The Marijuana Market: Self-Storage Operators Should Stay Informed and Prep for Changes

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"Things are going to change, day by day, minute by minute, and we need to just keep our eyes open and ears open and read about it," she says. "Follow routine business practices, the things that you know are right, and you'll be fine."

A Canadian’s Perspective

Putting aside all other concerns, one operator questions how allowing the storage or growing of marijuana might change the operational goals of a self-storage facility. Robert Madsen, president of the U-Lock Mini Storage Group, president of the Vancouver Island Self Storage Association and director of the Canadian Self Storage Association, says allowing tenants to grow marijuana in units for profit would be a "totally different business" from the traditional self-storage profession. "In Canada, the space is strictly for storing items so you are not supposed to operate a business in which there are activities inside the lockers," Madsen says.

Canada has a national medical-marijuana law and, so far, has resisted recreational approval. Since 2001, licensed medical-marijuana patients could grow their own supply or purchase cannabis from small-scale producers. However, the law will soon change. In April, medical marijuana users must purchase directly from operations that have authorization from Health Canada, which is the federal department in charge of the country’s healthcare system.

A Legal Perspective

Self-storage legal expert Jeffrey Greenberger, a partner with the law firm Katz, Greenberger, & Norton LLP in Cincinnati, noted there are multiple issues that raise concerns for industry professionals considering cannabis production and storage. "It would be a business decision that needs to be very well thought through.”

A cannabis operation may actually be a mortgage-agreement violation since marijuana possession is a federal offense, according to Greenberger. "We've agreed to run a self-storage facility, and we've told the bank what the self-storage facility is going to be. And they've said, ‘We're going to lend you this money, and you're not going to allow any hazardous materials, not going to allow any illegal activity, and you're going to take care of our asset and be a good steward.’”

For similar reasons, most insurance companies will not offer coverage in this scenario, Greenberger says. "I don't think the insurance companies have caught up with the idea that if it's legal in a state it might be legal to do in a facility," he said. "As I understand it, they still consider it an illegal activity."

On the pro side, tenants involved with the cannabis industry are assumed to be "good payers," since they often deal in cash, Greenberger notes. Though this may be attractive to struggling self-storage businesses, he cautions operators that large cash transactions come with their own set of problems. "It's a very creative idea for a way to use the facility. But you have to really think it through."

Whether self-storage will be a good fit for the cultivation and storage of cannabis remains to be seen. With marijuana legislation changing state by state and year by year, staying informed will be key to the industry's evolution in management strategies.

Kay Miller Temple is a physician and recent graduate from the master’s program at Arizona State University’s Walter Cronkite School of Journalism and Mass Communication. To reach her, e-mail ktemple@vpico.com.

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