California’s (desirable) urban areas are hopelessly gentrified, all the oceanfront property is long gone—sold to billionaires or protected (in theory, at least, from billionaires)—and President Donald Trump hasn’t quite yet undone all the post-recession financial reform to launch another mortgage-backed real estate “boom.” So where’s a flipper going to flip now? Forget good school districts or quiet suburban streets: The hot real estate in 2017 is where you can grow weed.
When California voters legalized marijuana for adults 21 and over in November, they created—in theory—a commercial cannabis industry. In the months since the voters gaveth, cities and counties have been busy taking away. Bans, moratoriums or other limits on marijuana cultivation and sales are de rigueur in certain areas of the state.
Some citizens, outraged at the prospect of having to pay a $411 “permit fee” or submit to regular inspections from authorities for conduct that’s enshrined in state law, are accusing lawmakers of deliberately undermining marijuana legalization. Maybe they are. Either way, the many places in California that don’t allow marijuana cultivation or sales are creating a real-estate gold rush in the areas that do.
Several dusty and desolate desert towns have already staked their futures on becoming hubs for marijuana production.
Before a single plant was grown, real-estate speculators had already shown up, representing buyers from all over the U.S. and overseas, prepared to pay quintuple the going rate for a place zoned for weed cultivation. In Southern California, where the property is desirable with or without marijuana, a real-estate “feeding frenzy” is afoot, a property broker told San Diego-based NBC-7.
Cannabis dispensaries are allowed in La Mesa, a San Diego suburb nine miles east of downtown. That is, they will be eventually—no recreational retail dispensaries will be able to open before Jan. 1, 2018, at the earliest; any cannabis business that opens in the meantime can sell only to medical-marijuana patients.
Not that any of that matters. The mere promise of future weed sales has set off an international bidding war for a Chinese restaurant, which became one of the hottest properties in town as soon as out-of-town investors discovered you could site a dispensary there (so stash your munchies jokes).
Further constricting supply are the requisite “buffer zones.”
Dispensaries have to be placed far enough way from schools and playgrounds—but in La Mesa, they also have to be zoned away from each other. That means a dispensary that opens up first can cancel out others in the area.
This has caused properties to triple in value and has led real-estate broker Jason Klein to entertain interested clients from as far away as Morocco. Jet-setters fly to California all the time to check out property, but on Rodeo Drive, or the beach—not an otherwise-boring suburb. This is not normal.
La Mesa began accepting applications to open dispensaries on Feb. 6. That set off demand normally reserved for rare sneakers or Katy Perry tickets. So many would-be entrepreneurs started camping out in front of City Hall, for the right to be the first on their block with a marijuana store, that police had to intercede and hand out “line numbers,” as if it were a deli or really, really popular coffee grinder.
Land grabs have also been underway in the state’s traditional homes for marijuana cultivation. Once hippie-settled and hippie-friendly, rural areas in Humboldt and Mendocino counties have been beset by investors “behaving… like multinational corporations in Third World countries,” one grower complained to the San Francisco Chronicle.
Like La Mesa, Humboldt County was also one of the California jurisdictions to regulate and license marijuana production and/or sales rather than ban it.
So city councils have a choice: Ban pot and stay dusty and quiet, or let a grow house or dispensary in and be included in the portfolio of types who party in Monaco and dine at Mar-a-Lago.