Building for an Emerging Industry

Zoned Properties

Zoned Properties, as the name implies, helps cannabis companies navigate the red tape of zoning, permits, and politicians – letting companies focus on perfecting their product. Zoned is proficient in the areas of property identification, sustainable development, and leasing.
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A little over a year ago, a news story broke that a prominent highway billboard in Arizona read: ‘Every three days, someone dies in a marijuana-related traffic death in Colorado.’ Anti-cannabis organization Arizonans for Responsible Drug Policy was pushing back against the movement to legalize.

The Colorado Department of Transportation (CDOT), meanwhile, stated that: “The presence of a cannabinoid does not necessarily indicate recent use of marijuana or impairment.” And Spokesman Sam Cole noted in an interview with the Colorado Springs Gazette that CDOT considers the most reliable indicator of danger to be the number of deaths in which the driver was impaired according to state law. That number has decreased.

Battles for public opinion and political points are not news to those in the cannabis industry, but companies that are best able to navigate the politics and red tape are coming out on top. More of the spoils are going to firms composed of former politicians or real estate or construction professionals. With zoning and regulatory experience, these people are less likely to fall victim to a legal loophole, a bureaucratic misstep, or a mismanaged political relationship.

Bryan McLaren, Chief Executive Officer of Zoned Properties, explains. “What we’ve seen in this industry is that the group with the most experience typically finishes their facilities and gets open first. State by state, the first to open the doors usually crush the market, gobble up market share, and are incredibly difficult to compete with.”

Companies that hope to avoid red tape or political landmines are wise enough to seek legal counsel. However, legal counsel is not the same as making friends with the municipal zoning office or having ongoing discussions with elected officials or community groups. Companies that only seek legal help can unwittingly set up an adversarial relationship rather than a collaborative one.

“You should be able to walk into a planning office when you’ve made a clerical error on your permit and easily get that changed in a quick ten-minute conversation versus being a combative neighbor and getting a notice that your permit has been stripped.” These nightmare scenarios are far too common in the industry. “We’ve seen six to ten million dollar facilities sit vacant for years because they had to go through a legal process to get their operating permits.”

In 2017, while that media storm was taking place over a billboard in Arizona, Zoned Properties developed four energy-efficient properties in the same state. Not only were its properties approved, but the municipality actually loosened laws to allow for larger growing acreage. Zoned played a major role in drafting the regulations.

After years of experience in the industry, Zoned is now offering its consulting services across the United States, for half the cost of a lawyer. Companies can hire Zoned to work on short-term or long-term contracts or pay a retainer to ensure the company keeps an eye on the nuances of the legal and political landscape.

“Our real bread and butter is helping companies in the first six months to a year of developing their facility,” says McLaren. For a reasonable price, Zoned will produce a research package that informs the client of prime real estate locations, pertinent political forecasting, and what regulations and zoning will affect them. It also designs corporate social responsibility plans of action and helps implement them.

“It might be walking a client through getting a special use permit. Maybe they have a construction professional they work with, but who has never worked in the cannabis industry and needs advising on how best to design the facilities,” says McLaren. Zoned mainly works with newer companies, but it also offers its services to established companies that might need to rebrand due to a hostile political environment or that want to redesign a facility to be more sustainable in its operations.

Before taking over Zoned in 2014, McLaren worked for years in the sustainability industry. For decades this sector faced an uphill battle to convince politicians, citizens, media and companies to adopt greener systems and worldviews. Sustainability experts are well-versed in highlighting scientific evidence, economic benefits, and moral reasoning to make an argument.

“I spent years cutting my teeth in the sustainable development industry,” reflects McLaren, “working in higher education building carbon neutrality programs, working on behavioral change, and engaging with energy services contractors… what’s really exciting about the regulated cannabis industry is that we get to build the paradigm from scratch.” In some ways, the cannabis industry is where the sustainability industry was twenty years ago.

An advantage of hiring a company that is versed in regulations and sustainable practices is that it can see the big picture. The link between utility use and rights, for example, is not always obvious. With agricultural zoning, rights to water and utilities are part of the package. The same is not true of cannabis.

“Cannabis may not technically be treated as an agricultural product by regulators, and this creates challenges,” says McLaren. Companies that do not purchase water rights could see water being rerouted to a company that just opened shop down the street. Imagine suffering massive plant die-off because citizens happened to be over-watering their lawns during the same week in July. Zoned Properties will work with the local utility providers to integrate a viable utility availability and make sure the company it is advising has the rights to it.

Once the utilities are secured, Zoned can offer significant savings with its expert design capabilities. Sustainability advocates made some of the biggest gains in the agricultural sector because implementing energy efficient designs yielded immediate economic results. “It’s a total no brainer,” explains McLaren.

“Everything you do from a sustainability perspective in this industry is likely going to save you money… by installing energy efficient LED lighting fixtures versus your old T5 or high-pressure sodium lights, you’re going to reduce your energy bill significantly.” T5s are fluorescent lights in which the ‘T’ refers to the tubular shape of the bulb and ‘5’ to its diameter in eights of an inch.

But it is about more than changing light bulbs. Having a sustainability mindset brings an attention to detail that designs better monitoring systems. A huge challenge for newer operators is designing their watering and flushing systems. With little large-scale growing experience, new companies find this is an easy place to make mistakes.

“I’ve seen operators send tens of thousands of dollars of nutrients down the drain because no standard protocol or best management practice plan has been put into place,” he says. “You don’t want to pollute the environment with nutrient concentrated water, and you’re literally dumping dollars down the drain.”

Many companies, burdened with high costs in the first two years of operation, can find themselves cash-strapped just before entering the market. In Arizona, Zoned Properties worked with a licensed operator to develop four regulated facilities – two for cultivation and processing, and two for retail distribution. The Arizona cannabis company leases the properties from Zoned, and a large portion of the rental revenue generated has been re-invested into expanding the facilities over that past few years. Zoned worked alongside the operating tenant to ensure the operations were as sustainable as possible and that all the correct regulations were followed.

Zoned is now looking to offer these leasing options to clients across the country. And what better to have as a landlord than a company that dedicates itself to the industry as a whole? In America, the highest volatility in the cannabis industry is not coming from direct competitors, but from changing regulations and special interest groups. A company can choose to staff a public relations department, legal team, and a sustainability expert to deal with this, or it can find all three of these resources in Zoned Properties.

“We’ve got long-standing experience in this industry. We’ve been through the ups and downs, and we know how to develop a regulated cannabis facility the right way. We want to share that knowledge and expertise with as many operators across the industry as possible.”

August 20, 2019, 6:30 AM EDT

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