Pot Marijuana

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

With marijuana laws changing rapidly across the country, self-storage operators may soon be fielding questions from potential tenants about storing and growing the plant in their units. Industry professionals advise operators to stay informed and stick to the laws in their state.

By Kay Miller Temple

Voters are rapidly pushing marijuana-law changes, with 20 states already legalizing it for medical use. Just last year, voters in Colorado and Washington legalized it for recreational use as well. The Marijuana Policy Project reports on its website that its working on voter initiatives in seven states and bills in six state legislatures to create systems where "marijuana is regulated and taxed like alcohol."

These state changes impact almost every level of every industry, from banking to human resources. The self-storage business, with its attractive, reasonably priced space, may not be overlooked by those who want to store and grow plants. Could there be an opportunity to generate revenue from this niche? How should operators handle inquiries? For now, industry leaders recommend that they stay informed and stick to the laws in their state.

Growing and Storing Marijuana

Whether a self-storage facility is the right fit for the storage and growth of marijuana is debatable. Growing the plant is a convoluted process that requires many checks and balances. It can be grown with hydroponics and plant cuttings in soil made from inert materials, according to online sources. Plant growth relies on appropriate ratios of calcium and fertilizer, and water from a reverse-osmosis system that eliminates heavy metals is needed.

In an interview with Business Insider, Nick Hice, chief grower at the Colorado dispensary Denver Relief, said environmental control is "absolutely paramount." Humidity should be kept around 45 percent to 50 percent and temperatures at 75 degrees to 77 degrees. Temperatures are affected by heat from the 12-hour daily light requirements. Light exposure, not plant numbers, has the most influence on productivity, Hice said.

Production requires two rooms: one for the growing cycle's first 60 days and a second for the 70-day flowering cycle. Like the majority of plants, marijuana doesn't escape notice of the usual pests including spider mites, whiteflies and stem rot. Rodents, such as gophers and rats, are also attracted to cannabis. For self-storage facilities, storing anything that might entice pests is strictly prohibited, as they can quickly multiply and affect other units.

Even with climate-control measures, marijuana can be susceptible to spoilage. Several medical-marijuana webites suggest that storage methods should focus on protecting trichomes, the hair-like structures containing the plant's active ingredients. Glass containers and refrigerator temperatures are best since static from plastic bags retain active ingredients and frigid temperatures create easily-fractured trichome icicles.

Dried cannabis is susceptible to mold, viruses, bacteria and fungi. Aspergillus, a fungus that grows in decaying plant material, can contaminate marijuana and has been reported to cause disease in humans with weakened immune systems, such as those with cancer or organ-transplant patients.

Due to these reasons and more, Andy Betts, general manager of Denver Relief and Denver Relief Consulting, says marijuana production would be an "unlikely fit" for the self-storage business. "There is such a regulated model here in that it's tracked from seed to sale. Security and access, labeling, compliance, and odor control are storage challenges in addition to regulatory issues, he says.

A Case Study

Self-storage may not seem like the best place to grow or store marijuana, but at least one operator is giving it a try. In 2012, "Inside Self-Storage" reported on a Sedro-Woolley, Wash., facility that was entertaining the use of its units for the controlled growth of cannabis. A1 Heated Storage found itself at the center of a debate when it applied for additional permits to add medical-marijuana growing rooms to the facility, which is in a residential area.

Neighbors expressed concern that the facility, which is allowing tenants to store and grow dozens of legal pot plants in units that have access to water and artificial light, was creating traffic and safety problems in the neighborhood. They also feared an overall increased number of cars and impaired drivers resulting from a proposed facility expansion.

Over the next couple of years, the request to expand went back and forth between local governing bodies. Though A1 was not available for an update on the progress of its original application, a Jan. 24 article in the Skagit Valley Herald reports that after reviewing several zoning proposals, Sedro-Woolley's city council decided "to consider allowing some recreational marijuana businesses in both industrial and residential 5 zones." However, the council ruled any businesses selling, storing or growing recreational marijuana would be required to meet the state's minimum 1,000-foot buffer from public property, schools and child-care centers.

Now, with the legalization of recreational marijuana, Washington city and county governments have new laws to consider in regard to marijuana production, processing and retail activities. Skagit County offers online information for recreational-marijuana permits that includes language addressing the "production inside an opaque structure," such as a self-storage unit.

Self-Storage Industry Leaders Speak Up

With the recent approval of recreational marijuana in its state, the Colorado Self Storage Association is watching how regulations unfold. "We will be following the implementation of the new marijuana law for awhile, and then we will make a presentation to our members," the group said in e-mail communication with Inside Self-Storage.

Lynn Prather, a past president of the Washington State Self Storage Association and a current member of its board of directors, also believes a wait-and-see stance is best. "People in self-storage should not be concerned about it right now. My personal feeling is that it isand should below on the self-storage radar because we don't know what is going to happen. Colorado doesn't, Washington doesn't, and there's a lot that our state is going to learn by trial and by error."

A practical approach for operators is to stay informed, follow industry best practices and abide by current rental agreements, says Prather, whos also owner and president of Sound Storage Management Inc., which owns and operates two Washington facilities.

"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 Canadians 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 countrys 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 masters program at Arizona State Universitys Walter Cronkite School of Journalism and Mass Communication. To reach her, e-mail [email protected]

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