hire a lawyer and real estate broker who can help find the right building and negotiate a lease that abates the rent until you get your license. • Sign a longer lease; a landlord might be willing to take the long- term gains of a long lease over the short-term loss of rent while you await license approval. • Meet with the building owner. The owner might cut you a deal if you can convince him or her that you have a strong business plan and will be an asset to the community. • Agree to foot the bill for tenant improvements in exchange for a period of free rent. July 2018 • Marijuana Business Magazine • 59