Michigan’s New “Green” Industry

For the past decade or more, green industrial buildings have been a goal of developers and owners who want to reap the rewards of green technology. Lower operating costs, higher efficiency and less pollution are just a few of the benefits these industrial buildings offer.

Michigan joined into the ranks of medical marijuana states in 2008 when 63% of voters approved the Michigan Medical Marihuana Act. The act allows patients with a doctor’s recommendation or their caregivers to register with the state and legally possess up to 2.5 ounces of usable cannabis.

The new laws create three classes of growers: people who can grow up to 500 plants, up to 1,000 plants or up to 1,500 plants. They also create five classes of licenses — those for growers, testing facilities, transporters, seed-to-sale tracking and dispensaries. Communities can decide whether and where they’ll allow dispensaries to operate and charge an annual fee of up to $5,000 per dispensary.

For the most part, licensing fees haven’t been set yet, except that the state can charge no more than $10,000 per license for the class of growers who cultivate up to 500 plants.

Across the nation, eight states have legalized marijuana for medical and recreational uses. Another 20 states have medical marijuana laws and 17 more have laws legalizing medical cannabidiol — a strain of marijuana that provides pain relief without the psychoactive high that accompanies traditional marijuana.

The businesses that are looking for commercial space to buy or lease are:

  • Provisioning Centers (a.k.a. Dispensaries)
  • Marijuana Cultivators
  • Marijuana Processors
  • Marijuana Testing Facilities
  • Marijuana Transporters

 

Buy or Lease?

Even though selling marijuana is legal; manufacturing, distributing and cultivating is a federal crime. If the landlord gets caught leasing a space to the growers, they can lose their asset. The government doesn’t need to prove the owner committed a crime, they just need to show the connection between the property and the crime.

The only way the owner doesn’t get in trouble is if they claim they didn’t know the tenant was growing marijuana. The problem with that is, the government will want a copy of the lease and the lease traditionally has what activities are permitted on the property.

Under federal law, forfeitures can be civil or criminal:

The following shall be subject to forfeiture to the United States and no property right shall exist in them … [a]ll real property, including any right, title, and interest (including any leasehold interest) in the whole of any lot or tract of land and any appurtenances or improvements, which is used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, a violation of this subchapter punishable by more than one year’s imprisonment.

How does this effect the industrial building sector in Michigan?

Industrial buildings are being purchased at higher prices now than in the past because the need is there. Most of the buildings that were on the market from the 2008 recession have been acquired by new owners.  The buildings that are still available, are in high demand and many are now under contract for potential medical marijuana grow operations in Southwest Michigan.

Trends like this can make it challenging to navigate the commercial real estate market where demand is high and inventory is low.  However with our extensive databases, long-lasting relationships and market knowledge, our team has the tools to find the properties that will fit your needs.


Ringler JimJames Ringler, Senior Broker

574.485.1561 (o) | 574.298.8980 (c) | jringler@cressy.com

James Ringler is licensed in both Indiana and Michigan and has over 25 years of business management and ownership experience in retail and industrial manufacturing businesses along with 21 years of municipal management serving as Treasurer and Board Member of Niles Charter Township. He also has been a real estate broker for the past 37 years. His experience in a variety of sectors gives him the ability to understand both client needs and community issues in planning, zoning, land development and in the acquisition and marketing of commercial real estate.