The passage of Measure 91 in 2014 legalized the use of recreational marijuana in Oregon and paved the way for growing, processing and selling this substance throughout the state. The Oregon Liquor Control Commission, or OLCC, is primarily responsible for regulating and overseeing the marijuana industry. Determining where businesses that sell, grow or process marijuana can operate, however, is generally a matter of zoning ordinances established by cities, counties and other local governments in the state of Oregon. For commercial real estate investors, determining what zoning ordinances are in place for their properties can prevent potential legal issues when leasing space to marijuana-based businesses.

Zoning Regulations and Land Use Restrictions

As any commercial real estate (CRE) investor knows, local zoning ordinances can have a big impact on the way in which various properties can be used. In the state of Oregon, cities, and counties have the option to prohibit Licensed Recreational Marijuana businesses within their borders. Currently, there are certain cities and counties in Oregon that have decided to ban these types of businesses.

Performing the necessary due diligence to determine whether marijuana-based businesses are permitted in a particular area is essential to ensure that CRE investors can monetize their properties in the most effective way possible.

Buffer Zones

City and county governments that have not elected to prohibit marijuana-based businesses in their areas may establish buffer zones that can limit the use of real estate properties for marijuana-based businesses:

  • Local governments may institute a specifically required distance between residential zones and areas in which marijuana is grown.
  • A buffer zone may be required between areas that produce, process or sell marijuana-based items and schools, churches or other community institutions.

Checking on the local regulations that apply to a particular piece of property can help you to determine the right acquisitions for your CRE portfolio.

Federal Regulations Still Apply

If you are planning to acquire property in Oregon for use in marijuana-based business operations, you may experience difficulty in obtaining traditional commercial mortgages or lending arrangements. Because federal law still prohibits the production and sale of marijuana, most banks are wary of funding properties that might be used in growing, processing or selling marijuana products to the public. This can make the process of obtaining funding for your real estate investment more difficult, especially through traditional channels.

Exploring Alternative Lenders

For commercial investors interested in making a move in this lucrative sector of the Oregon real estate market, alternative lenders can provide real solutions for temporary and long-term funding needs. These lenders are generally more risk-tolerant than their counterparts in the traditional lending marketplace. By looking into the available funding options from an alternative lender in Oregon, you can often find workable arrangements that can help you acquire the right properties on terms you can afford.

As marijuana-based businesses become more established in the state of Oregon, it is likely that the demand for real estate will continue to increase in areas where the growing, processing and sales of marijuana products are allowed by local law. Making a move now to secure your place in the commercial real estate marketplace can pay off in higher profits now and in the future.

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