Jun 6, 2023
Specialty Cannabis & Prop Tech Real Estate Services w/ Bryan McLaren of Zoned Properties
- BRT S04 EP22 (185) 6-4-2023
What We Learned This Week
- Zoned Properties specializes in Cannabis related Real Estate
- There is High consumer demand for cannabis, it exists already, do not need to create it
- Cannabis dispensaries are in the retail asset class of real estate. Also called - Direct to Consumer real estate.
- Many of the past myths & propaganda about Cannabis on crime and other societal issues were wrong. Property values never went down.
- Cannabis is a $50-$70 billion projected sales industry, w/ a $200 billion Economic Impact
- Zoned Properties Tech Division and SaaS software may be the biggest part of the company in the future
Guest: Bryan McLaren, Chairman & CEO of Zoned Properties
https://zonedproperties.com/about-zoned-properties/
https://www.linkedin.com/in/bryanmclaren/
Bryan McLaren is Chairman and CEO of publicly traded Zoned Properties (ZDPY). As a certified and licensed realtor, Green Roof Professional, LEED Green Associate, and former City Sustainability Commissioner, Bryan has navigated state regulatory programs for cannabis commercial real estate in over ten markets for over 100 development projects.
Zoned Properties®, Inc. (OTCQB: ZDPY), a strategic real estate development firm whose primary mission is to provide real estate and sustainability services for the regulated cannabis industry, positioning the company for property acquisitions and revenue growth. They recently announced the market launch of its partnership with dispensary retail franchisor (The Open Dør). Zoned Properties invests in OpenDor with franchise model in cannabis using inspiration from McDonald’s as an example & model.
PropTech (or Property Technology) is a term used to define the real estate startups that are offering new innovative technologies and ideas built to re-imagine the core processes and business models of the traditional property management and real estate vertical through digital transformation. Real Estate can become more efficient and scale faster for growth.
Lots of rules and regulations to regular real estate zoning, gets trickier with Sinn type industries – alcohol, cannabis, cigarettes, etc. cannabis business cannot just setup shop anywhere like a Starbucks. Rules dictate cannot put the business near a school, or a church. Legalization has also adjusted what hours the store is open while also stabilizing the overall industry – better tenant with growing business. Cannabis will be a $50 to $100 billion client in commercial real estate in the next few years.
Notes:
Zoned Properties has multiple divisions for real estate services, like rental, investment and techs. They have an investment side where they have purchased properties to rent out. For Cannabis clients they could be both a realtor and a landlord. They do not do commercial loans. They have protections if a renter defaults on their lease. This can include a landlord lien or a UCC on equipment, and 3rd-party proxy rights like bankruptcy receivership as an example.
Cannabis dispensaries are in the retail asset class of real estate. Also called - direct to consumer real estate.
Seg 1
Zoned Properties has been around for 10 years specializing in cannabis properties which is a highly regulated and specialized industry. Cannabis is legal in 38 states. Zoning is very specific on where cannabis can setup shop.
Zoned is a public company with investors. The investor pitch for cannabis is pretty straightforward, as there is high consumer demand for the product.
Real estate is a tangible asset class with a hard value. Zoned only purchases real estate in an industry, with increasing consumer demand.
Bryan has a background in sustainability, and environmental projects and also zoning. The goal of any real estate project is to see how it can help the community prosper.
Legacy in the Cannabis industry is for medicinal demand and cultural use. They do not have to create demand as it exists already. Numerous cannabis studies on the medical side helping people with pain and other elements.
Many of the past myths and propaganda about Cannabis talking about crime and other societal issues were wrong. Property values never went down. Cannabis is a $50-$70 billion project and gross sales over the next decade. Also a $200 billion economic industry impact, along the lines of the alcohol industry. Strong economic value overall.
Seg 2
You always want to determine the highest and best use of the real estate property. An example would be in a good climate area, you would want farmland. In a dense city area it could be apartments or office space. Cannabis dispensaries is in the direct to consumer real estate. You could convert a previous property that might’ve been a bank or a restaurant into a dispensary.
The commercial real estate industry has a market value of $16 trillion, with 1.5 trillion being industrial use. Cannabis properties that do cultivation or greenhouses are considered industrial.
Different classes of assets in real estate. Cultivation or distribution would be considered industrial while a dispensary is considered retail. Demand previously had outweighed supply and cannabis, but now there is more supply. Storage space needs to be improved.
Office space is on the commercial real estate side. Commercial retail real estate would involve the sale of a product ‘in person’ to a consumer at a retail site, or direct to consumer. It’s been a commoditization of the industry. Conversion of open real estate to better trends, will raise the value by getting the highest and best use.
Seg 3
Bryan‘s background is in community planning, office and zoning. Like City project to figure out where it’s best to put a sports arena, highway access or where would restaurants or schools be located.
Where should a cannabis site go? Cannabis is an emerging industry that is highly regulated and considered specific use in the real estate sector.
Zoned helps clients with site identification, permits and building set up. Zoned Properties also has an investment division that invest and owns properties.
They have a technology division which they call Prop Tech for property technology, to increase efficiency of a property. They can do predictive studies of where the next zoning project will go.
38 states have legalized Cannabis with Kentucky in 2023 and Minnesota soon after.
It’s been a shift in society since Covid, as less people in the office. So you have to figure out how to convert that real estate.
An example from the past would be Blockbuster. They owned so many stores, who do you sell those buildings to when an industry craters?
Cannabis has premiums on rental rates. Green zone analysis - where can you put a Cannabis store.
Zoned calls it their product re-zone. AI technology at Zoned which can identify properties that could be used for cannabis locations, and have the best coding.
SUP or special use permit to change zoning. An area might need to be rezoned to see to zoning for cannabis.
The biggest value loss in trying to get a property is time. Because of regulations it takes longer in Cannabis to get permits, upwards of 6 to 9 months. That is a long holding period for investors and entrepreneurs.
Seg 4
Zoned Properties is public company for eight years now, corporation, stock ticker ZDPY. They are non-plant touching company, ancillary company to Cannabis. They do not own any Cannabis businesses or take profits from any Cannabis ventures. Zoned gets fees from providing real estate or advisory services or rental revenue.
Chief legal attorney is Dan Gauthier who handles contracts and regulations as well as national brokerage.
National cannabis event takes place in Las Vegas. There’s a big barrier to entry in cannabis with all the regulations and investment needed.
Four divisions of Zoned Properties are: property tech, advisory, services like brokerage, and investment
Currently they have 5 state offices with expansion of 5 more. Investors want upside so they like the cannabis industry, and getting in early. Cannabis is in a consolidation phrase, lots of M&A the last 5 years.
Risk mitigation that Zoned provides is they have the tangible assets of the real estate. This gives downside protection to investors. Equipment and real estate are the best security and collateral for loans.
Biggest opportunity in Cannabis - follow the trends of consumers. The tech side could be the biggest opportunity for Zoned Properties. Working on a SaaS or DasS product. $200 billion of economic impact.
Real Estate Topic:
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