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Recreational marijuana can bring New York to new heights

New York Mayor Bill de Blasio (Credit: NYC.Gov)

New York joined a growing number of states that have legalized recreational marijuana after state lawmakers reached a deal last month to allow sales of the drug for recreational use. Dispensaries and “consumption sites” (e.g. pot cafes) are now allowed, along with changes like the loosening of medical marijuana restrictions.

Worth Noting: Although the legislation has taken effect immediately, sales won’t start until New York sets up rules and a proposed cannabis board, which means it could take two years for sales to commence.

Real Estate Angle: Many property owners won’t do business with companies selling cannabis because the federal government still classifies marijuana as a controlled substance, like cocaine or heroin. So for owners willing to lease to cannabis businesses, it’s highly lucrative.  Properties with federally chartered loans and mortgages are legally precluded from renting to such tenants.

High rents: Property owners have been able to charge as much as three times market rates when selling or renting to businesses involved in the cultivation, distribution, processing, or sale of cannabis.

Hurdles at Play: Opening a dispensary or lounge requires flexibility from a landlord; applicants must show that they have possession of the premises 30 days after having their license approved, either through a lease or through owning a property, The Real Deal noted. Openings may also have an impact on surrounding businesses, attracting some while repelling others.

Zoning Considerations: Like tobacco stores, marijuana retailers cannot be within 500 feet of a school or church, per the legislation. No other locations are forbidden. But cities and towns can use their zoning authorities to determine where dispensaries and other retailers can be. That could involve placing dispensaries on the outskirts of towns, as adult businesses often are, or spreading the retailers out to avoid a cluster of businesses in one or several locations.

Like a Liquor License: Under the approved legislation, dispensaries will need to have a separate license to allow for on-site consumption. Similar to liquor stores and bars, there are separate categories for where consumers can buy the product and where they can consume it. And as of now, laws also prohibit the sale of food and beverages at cannabis lounges, though that could change as the Office of Cannabis Management firms up regulations, TRD noted. [AP+Gothamist+TRD]

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