Key Take Aways from Northern New Jersey’s March, 2021 Meeting
NJ Just Got Greener: What’s Next for Cannabis in the Garden State? Presented by Genova Burns’ Jennifer Mazawey and Charles Messina of Genova Burns.
• NJ joins 14 states plus Washington DC in legalizing adult use marijuana; medicinal use is legal in 35 states. Note: the drug remains illegal on the Federal level.
• Licenses cover six classifications: cultivation, manufacturing, wholesale, distributor, retail and delivery.
• NJ State tax 6.625% plus another 2% from some municipalities is lowest in US (CO is highest at 29%; last year, Massachusetts had over $1B in tax revenue from cannabis.)
• Impact on NJ real estate and land use for site selection and control as well as considerations for multi-tenants, leases, zoning, municipality support, lease covenants and environmental issues were discussed.
• Axis Insurance’s Mike Smith noted in the last five months, hundreds of NJ commercial real estate firms are securing new insurance or ensuring current coverage will apply to adult use marijuana.
• Mike Peters of PL Risk reported high risk / high pricing issues in the developing market for cannabis insurance; few carriers want to be involved; underwriting process for licensing, permits and cost is complex.
• Self-storage projects remain strong for Tulfra Real Estate. Lucas Grunberger sold a third project to Columbia Self-Storage in North Haledon – 180 units in four buildings, two of which will be complete and ready for tenants in July as Tulfra proceeds with construction on the remaining two buildings
• Rich Lutz of REDCOM reported that COVID continues to affect pricing and delivery time on construction materials (lumber, steel, finished material like steel trusses), causing timeline and delivery delays.
• Constantine Siversky reported Emtec is expanding geographically – first to Dallas and Miami, and next targeting Atlanta.
• Guest Itay Ron from Israeli private equity firm Faropoint works exclusively in the industrial sector; he has been aggressively pursuing opportunities in southern and central Jersey as well as Metro areas along I-95. The focus: a portfolio of 20K to 200K SF spaces, with a potential fit for cannabis-related facilities.
• Anchin’s Laurence Whittam focuses cyber/IT security programs for large accounting firms and government contracts, as well as a cyber protection program against ransomware and hacking at smaller firms.
• Gregg Manzione (Nationwide Consulting) reported a contrast between the industrial/warehouse and retail sectors. Industrial is super-hot; pricing doubled in two years; examples: a property in Edison at $275/SF with 4% cap; another in the Meadowlands at $375/SF with 3-1/2% cap.
• Joe Mele with Dresdner Robin noted that while brick & mortar retail has been struggling for some time, demand for high-rise residential in urban areas as well as warehouse/distribution properties remains strong. Environmental issues increasing and more stringent as flood zones are changed constantly.
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