March19,2018-
Demand from cannabis growing companies is fueling an increase in property values in Central Valley towns where it is allowed says a new study.
This week’s move by the Hanford City Council to not just restrict companies to medical-use cannabis projects but allow the much larger market for commercial growing for recreational use – may boost this trend.
Also this week the Hanford City Council heard an appraisal to sell two industrial parcels they own. The appraisal identifies that cannabis growing “has the potential to add thousands of job and millions of dollars in revenue for the city.” The appraisal is by the Hanford firm of Simon and Hower for two vacant parcels at 11th and Energy.
The appraisal describes the effect of allowing commercial cannabis cultivation on land prices in Coalinga. It says the prices of real-estate zoned for cultivation “has doubled in value” in the community and more than that in some cases. Two properties recently sold there for $200 per square foot where without an ordinance, they would have sold for as little as $50 per square foot.
The report recounts that cannabis company Genezen recently purchased the long vacant Calcot plant in the Hanford Industrial Park for $11 million but for the past four years the property had received offers of only $6 million. Another firm Caliva is said to want to purchase 47 acres in the industrial park but as of January 23, the date of the appraisal report, had not yet opened an escrow.
The appraisal concluded the “highest and best use”( no pun intended) for the two parcels the city wants to sell would be for cannabis cultivation.
The report adds that “for many years the Kings Industrial Park has been somewhat depressed as it attempted to compete with Visalia and Tulare.”
Could pot be a game changer?
Land prices in Hanford have ranged from $25,000 to $35,000 per acre here before cannabis permission. Now the appraisal says of two sites, a 9.81 acre parcel is valued at $75,000 per acre and a larger parcel is estimated at $65,000 per acre for 16.43 acres -assuming the buyers are cannabis growers.
If the city council allows commercial growing for recreational use, also called adult use , as expected, the opening of this market would be attractive to companies says Kings EDC director John Lehn. The city would still maintain a ban on recreational dispensaries.
Seems that pot can lift spirits and property values in this Valley community. They are not alone. Woodlake is seeing new investment in several growing facilities as well as retail.This month Woodlake investor Bruce Kopitar sunk $100k in his new Munchies Cafe enterprise.
Recreational cannabis sales began in California on January 1.
A report from the cannabis industry research firm BDS Analytics estimates sales of recreational cannabis will hit $3.7 billion by the end of 2018 and increase to $5.1 billion in 2019. By comparison, beer sales in California were $5 billion in 2017.
Meanwhile the market for medical marijuana is apparently shrinking.Revenue from the sale of medical marijuana is expected to drop from an estimated $2 billion in 2016 to about $1.4 billion in 2018, according to a study published by the University of California Agricultural Issues Center.