Berekk Blackwell, COO Zoned Properties- Interview Series

As it stands, with the amount of complexity and upfront financial burden that is required to secure cannabis real estate, the playing field is unbalanced towards large multi-state operators.

Berekk Blackwell

Real estate is one of the biggest challenges of the legal cannabis industry. Unlike other industries, zoning is a big consideration because one cannot put up a cannabis facility in just any random location. Distance from schools and residential areas are taken into consideration, making the real estate options few and far between. This definitely pushes the cost of real estate higher. Worse still, financing is a BIG ISSUE in the cannabis industry.

Not many people have dared to venture into cannabis real estate to try and find solutions to the existing problems. That said, a few have tried to take up this uphill task. To get a practical feel of what this is, we spoke to the Chief Operating Officer at Zoned Properties; Berekk Blackwell.

Zoned Properties is a real estate company that provides real estate and sustainability services for clients in the regulated cannabis industry. The company is an accredited member of the Better Business Bureau (BBB), the U.S. Green Building Council, and the Forbes Real Estate Council. The company does not grow, harvest, sell or distribute cannabis.

As an intro, how did your career path lead you to cannabis real estate?

Prior to entering the cannabis real estate industry, I was involved with a variety of different restaurant concepts and their regional, national, and international expansion. My specific roles included operations, pre-opening management, franchise sales, and real estate site selection. This led to a more significant role in the capital markets for restaurants, consulting for private equity investors in the space, and helping them with analysis and day-to-day management. This traditional retail experience has translated extremely well into cannabis real estate, helping operators navigate the complexities of finding high-quality real estate that can be used for a cannabis operation. These operators are dealing with many of the same issues as the ones I was involved with previously and I’ve enjoyed the additional layer of challenges that cannabis brings.

What are some of the real estate challenges facing the regulated cannabis industry?

There are many, but a couple of main categories I would highlight are local zoning regulations and financing. Municipalities across the country in states with regulated cannabis programs of some sort have been forced to make the difficult decision about where, if at all, to put these cannabis businesses. In many cases, this is the first time the local officials have had to discuss such a topic, which creates a very steep learning curve and usually leads to complicated zoning ordinances. These ordinances usually have designated areas these businesses can operate, and how far they need to be from any protected uses such as schools, churches, residential, etc. You can see how very quickly your pool of potential high-quality sites shrinks to a fraction of the total. This leads to financing. The inability of some banks to do business with cannabis companies leads to instances where the landlord of a site, although it meets local code, can’t engage in a lease because of the financing they already have on the property. This part of the problem is changing very fast in our industry with more options for operators and real estate owners but is still an issue nonetheless.

Can you shed some light on democratizing real estate in the regulated industry?

As it stands, with the amount of complexity and upfront financial burden that is required to secure cannabis real estate, the playing field is unbalanced towards large multi-state operators. At Zoned Properties, we’re aiming to democratize the process by developing technology that makes it easier for smaller, local operators to be able to capitalize on the same potential real estate opportunities as these larger organizations.

Which has been your greatest project to date and what was the one lesson that you learned from executing this project?

My favorite project so far was the most recent Arizona license lottery where they issued 13 additional licenses via lottery in rural parts of the state. We worked with many different clients on securing their real estate as a part of their applications. The highlight for me was the immense pressure these smaller rural municipalities were under to draft new ordinances, have open dialogue, and make decisions under a strict deadline. We learned compassion during those few months. We needed to be patient and work with these local officials to help educate them on the process, the variables to consider, in some cases cannabis in general. Most people wouldn’t take the time to do this, but these relationships we created are still there today and it has made a huge difference for both us and them.

In a nutshell, what does it take to put together a multi-million-dollar cannabis commercial real estate project?

Extreme attention to detail. In a traditional commercial real estate deal there is already a multitude of variables to consider. With cannabis, you still have those same variables but you add on an additional layer of complexity that requires a great amount of attention to detail. There will always be a risk, but it's understanding the risk mitigation strategies that we’ve developed over years of working in cannabis real estate that will continue to give us and our clients succeed in this business.

Thank you for the great interview and for all of the work that you have done to help move this industry forward, readers who wish to learn more should visit Zoned Properties.