You may have thought medical marijuana was primarily a health matter or a talking point in the liberal vs. conservative debate. And while it can be those things, it is also a real estate issue. After all, the pot dispensaries have to set up shop somewhere.
In New York, that somewhere is 212 E. 14th Street, a 7,200-square-foot mixed-use residential building between Second and Third avenues in Union Square that will become Manhattan’s first medical marijuana dispensary. Columbia Care NY, one of five companies that recently received a New York state license to grow and distribute medical cannabis, has reportedly signed a five-year lease for 3,500 square feet on the ground floor and basement of the property and will store its merchandise in a secure vault.
The market value of the 1920 building, located near Stuyvesant Town, was assessed by the New York City finance department at $3.19 million for the 12-month period ending June 2014, with an estimated gross income of $278,928.
Medical marijuana, which is used to alleviate ailments including chronic pain and the nausea caused by chemotherapy, is legal in 23 states, though varying restrictions apply.
Columbia Care, an alternative health care company founded in 2013 and headed by CEO and former Goldman Sachs investment banker Nicholas Vita, will be legally authorized to hand out non-smokable medicinal marijuana as of January 1. Company spokesperson Peter Kerr was quoted as saying the atmosphere will be like a “very nice pharmacy.”
Vita told the New York Times his company would invest “double-digit millions” in dispensaries and growing facilities across New York state, including a marijuana farm in Rochester and facilities in Platttsburgh, in upstate New York, and Riverhead, on Long Island.
Just how profitable could the budding cannabis industry turn out to be?
Let’s be blunt: Industry advocates predict that U.S. retail cannabis sales are heading for a high, with the Marijuana Business Factbook saying sales could rise more than fivefold between 2014 and 2018, reaching between $7.4 billion and $8.2 billion.
The RAND Drug Policy Research Center estimates that marijuana consumption has increased by more than 30 percent between 2006 and 2010. RAND co-director Beau Kilmer has told the Wall Street Journal that current retail spending on marijuana in the U.S., including legal and illegal sales, amounts to the tens of billions of dollars, adding: “There is definitely money to be made.”
All five approved companies plan to open four dispensaries and are required to be doing business within six months. As for the commercial real estate possibilities in New York, the possibilities extend beyond Manhattan (though another Manhattan site, operated by Bloomfield Industries, is expected to open as well). According to the New York State health department and media reports, Empire State Health Solutions will be opening at the Queens Center Mall and manufacturing in Fulton County, PharmaCann will be dispensing in the Hunts Point section of the Bronx, and Etain will be both manufacturing and selling outside of the city, dispensing in Albany, Yonkers and Syracuse.