NJ cannabis licensees face exorbitant rent demands
NEW JERSEY - More than a year after the state of New Jersey legalized the recreational sale of marijuana, some who have obtained licenses from the state are hitting a dead end when it comes to obtaining retail space.
Many had expected the main hurdle to be securing a cannabis license. As it turns out, the real estate component has been the main obstacle. In New Jersey, once awarded a license, a licensee then has a secure real estate on which to operate their business.
Observers say of the 300-plus licenses awarded so far, as many as 50% may have to give up because commercial landlords are charging them rent through the roof once they hear marijuana is involved.
"You're normally used to spending a couple of thousand dollars on a commercial lease for property," Chirali Patel of Blaze Law Firm told FOX 5 NY. "Now you're talking minimum $10K and above for the same property because as soon as the landlord hears the word 'cannabis,' it's like a 10X almost."
Approximately 70% of New Jersey townships have banned recreational cultivation, manufacturing, or retail. The move in effect limits choices for entrepreneurs like Linda Solana, who was awarded a license by the state under its effort to create social justice. But she said local municipalities are making it impossible for her to find a retail space, from zoning restrictions to high rents. Now she said she is being squeezed to the point where she may have to give up her license even before selling a single product.
Recreational marijuana is still illegal under federal law, making her business the kind banks are not eager to loan money to.
"So you're going to be paying five to six months of rent without making any income. So can you imagine paying $16,000 a month until you open — let's hope you open in November?" Solana told FOX 5 NY. "I've been paying rent since May, and it's been a struggle for me."