Is it safe to invest in 'cannabis real estate'?

The cannabis industry is experiencing a period of rapid growth -- which means that it could be a great time to invest in commercial real estate that's designed to be used for growing cannabis, processing it or dispensing it to either medical marijuana patients or (eventually, you may hope) recreational users.

It's also a time fraught with a lot of risks for those in the cannabis industry -- but savvy investors know that and know that no market is 100% "good" or "bad" for any type of investment.

Here are some of the things that potential investors should consider before deciding whether they're willing to take the financial risk on investing in cannabis-related real estate:

  • At least 33 states have already made marijuana available medically for qualified patients (although what "qualifies" someone varies drastically from state to state).

  • At least 10 states and the District of Columbia have made recreational marijuana legal for adults.

  • Legislation on the issue seems to be largely trending toward the eventual legalization of marijuana in some fashion nationwide

  • The constant flux of laws and the mishmash of regulations that don't match up between the federal government and the state add to an operation's operating costs and limit growth.

  • Those same issues make banks reluctant to work with the cannabis companies.

  • Landlords may shy away from grow operations, cannabis refineries and dispensaries because they're worried that the federal government will step down on them -- regardless of the state's laws.

It's important to understand that New York's cannabis industry is very tightly controlled -- however, positioning yourself to rent to cannabis tenants may be in just the right spot and time to benefit greatly.

It's always important to do your due diligence before you invest in commercial property. The more complicated your situation or goals, the more likely you should seek some experienced advice before you purchase.