Marijuana Retail Leasing Faces Blunt Challenges as Legalization Spreads

The number of marijuana stores in the U.S. is poised to grow in 2021 and 2022 as more states legalize the narcotic, the federal government toys with legalization at the national level, and already large sales chains seek to get larger.

The expected growth is a small miracle given that tenants, landlords and commercial real estate professionals continue to operate in a niche retail market beset by variables and risks unlike any that just about any other type of retailer faces. These include a primary competitor that no smartphone, fruit or clothing retailer has ever faced.

“It is still the case that the No. 1 competitor for any legal business is the illicit market,” said Howard Schacter, a spokesman for New York-based marijuana producer and retailer Acreage Holdings. “The illicit market still dwarfs the overall addressable cannabis market.”

Acreage and other large marijuana sellers, such as Curaleaf and Green Thumb, have announced expansions over the past two years, including acquisitions of other retailers and new investment. Acreage, for its part, had 28 dispensaries selling marijuana for recreational and medicinal use as of the end of 2020’s third quarter; that was up from 22 in early 2019. [Read more at Commercial Observer]

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