January 21, 2019
Other Voices

Recreational pot would be a boon to CT economy, real estate

Luke Massirio
Daniel Glissman

Connecticut is uniquely positioned to implement an adult recreational cannabis program quickly and efficiently.

Connecticut can develop thoughtful, straightforward, business-friendly legislation for this industry by building on its medical program and looking to Massachusetts, which has pioneered the way for this industry on the East Coast.

After similarly building on its medical marijuana program, Massachusetts opened the first recreational cannabis establishments east of the Mississippi River on Nov. 20. Since its first day of sales through Dec. 30, the cannabis industry in the Bay State grossed almost $15 million, and Massachusetts has projected that the state's revenue will increase by about $215 million in the first two years of retail sales.

Even though Connecticut has yet to legalize recreational cannabis use, it's important for cities and towns to begin planning for this industry right away.

However, many Connecticut municipalities won't do so until the state gives a clear indication that legalization is imminent. Through a transparent and deliberate legislative process, Connecticut could seize on this opportunity and clearly identify when an adult-use program would begin, giving municipalities, businesses and residents time to plan how and where they want cannabis establishments in their community.

It's no secret that growth has been a major issue for Connecticut's economy. In comparison to other parts of the country, Connecticut still has higher vacancy rates among various types of commercial real estate.

Raising revenue is a major problem in Connecticut. It was a major talking point for both political candidates during the gubernatorial race. Connecticut now has a golden opportunity to capitalize on the ever-expanding cannabis market, particularly when it comes to filling vacant commercial real estate.

During a recent interview on WFSB's "Face the State," Gov. Ned Lamont indicated he would like to see a push for legalized recreational marijuana this year. This is great news for an economy that desperately needs growth. Focusing in on real estate in particular, legalization would assist in filling many vacancies among various types of properties throughout the state.

The industrial/flex market alone, with much of the state's inventory being outdated, underbuilt and underutilized, could see a large increase in sales and leasing activity from cannabis legalization.

Growing, warehousing and distribution facilities along with research and development labs are just a few examples of the micro-cannabis economies that will improve the industrial real estate market in Connecticut.

Other states, such as Colorado, have seen industrial vacancy rates plummet due to the advent and growth of the cannabis industry, effectively raising rents for landlords and, of course, increasing revenues for governments.

Keep in mind, job creation and the housing/residential benefits as well, which is an entirely different topic.

Another asset class that stands to greatly benefit is retail. Obviously, like beer and spirits in package stores, cannabis products must be sold somewhere. The disruption e-commerce has caused in brick-and-mortar retail has left many storefronts vacant. Many strip centers have high vacancies with rock-bottom lease rates due to laws of supply and demand. Cannabis can increase the demand for retail space, effectively increasing rents while providing better returns for landlords and investors.

Luke Massirio is a commercial real estate broker with O,R&L Commercial. Daniel Glissman is chair of the cannabis practice group at Hartford law firm MacDermid Reynolds & Glissman P.C.

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