Ep 332 – The Zillow of Cannabis Properties?

ryan george 420property

How do you find real estate for cannabis businesses? Here to answer that question is Ryan George of 420 Property, the Zillow of cannabis.

Learn more at https://www.420property.com

Key Takeaways:

[1:43] An inside look at 420 Property, the world’s largest hemp and cannabis real estate marketplace

[2:06] Ryan’s background in cannabis and how he came to start 420 Property

[8:51] “Green zones” and where to find them

[10:06] Why both businesses and investors are choosing Ryan’s platform as the place to buy and sell cannabis and marijuana businesses

[11:36] The most active locations on 420 Property, including cities in California and Oklahoma

[15:15] Key considerations when selling a cannabis property and how to get your listing noticed

[18:20] Practical advice for buyers on what to look out for when searching for a cannabis property

[20:50] Where Ryan sees the cannabis retail space heading in the next few years

Click Here to Read Full Transcript

Matthew Kind: Hi. I'm Matthew Kind. Every Monday I look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at cannainsider.com. That's C-A-N-N-A insider dot om. Now here's your program. How do you find real estate for the cannabis businesses? Here to help us answer that question is Ryan George of 420 Property. Ryan, welcome to CannaInsider.

Ryan George: Hey, Matt. Thanks for having me.

Matthew: Give us a sense of geography. Where are you in the world today?

Ryan: I'm in Northern California. Specifically, I'm at my home office in Sacramento.

Matthew: A lot of people from the Bay Area moving out there? 

Ryan: Oh, my. It is one of the hottest housing markets in the world right now. It's amazing. Just to see home values rise as fast as they have in my immediate neighborhood is just amazing to see. Over the last year, we've seen homes go up over 20% in my immediate neighborhood.

Matthew: Oh my gosh. Yes, that's nuts.

Ryan: I was telling a good friend of mine that is currently shopping for a home in the Bay Area, what's going on up here and we were discussing, if I were to buy my house today for the prices that they're currently getting, I would say, "Forget it." I'd move somewhere else. It's just amazing the prices that people are paying for homes in the Sacramento area.

Matthew: Wow. It's an amazing time. We'll get into more about this type of thing later on in the show, but give us an update on what is 420 Property on a high level, just to give us an orientation, what that is? 

Ryan: 420 Property is an online real estate and business listing platform. We've often been called the Zillow of Cannabis. I'll admit it's not my favorite analogy, but for the purposes of an elevator pitch, it gets the point across pretty quick.

Matthew: Tell us a little bit about your background and journey, how you got into the cannabis space, started 420 Property, and so on.

Ryan: I grew up around the real estate business and inevitably began working in various capacities in real estate at a young age. About 2010, I was a commercial property leasing agent and had a client that was pretty evasive on what their business was, and eventually it came out and they came clean what they were going to be doing, which was a cannabis testing facility in Sacramento.

I had some suspicions on what they were going to be doing because of how specific their requirements were, can't be near a school, can't be near a church, and so forth. Once they came clean, my journey of trying to track down a cannabis property began. Being a millennial, I'm very good at using the computer and finding things online, I just could not find anything that could help me find a cannabis property. I went the old school route of just picking up the phone and calling everyone I possibly could.

I ran into roadblock after roadblock and objections from the landlord and when it wasn't objections from the landlord, it was objections from the localities or it was prohibited either by the local ordinance or the landlord was open to it but he had a bank loan on the property and couldn't afford to get a hard money loan or pay off the property in the event that their mortgage servicer found out and called no do.

I remember spending a lot of time on that specific deal, even though it wasn't a very large deal and I didn't stand to make a lot of money on it, but it almost became an obsessive game to find cannabis compliant properties. They ended up finding a property through a friend, but I still had that experience of how awful it was to try to find a cannabis property. This is back in 2010, '11, '12 era where it's still the Prop 215 days. At that time, the only luck I was actually having finding cannabis properties was on Craigslist under a term I believe it was garden-friendly or 215-friendly or 420-friendly.

What was on there was really dilapidated buildings or sheds in the back of people's homes or rural residential acreage. After that client was able to find the space, they invited me to come work for them at the lab. I left my position at the leasing company and started my career in the cannabis space as the business development manager for Halent Labs in Sacramento, which now has since merged with Steep Hill Labs out of Oakland, which was the first ever cannabis testing lab in the nation.

I'll say that that time at the lab was and is my most valuable cannabis industry experience. The Prop 215 era really was the wild West. I had a front-row seat to the emerging cannabis business at that time and it still is, still full of energy and new ideas. At that time, I was looking around and saw the need or the necessity for cannabis in the space and no one was really looking towards that area. Everyone was looking at mostly plant touching things. The ancillary side of the business hadn't really started to blossom. That's about the time I registered 420 Property.com, the domain name and cannarealty.com, and several dozen other cannabis-related real estate domains.

Surprisingly, 420 Property wasn't the first business that I had pursued in the real estate cannabis space. I initially pursued Canna Realty as the first real estate brokerage that focused solely on cannabis. It went well for a very short period of time and then it didn't go well. Being in Sacramento, California, there was a point in time where the unincorporated area of our city allowed cannabis businesses.

At that time we had over about 120 brick and mortar dispensaries in the county, and they were opening up and shutting down just as fast. I had a viable pool of customers in my backyard, and then the county issued a moratorium against those businesses. The number of dispensaries I believe dropped down to nine locations. At that time I decided to shut down Canna Realty and took a little bit of a sabbatical from the cannabis space for a few years. Then you fast forward to about 2015 and that's when I really started to get back into the space and started framing out what is now 420 Property.

Matthew: That makes sense. As just your own personal need you saw the opportunity there.

Ryan: Yes, absolutely. I remember thinking at one point, well, during my calling around. It was thinking of, "How great would it be if there was just a place I can go where all the properties are cannabis-friendly?" You don't have to feel out the other party like, "Hey, how does your client feel about a certain green business?" At that time it was still very taboo and it still is to some extent especially when you're dealing with landlords and trying to feel them out like, "Hey or--"

Back then, you didn't want to just come out and say, "Hey, are you opening a cannabis business?" Because you didn't want to have your reputation tarnished with your constituents in the real estate space, but now you can call somebody up and say, "Hey, if your property is in the green zone, can we put a business there?" It's either a yes or no question, but back then it was a little dicey, like, "Hey, how does your client feel about a particular green business that's new and emerging?"

Matthew: Talk about the green zone there and what that means. I know earlier you said it can't be close to a church or a school, but for people that aren't familiar with exactly what you're talking about, can you just help them understand that?

Ryan: Zoning in properties are one of the most important things or zoning with properties is one of the most important things in the cannabis space. There's not a one-size-fits-all answer. It's going to come down to what the locality or a municipality that issues the cannabis licenses has to say about the property requirements. Sometimes there's only state requirements, sometimes they're state and local requirements, but just generally cannabis buildings can't be near schools, churches, parks, public places where there's going to be kids.

Specifically, a green zone can refer to-- Some cities have designated out areas on their zoning maps, where you can put a cannabis business ahead of time. You go down there, you see what their green zone map is, or where you can locate, and then you have to try to find a property in that area.

Matthew: Who are the participants on the platform in general?

Ryan: We have a lot of different types of users with different goals of using the platform. Everyone from real estate agents or business brokers specializing in the cannabis space, investors looking for opportunities in the cannabis space, land and property owners looking to capitalize on the cannabis space or the increased premiums that a cannabis tenant's willing to pay. Then entrepreneurs in the cannabis space looking for real estate business assets or financial resources that they can find on our platform.

Matthew: Do you keep track of how many transactions have been there so far or how many leads or what are some key performance indicators?

Ryan: Yes. We don't really publicize the number of actually closed transactions or sold versus leased listings. What I can tell you and your listeners is that we've seen nearly 7,000 transactions to date on our platform that have come on and come off. That doesn't include the 3,000 that are currently being actively advertised on the platform. Of that 7,000, that equates to about 5 billion in market value. Our users have reported a very, very high success rate on 420 Property compared to any other real estate listing website out there.

Matthew: Where are most of the properties located?

Ryan: Well, most of our properties are located in California, which is arguably the largest cannabis market in the country. I would say, second to California is Oklahoma at the moment because Oklahoma has very low barrier to entry for the cannabis space. Then from there it would be Michigan, Oregon, Washington as where most of the listings are at this time. There's a few scattered throughout the country.

We're expecting New Jersey and Arizona to be the next two big markets. I'm still undecided on what is going to end up happening in the state of Illinois. That has the potential to be a very big market for us. It's a very big cannabis market in general, but I don't know how many licenses or how many businesses are going to be in that market altogether.

Matthew: Is there anything, anything besides real estate that people list on 420 Property?

Ryan: Oh, absolutely. Let's just kind of start with real estate. We have various capacities of real estate. We have real estate that's for sale, for lease, or sale-leaseback transactions that are on there. Then real estate in the cannabis space, depending on the local municipalities, what their requirements are.t i, could either be in the green zone, or it could be just a regular piece of real estate that you get a conditional use permit from the city. It's pre-approved with that conditional use permit to have a cannabis business there. You still have to go through the licensing process to get a operational permit or operations license.

Then from there we have all stages of cannabis businesses in various types. We've seen everything from applications for sale like applications that are in the process that aren't yet a license for sale, pay for licenses that are for sale, which is basically a piece of paper that says you can operate a license or operate a licensed cannabis business at a specific location. Then we've seen turnkey cannabis businesses for sale, as well as business assets, such as extraction systems or packaging equipment, or digital assets or proprietary information or intellectual property.

Matthew: Predominantly real estate?

Ryan: It's predominantly real estate and our second-biggest category is existing businesses for sale.

Matthew: That makes sense. How many people are browsing the site monthly or annually?

Ryan: We're seeing about 35,000 to 45,000 active monthly users.

Matthew: Wow. That's good. This seems like it's really solving a problem.

Ryan: We try to create a lot of value for our users and we're constantly striving to add more features or make sure that the listings are of the highest quality. We do a lot of moderation of the site. Surprisingly, people want to try to advertise product. By product, what I mean is finished retail products on our site. We stay 100% to our core of what we do. We don't allow any sort of products for sale or anything that's outside of our core business on the site.

Matthew: Let's say I wanted to list a property, how could I make sure that it really looks good and gets noticed because you don't want to get a fade into the background? How do you do that?

Ryan: I would say, first and foremost, you'd want to do some research on the property to make sure that it is a 420 Property and can be used for the specific cannabis use that is being proposed there. For example, just because it's in the green zone, you may be able to put a cultivation there or manufacturing there, but you may not be able to or want to put a retail store there. You want to check the property to see if they allowed use or the proposed use is allowed at that specific location.

Then from there, you'd want to check to see what the state and local licensing requirements are going to be for that property, find out the fees, processing times, operating tax, if there's one from the locality and the state or both. Then from there you want to look at the specific characteristics of the property, see if there's any value that a certain cannabis business might find appealing such as, is there a lot of power coming into the property? If so, how much power's coming in? Is the property have adequate water? Does the property have security characteristics that may be appealing to a cannabis client? If it's a retail space, is there enough parking?

You want to think of things kind of through the eyes of a cannabis business operator. Then from there, you'd want to make sure that it's priced appropriately. The biggest mistake that we see on our platform is because it's a cannabis property or cannabis is associated with the property, a lot of people that aren't in the industry think immediately that it's a gold mine. They will way overpriced the property or the business thinking that it's a $20 million property, when at the end of the day it's just a property in the green zone that is not really desirable by anyone, but it has some additional value, but not $20 million of additional value.

Matthew: That makes sense. Gosh, I've never heard of a seller thinking that a property is worth more than it is.

Ryan: Yes. We see it a lot.

Matthew: I've been guilty of that too. I think everybody is. It's like you're a child.

Ryan: Well, everyone's a little guilty of it outside of the cannabis space, but it's ultra inflated in the cannabis space. Like, "Oh, don't you know that cannabis is allowed here. It's got to at least add another 50% value in it." I'm like, "No." We don't really give that kind of information out on a case by case basis, because we're not licensed realtors, but that's the biggest issue that we've seen on the platform is people that'll put items on there that are ultra inflated in value or price.

Matthew: Anything additional the buyers should look out for? You mentioned electricity, water, location, price, anything else buyers want to look for to make sure it's appropriate property for them?

Ryan: Well, in any special use commercial real estate transaction due diligence is key. You're going to want to make sure that you have all of your basis covered. Specifically, you want to make sure that the zoning's correct. You want to make sure if there's a license associated with a property that the license is transferable and it's clean and what the processing timelines are for the transfer and what's required to get everything moved into your name.

I would recommend strongly to anyone trying to buy a piece of property works with a professional that is experienced in the cannabis space and that's seen numerous real estate transactions or business transactions within the cannabis space because there's a lot of nuances that aren't normal to your traditional real estate transaction.

Matthew: Sure. How do you monetize this? How does 420 Property make money on this platform?

Ryan: 420 property is what you would call a freemium service, meaning that it's free to use, but to access all the listings you would need to become a premium member which is a monthly subscription. From there we offer featured listings. It's free to add a listing onto 420 Property, but if you want the listing to be featured, get a little bit more exposure and to be viewed by everyone that doesn't have a premium subscription with us, that is what the feature listing would be for. That's $29 a month. We also offer additional marketing services such as dedicated email blast, social media boost, or guaranteed homepage exposure. Just really depends on what they have and how much their budget is.

Matthew: Okay. Which of those is the most popular?

Ryan: Definitely, the featured listing. I would say the second popular is the dedicated email blast. We just rolled out the concept of guaranteed homepage exposure, but that seems like it's going to be a pretty popular one for more expensive listings. By expensive listings I mean for the listings that are 10 to 100 billion.

Matthew: That makes sense. Looking ahead, how do you see the cannabis retail space I guess primarily out west evolving in the next three to five years?

Ryan: I would say as an entire landscape of our country, we're seeing a lot of momentum towards legalization on the federal level and we're certainly seeing a lot more states becoming more open to the concept of recreational cannabis in their states. As those states continue to pass laws that are allowing legalized cannabis, those businesses are going to need facilities to operate or processing facilities and facilities to sell.

Even delivery services need some space to operate in because most states aren't allowing home-based cannabis businesses. As the footprint of legal cannabis continues to grow, the need for real estate will continue to grow, and we'll be here to help them with every need that they have.

Matthew: Just a general California question, how does this thing seem like they're evolving there? Sometimes California seems like massive dysfunction but then again there's a ton of smart people there. What do you think is happening?

Ryan: California just because it was passed on like a statewide level like Prop 64, it was left up to each county or city to allow or disallow cannabis. We're seeing a lot more counties or cities becoming more open to the idea of cannabis sales in their area. It's a slow process. I think the biggest problem in California is the barriers to entry, which is giving a lot of black-market operators an opportunity to thrive.

Initially, they should have had lower barriers to entry for those that were Prop 215 operators that were able to make a living and give them some sort of ability to either pay their licensing fees over time or work with them in a way that it doesn't force them to the black market, help them become licensed viable businesses instead of basically pricing them out of the market.

Matthew: Yes, I've heard estimates that the black market's bigger than the regulated market in California. Is that what you hear or what's the size that you hear?

Ryan: This is just my personal opinion. I couldn't espouse any specific statistics, but I would say California is still the biggest producer in the nation of the black-market crop. I wouldn't say that that crop's been sold here. I would say most likely the Emerald Triangle is producing a lot of black-market cannabis and that cannabis is going to states that don't yet have legal cannabis in it.

Matthew: Yes, there's such an ideal growing environment up there. That makes sense. All right. I want to ask some personal development questions. Is there a book that's had a big impact on your life or way of thinking that you'd like to share?

Ryan: Actually, there's been a series of books. There's [crosstalk] oriental-- [laughs] Actually, I'll admit I'm not a big fiction fan. I have yet to read the Harry Potter books even though it's on my list of things to do. It's just very low on the priorities. It's a series of books by an author Jim Collins. There's four books that he's published in the series in total which are Good to Great, Great by Choice, Built to Last, and How the Mighty Fall.

Through these four books, the author and his research team take a deep dive into learning what sets great companies apart from mediocre companies. They also look at like why great companies that were once the leader in their space failed and how you build a great company that's built to last generations.

Matthew: It's a tough thing.

Ryan: There's companies that have been around for hundreds and hundreds of years and it wasn't by sheer luck. It was by design.

Matthew: What's the one or two nuggets that you think about the most from those books?

Ryan: There's one concept from the books. It's fire bullets, then cannonballs. The concept is derived from, you have to try a lot of little different things and then keep what works, and when you find something that works, you go all in on what works instead of going all in on one or two things that you haven't tried or tested out yet. I would say that's one of the bigger ones.

We try a lot of different things out on our platform and if it doesn't work, we trash it. We don't spend a lot of time or money on it. We just kick it to the curb and then once we find something that works, then we go full investment, full steam ahead.

Matthew: That makes a lot of sense. Apart from what you're doing at 420 Property, what do you think the most interesting thing going on in the cannabis space is?

Ryan: I find just all around the positive impacts that legal cannabis has made on communities to be very interesting. I mean, it was outlawed for so long and demonized for so long and now we have legal cannabis shops that are just as popular or just as abundant as Starbucks in California. [chuckles] We're creating tax revenue, creating jobs, and creating real estate equity. It's amazing to see along this journey from when I started the Prop 215 days to now.

Matthew: Wow. Now, final question here. Do you have a favorite comfort food?

Ryan: [chuckles] I'm a bit of a foodie and like many of your listeners, we've been in this COVID quarantine now and haven't had access to the ability to sit down in a restaurant. It used to be that my cravings were very generalized for, "Oh, I'm craving pizza." Almost any pizza would do within five or six pizza brands. Now, my cravings are getting very, very specific down to like the order. [chuckles]

To give you an idea of it, lately I've been craving just a good hamburger. In-N-Out will satisfy that craving for a little bit, but really what I've been craving is a hamburger from Hodad's in San Diego and a big cheese burger with fries, onion rings. Then they have, honestly, the best malted-chocolate milkshake I've ever had in my life. That's- [crosstalk]

Matthew: I'm salivating here. I'm having like a Pavlovian response to you describing this.

Ryan: Oh, it's super good. It's walking distance to the beach . What is it? It's in Ocean Beach, San Diego. It's just a cool environment, walk-up window, grab your hamburger and fries to go and sit on the beach. It's just all around a good experience and that's specifically what I am craving right now.

[laughter]

Matthew: Well, now that you got everybody hungry, Ryan, please let them know how they can reach out to you and who can go to 420 Property. Who's the ideal person to go there right now?

Ryan: Well, anyone that's curious about cannabis real estate. We see a lot of users that end up on the platform just to click around and look at some of the pictures of cannabis farms for sale or big grows. It's fun to take a look at non-commercial images of cannabis cultivations and you're inside of an actual greenhouse. Someone is in there taking pictures to sell it off. If anyone's curious about taking a look at the platform, all you have to do is just open up any browser on your computer or mobile device and type in 420property.com and you're there.

Matthew: Okay. Great. Well, thanks so much for coming on the show, Ryan. We appreciate it and good luck with everything you're doing with 420 Property. I think you really picked a growing segment there. Best of luck to you.

Ryan: Thank you. I appreciate it. Thank you for having me on.

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