NYC Cannabis: The Race for Primo Real Estate Space

With the legal cannabis tidal wave on the verge of hitting NYC in the not too distant future, Gotham’s longtime real estate minds are helping this emerging industry get its ducks in a row. 

With thousands of applications expected, there is a race to score the best potential retail space early. The team at Cannabeta Realty has decades of real estate experience in the city with a side of pot activism. 

Founder Matte Namer has nearly twenty years of pot activism experience locally and has been working on federal efforts since his college days. Namer is also the owner of Hotel Grand Union, the Principal of Alfa Development, and the co-founder of Gallery 151. I have known Namer since 2006 when we met at a Students for Sensible Drug Policy Conference at SUNY New Paltz. 

When the time to start thinking implementation and not just legalization finally came to NYC about six months ago, Namer was ready. “Since my real estate career has had a geographic focus really in New York and New Jersey, we sort of needed a bit of a change in regulations for Cannabeta to be born,” Namer told the Voice. “We’ve sort of been talking about it for years here and we were kind of hoping this was going to happen much sooner here. It’s kind of ridiculous it took as long as it did. But I think once New Jersey really legalized, that’s when we started making plans to kind of do cannabis real estate-related stuff.”

Obviously, the novel idea of helping dispensaries score retail space is now hitting the radar of many of Namer’s peers. But how crowded is NYC pot realty at this moment? “Right now we’re the first and only real estate brokerage firm in New York and New Jersey that specializes in cannabis. And there are other brokers, of course, that work for bigger corporate firms that kind of want to get in the cannabis game because of the dollar signs in their eyes. But they don’t have a long history to it. They don’t really have this background and understanding that we are both standing on the backs of activists that got us to this point of legalization and kind of like even more important than the activists, the literally tens of millions of people that have been sitting in prison over the decades.”

How much did that ethos help Cannabeta in scoring clients to fill the properties the team has been scoping out? It’s a mix. Many clients so far fall into the more traditional business side of things. But don’t fear NYC’s cannabis industry completely being overrun by suits. Namer sees plenty of folks with potential. 

“Some people are really passionate about social justice and passionate about the plant and its medicinal qualities,” Namer said, “So you really get different motivations from different clients. Some people have definitely really responded well to the fact that we donate 10% of all our profits back to communities harmed by the war on drugs. Other people are sort of a little bit more focused on, ‘Can you do a good job for me?’ in terms of like, sourcing cannabis real estate, and I think that’s understandable.”

Namer argues that one of the main factors for biz-centric clients is his firm’s grasp on an industry that requires specialized knowledge around the understanding of rules and regulations.

“It’s such a specific industry that you really can’t just be a retail broker and do stuff in cannabis without really understanding the cannabis industry,” Namer said. “We’re really good at what we do because we understand it, right? Whereas you might walk into a normal real estate broker’s office, and be like, ‘Find me some dispensary locations.’ Then they send you a bunch of things that are right next to a church or right next to a school or something. They haven’t really looked at the laws.”

Namer argues that it is absolutely necessary to understand how the laws are going to affect the economics, “which is such a big part of this industry.”

Currently, Namer sees existing operators expecting a fast track to legalization and those with a social equity angle on their licensing — despite the fact that guidelines are not fully in place — as the ones most ready to pull the trigger on locations. Namer admits that these folks are taking a big risk, but risk-takers will get the best retail locations. 

“What’s interesting is that we do at least know that a dispensary is going to have to be more than 500 feet away from school, and it’s going to have to be more than 200 feet away from a house of worship,” Namer said, “That actually means that in some neighborhoods in New York City, that makes up to 90% of the neighborhood not viable for a dispensary.” Right now properties that aren’t viable fall into a few categories. First is the church/school buffer zone, next are landlords worried about their assets, and then finally are the landlords who object based on moral grounds. Namer has experienced all of it.         

For Namer, one of the best parts of helping the NYC cannabis industry get its doors open is knowing what that messaging means to the cannabis movement worldwide. “The fact that we’re going to have cannabis dispensaries in New York City, right? Which is the media capital of the world. Which is the financial capital of the world. Which is the cultural fashion capital. It’s all of these,” Namer said, “It’s such an important place that sort of can dictate things to a certain extent to the rest of the world. I really believe that cannabis dispensaries in New York City, and the visibility they are going to have, will have an impact worldwide ending cannabis prohibition 1,000%.”  

Namer now sits waiting to see how the forthcoming round of regulations will play out for the 10,000 applications for dispensary licenses in the city. The regulations will shed light on the application process and the final needs of his clients. He expects the risk/reward factor to be largest in the most densely populated neighborhoods. Residents and tourists will all need cannabis.       

“I think the biggest question that everybody has is this question of timing. We don’t even know right now in New York City when the regulations are going to come out, which is a really scary thing to a lot of people. but the other thing to consider is that once you start putting these filters in, okay — 80% of the neighborhood is off limits here to the churches and schools. Now, of that 20% that is remaining, how many of those sites are going to lease to a cannabis dispensary? How many of them are not? “

Namer expects that a good location with the coolest landlords will be a very coveted thing. He currently has over 100 properties in play across the city. “Then, of those remaining sites, how many are going to be big enough, or in the right locations, or whatever else to make it viable for a dispensary? And then once you apply all those things, there’s not a lot of sites left. So that’s why I think because New York is such a big market, it does make sense for some of these folks to look at spaces today even though they may not be operational for another year or longer.”

Local attorney Neil M. Willner has been involved in cannabis reform for the last five years. While waiting for the law to change at home, he’s worked with multi-state operators, the whole hemp supply chain, cannabis trade associations, and risk management companies looking to wrap their heads around the cannabis industry. That was initially where he caught the bug to dive in. 

Currently, he chairs Royal Cooper Cohen Braunfeld’s Cannabis Industry Group, serves as regulatory counsel to the American Trade Association for Cannabis and Hemp’s CBD Task Force and Cannabis Beverage Council, and previously he co-authored an amicus brief on behalf of the National Cannabis Industry Association (NCIA) for a writ of certiorari to the Supreme Court in the case of Washington v. Barr.

“So it’s been a fun five years, that’s for sure,” Willner told the Voice, “And I feel like every day a lifetime goes by with all the new developments at the federal and state level. It’s just crazy how quickly this moves and I keep getting amazed day after day about all the new developments, new in the past week, in the past month, past year, and the pace just doesn’t stop.”

Willner has had a view of how the cannabis landscape is starting to pan out. “As far as real estate is concerned, everyone who’s inking deals now before there are even regulations, before there’s even an application process, everyone’s taking a huge risk and paying a price for that risk,” he said. “Both landlords and tenants are put in pretty precarious situations because no one knows how long this is going to take. So, if there was a defined period of time, I think that would ease everybody’s minds on both sides of the transaction.”

Willner notes that at this point, although plenty of people are signing leases all over the state, legalization in New York is not finalized. Things that people are basing their deals upon, like the distance restrictions in proximity to schools and churches, are not set in stone yet. 

“Where does the measurement start with the property? From the front door? We don’t know,” Willner said, “And it’s such a condensed area in the city. The difference of 20 feet from the front door to the property line can make all the difference in the world. And depending on what the regulations look like, people could be foolishly spending money now, reserving a spot from a landlord in a prime retail location that they may not even be able to use even if they do win a license.”

Willner also noted that New York companies will not be able to vertically integrate the ways in which ones on the west coast can. We asked if this might put New York producers behind the eightball when interstate commerce opens up. “That’s a really great question,” Willner replied. “It’s to be determined because a lot of that will depend on what federal regulation looks like and whether federal regulation will be following the alcohol beverage model.”     ❖

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