Want to invest in legal marijuana in Washington state? Better be a resident.
A three-month residency requirement in Washington state for all involved in marijuana businesses, including investors, has frustrated some business owners and potential financiers.
That requirement makes cross-state and cross-border business and investment almost impossible, but there’s at least one way that out-of-state investors have gotten involved in Washington’s legal marijuana industry: by being a landlord.
A Canadian company is setting itself up to use the law’s landlord exemption to profit off of Washington’s legal marijuana industry.
Chlormet Technologies of Vancouver, B.C., bought a 9.7-acre property at 2010 Grandview Road in Ferndale on May 29 for $1.2 million. The company said in a November 2014 news release that it intends to get involved in the state marijuana industry by providing buildings, equipment and non-grow related services to licensed producers and processors.
Chlormet Technologies is a mining company that has made several ventures into the marijuana industry in the last few years. Last year, Chlormet signed a takeover agreement with AAA Heidelberg, an Ontario-based firm with plans to grow medical marijuana, and acquired a vaporizer and electronic cigarette company called VapeTronix. The company is also involved with a project called WeedBeacon, which is a vaporizer kit and app that would allow users to track marijuana dosage, use and other variables, according to the company’s website.
Providing a facility for marijuana producers and processors could be lucrative, said Heather Wolf, a Bellingham attorney who works with marijuana businesses and wrote a book titled Turning Green to Gold: Tips on starting a new legal marijuana business.
Helping clients legally locate their businesses is a big part of Wolf’s work, she said. A variety of regulations make it hard for her clients to find a site for their marijuana growing and processing businesses, she said. There’s a 350-foot setback requirement from residences in rural areas, some jurisdictions have banned recreational marijuana businesses altogether and most jurisdictions don’t have a lot of industrial land.
“The places where you can locate these businesses are very few and far between,” she said. “If they are able to achieve buildout of a location for I-502 licensees that could be a terrific investment.”
The property is in Ferndale’s city limits, and marijuana growing and processing would be allowed on the site, said Ferndale community development director Jori Burnett.
The site is on a septic system, and depending on water requirements for businesses on the site, sewer lines may need to be extended to reach the facility, Burnett said. Whether or not that’s necessary would depend on the specific users, as there are many different ways of growing marijuana, Burnett said.
“They’ve told us that they are interested in making this site I-502 compliant and what we’ve told them is to look at our standards and follow the process,” Burnett said. “If they’re able to do it then good for them and they’ll get all their permits, and if they don’t then they won’t. We’ve made it pretty easy for them.”
Chlormet hasn’t applied for any building permits on the site, Burnett said.
The company doesn’t have a timeline for work on the site. Chlormet director Ian Foreman said they’re taking it slow and being “somewhat noncommittal,” with the project, and that non-marijuana tenants could also be a possible fit for the space.
“We have purchased a property with the intent of leasing it out to high-value, long-term tenants,” Foreman said. “We have to make sure that we go through all the processes with the City of Ferndale first.”
The property currently has a several buildings on it. The largest is 13,000 square feet and is divided into 8 bays. There’s space on the property to construct multiple other buildings and Chlormet engaged a developer to provide schematics and zoning guidance, a company press release said.
“Ultimately, if the grand concept were to succeed, then there would be potential on the property for other buildings,” Foreman said. “We have to be concerned with budgets and the reality is that we don’t have a designated tenant at this point in time.”
Oliver Lazenby, associate editor of The Bellingham Business Journal, can be reached at 360-647-8805, Ext. 5052, or email@example.com.