Bryan McLaren, CEO of developer Zoned Properties, was among the launch investors in cannabis dispensary franchisor The Open Dør. Now the two organizations are formalizing their connection: Zoned will provide Open Dør franchisees with real estate and zoning expertise. The goal is to grow the brand by helping franchisees with the real estate side of opening up dispensaries. McLaren spoke with SCT contributing editor Ben Johnson.
What will the Zoned-Open Dør partnership do?
Multiply all of the challenges that go into delivering a typical commercial real estate project by 10 when it comes to regulated cannabis. The three main pain points for dispensary license holders are the real estate, the standard operating procedures to deliver the value to your consumers as a business, and to make sure you are doing it all in a compliant way. The Open Dør wanted to focus on taking all of these complexities away from opening their retail location. Even if you have the capital, the nuances of the industry are overwhelming for someone that is not familiar.
Zoned Properties has really specialized only in this type of venture because of the complexity. One of the things we have done over the past seven to eight years advising clients and managing our own portfolio is pick up best practices and truly identify the pain points for operators. We want to help standardize and increase best practices for operating cannabis companies on the retail dispensary market side.
How mainstream is the cannabis industry becoming?
We are past the tipping point of the national regulated cannabis industry in the U.S.; that probably occurred a year ago. But in this election cycle, we saw an overwhelming response from the American electorate that we want to legalize regulated marijuana. Now this next wave of business is coming, and these operators need every tool in their toolkit to help them succeed and mitigate the risk of failure.
What types of rents and deals are getting done?
We are still seeing investments and transactions happen at a really inflated value. Cannabis is still a very custom valuation when it comes to real estate, due to demand and availability. But when it comes to what actually works as a long-term win/win for the landlord and the tenant, we are going to see a massive rebalancing of that. In getting landlords on board with this, you also have to give them realistic expectations; you are not going to see forever a dispensary operator wanting to pay five to 10 times the average rate, let alone two to three times.
Is increased foot traffic attractive?
That is one of the big value propositions we bring to the table when we talk to commercial center landlords. The brick-and-mortar retail market has been shifting for decades, and it is being reimagined. I am a sustainable guy by training, reimagining how to create a sustainable community with retail at its center to serve a community purpose is critical, and cannabis is a cornerstone of that. We continue to see how it positively impacts local communities.
What do you hope to accomplish in 2021?
What I am seeing now is state-level governors, senators and representatives asking: How do we make our own state program? We are starting to see a lot more movement from officials that are starting to push this process forward legislatively, which is very promising.