Cannabis in Commercial Real Estate: Licensing, Zoning, Risk, & Regulatory Challenges w/ Gregg Hilzer
Welcome to the sixth episode of the A.CRE Consulting Podcast! In this insightful conversation, we dive into the dynamic intersection of cannabis law and commercial real estate with Gregg Hilzer, Co-Chair of Stevens & Lee’s Cannabis Law Group. With years of experience navigating white-collar criminal investigations, regulatory matters, and complex commercial litigation, Gregg has become a leading expert in the legal frameworks surrounding the cannabis industry. From advising on licensing processes to guiding operators through compliance challenges, Gregg has been at the forefront of shaping how this rapidly evolving sector integrates with real estate.
In this episode, Gregg shares his journey into cannabis law and the unique challenges that operators face in securing site control, obtaining municipal approvals, and accessing capital. He provides valuable insights into how regulatory hurdles, zoning biases, and federal policies impact the industry’s growth and the opportunities that arise from these complexities. Whether you’re curious about the legal intricacies of cannabis-related ventures or seeking guidance on building a profitable business in this space, this episode is packed with actionable advice. Tune in as we unpack the risks, rewards, and strategies for success in a market still in its early innings.
Gregg Hilzer and Michael talk about Cannabis in Commercial Real Estate
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Episode Transcript
Gregg Hilzer – Co-Chair of Stevens & Lee’s Cannabis Law Group
[00:00:00]
Michael Belasco:
Welcome to another episode of the ACRE Consulting Podcast. Today is actually election day and uh, you know, tensions are running high all over the place. Uh, our episode is not too Closely related to the election, but the election does have implications on what we’re probably going to talk about today um So i’m very excited to introduce actually a close friend of mine god i’ve known Greg, how long has it been? It’s, so I was eight years old. I think I, I’ve, um, Greg Hilzer, who is a close friend of mine, Greg, I’ll read a bio and then I’ll kick it over to Greg to get into more details and. Um, let me start there and we’ll start with the bio. You’ll hear a bit more about what Greg is up to, and then we’ll get into this topic and it’s particularly how it relates to
[00:01:00]
commercial real estate. So Greg is the co chair of, uh, the cannabis law group at Stevens and Lee. In addition to his cannabis practice, he has substantial experience representing clients in white collar criminal investigations. Federal and state regulatory matters and complex commercial litigation. Greg is distinguished in New Jersey’s cannabis space as an experienced advisor to both adult use and medical marijuana operators. In addition to guiding cannabis clients through the licensing process in New Jersey, he has also successfully navigated New York’s adult use license, adult use license application process for multiple clients. Additionally, Greg has worked on numerous financial transactions for both operators and investors in the cannabis space. Clients who are already operating rely on his multifaceted legal guidance focused on managing risk and ensuring compliance and regulatory requirements. There is a lot more for Greg’s bio, but we’ll, we’ll stop there. Um, you know,
[00:02:00]
I’m excited to introduce to our audience, Greg Hillser, you know, cannabis, especially as it relates to the real estate space. Uh, there’s so much crossover, they’re interdependent in fact. And so I thought it would be an awesome opportunity to bring Greg, a close friend on, uh, to talk about this. So Greg, anything else to add to that intro, uh, before we, we dive in?
Gregg Hilzer:
No, nothing to add to the intro. I mean, thank you for having me. Um, been wanting to talk to you about this for a long time and, you know, funny, it is, um, election day here. I think cannabis may be one of the few issues where Trump and Harris are actually on the same page. I actually can’t think of another one.
Like they both want to move forward with. Some federal movement on adult use cannabis. Um, and so, uh, hopefully no matter who wins, um, that, that happens. Uh, this is an, an industry that’s like begging for forward federal movement. Um, And, uh, you know, much like everything in cannabis, it
[00:03:00]
will take longer than expected. It will cost more, um, but eventually it, it will happen
Michael Belasco:
Yeah. And you particularly, you know, I want to talk about your background, how you got into it. You didn’t start off in this space, um, but you particularly have a finger on the pulse in every, at least when it comes, you know, it comes down a lot to the States at this point. Pushing into federal, you’ve been at the forefront in New Jersey, New York. Um, you’re working on, on Pennsylvania now. Um, and you know, I’ve just, you know, over the years, it’s been a hot topic. It’s been a cool topic. It’s been sort of up and down in commercial real estate, but. You know, from the little I know about it and with a real estate lens on, it’s just, there’s, it’s incredibly high risk, high reward.
I mean, from the last time I looked into it, um, you know, people that were in this business couldn’t really open bank accounts. It was a cash business and probably things have changed a lot at that time since then, maybe, maybe not.
Um, so why don’t, there’s a lot to talk about here. Why don’t we first get into
[00:04:00]
the story of how you got into it.
Now I can. I can leave. I remember cause we were, you know, in touch throughout a lot of this, but you had started unrelated representing a very high profile client, um, in the state of New Jersey, some, you know, very famous senators been in the news recently and maybe before a New Jersey senator.
And you were on this first case that was in the public
Gregg Hilzer:
So I got into cannabis. Um, by the way, you, you couldn’t have planned to get into legal cannabis when I was going, you know, back in school, it was something that hadn’t happened yet. And so I actually got into cannabis by accident. I had spent most of 2017 working on a pretty intense trial. I guess it was a former, uh, United States Senator, Senator Robert, um, I was one of his lawyers during his trial. Um, and after that trial, I needed a
[00:05:00]
break. I needed to catch my breath. Um, my law firm, it was an intense experience. Um, after that trial, I needed to, you know, like I said, catch my breath. At that time, my, my, uh, you know, firm at the time was launching its, uh, cannabis practice group. Uh, it was a New Jersey based law firm. Uh, Governor Murphy had just won. Um, election, he was going to legalize adult use cannabis. Um, California had also just passed an adult use law. So cannabis was happening. Um, I went to the launch of the cannabis group. They asked for, uh, volunteers to go to cannabis industry functions. I, you know, volunteered. And then I ran into people from my life that I already knew that I didn’t know we’re going to be there. Uh, that we’re getting into the cannabis industry, like people that were in the wine industry, people that were in finance. Um, and it just sort of built from there. And for the first year, I was
[00:06:00]
a total sponge.
I wasn’t focused so much on, you know, representing people. I was focused on learning. Um, you know, not just learning the laws, but learning how the industry works. And, uh, that was time very well spent because I think like most industries, if you’re representing people, you need to know not just the law, you need to know how the industries work. And so it started, so I started, you know, being a sponge end of 2017, started representing people in 2018, 2019, there were, um, medical application rounds in the state of new state of New Jersey at the time. Um, so represented clients there. Um, and then around 2019, 2020, Um, the pace towards adult use in New York and New Jersey really started to pick up and then, uh, it’s been growing ever since.
Um, we now have adult use in New, in New Jersey and
[00:07:00]
New York and pretty much every state in our Northeast region except for the Commonwealth of, uh, Pennsylvania, but cautiously optimistic that that’s going to be happening
Michael Belasco:
Great state that we live in? So I want to get into, um, Representation and what you were doing because a lot of this has to do with Land use approvals entitlements and this is stuff that every person that’s developed anything in real estate understands
I mean when you look at commercial real estate and you look at a risk profile everything gets progressively less risky the further along you get in your process and
When you buy raw land and in you it might have been somebody’s looking to establish a business You And tangential to that business and just as important is getting the real estate, right?
So when you’re representing p you are representing people and often not only for their business plan And i’m i’m i’m guessing here you you clarify but but in their real estate you are that you are dealing with Planning departments.
And so why don’t you give us a little link? Cause I’m sure there’s some
[00:08:00]
people listening to this, that this is, and you tell me we’re in, you know, we, we refer to innings all the time in a lot of different businesses, but we’re in like, from what you’ve told me last time, we spoke like the top of the first, maybe not even.
And so this is an opportunity. How does the entitlement plan you? So you’re in New Jersey. I know it varies in municipality, states, everything, but tell me your experience. In, in this,
Gregg Hilzer:
Sure. So I guess maybe to take a bit of a step back You know what a cannabis lawyer does. I mean a cannabis lawyer, you know Represent clients and generally fall into a few different buckets one It you know, the first bucket is, you know clients that are looking to become licensed clients are looking to become licensed are really like no other client because you know in all of the Northeast markets you need site control and Um, to complete your final license applications.
That means you need to lock down commercial real estate before you’re even licensed. So way before you’re operational. So
Michael Belasco:
need to own it or can you leave, could you have a lead, have to
[00:09:00]
have a lease in place? You have to own it.
Gregg Hilzer:
can lease it, you can have a contract to buy it, you can even have a letter of intent. Some states recognize a letter of intent as, you know, checking the box for requisite site control. That’s not best practices, because if you get through the licensing process and all you have is an LOI, the landlord has you by the short strokes, because you now have to make a deal and you have no leverage whatsoever.
Michael Belasco:
Right. Hmm.
Gregg Hilzer:
you’re working with, you’re working with cultivators, manufacturers, retailers, testing labs, wholesalers, to get them through the licensing process.
And so, That’s sort of one bucket of clients. Another bucket of clients are the actual licensed operators, licensed cultivators, manufacturers, retailers, testing labs, all those folks. And these are highly regulated businesses. So my job, once a,
[00:10:00]
once a cannabis operator is licensed is to manage risk. You know, it’s regulatory risk, it’s business risk. Um, you know, and so you, you never know what you’re gonna hear on the phone when a cannabis client calls, but that, that’s what keeps interesting. I also work with folks that own, uh, commercial real estate or want to, in, wanna invest in the cannabis space. So I, I, I deal with every facet of this industry and I’m. I’m thankfully at a, at a law firm that has all the different practice areas that can help service and. represent, you know, every type of, uh, cannabis business. Um, but to go back to your point, um, commercial real estate and, you know, like locking up viable, uh, commercial real estate is one of the two most significant issues that operators in the cannabis industry
[00:11:00]
need to solve for, and they need to solve for it early. The other issue, which you’ve also touched on is, you know, getting municipal approvals. Now, in the first instance, that’s just getting A support resolution or a letter from a town saying, yes, you are able to, you know, do cannabis cultivation. You’re able to do cannabis manufacturing, cannabis retail here in this town, which is also very challenging.
If you don’t have commercial, uh, site control and you don’t have municipal, uh, uh, support, you don’t, you don’t have anything. If you have those two things, if you have site control. And you have municipal support. You can solve for everything else because if you don’t have money, if you have those two things, you, you will be able to find money.
I can’t tell you what the price of that money is going to be.
Michael Belasco:
Yup.
Gregg Hilzer:
If you have real estate locked down. And that’s challenging,
[00:12:00]
and that gets funky sometimes. Uh,
Michael Belasco:
Especially with the use, the proposed use.
Gregg Hilzer:
the, yes, it is still controversial. It is still, you know, people oftentimes still take a step back when you want to say, hey, I want to use your site or your land for cannabis, fill in the blank. Um, like I said, I like to say, you know, cannabis is not like baseball. The tie doesn’t go to, you know, the runner. Cannabis is a process. It can’t be rushed. You need oftentimes several, several conversations. You want to give people time to think about, think about the issues, think about what you’re looking to do, answer questions, get them comfortable,
Michael Belasco:
Yeah. How, how prepared are most like when people show up, I have so many questions by the way, but, but, um, you know, when people show up to you, I know you get a whole cast of characters everywhere from probably like, maybe not institutional, but so let’s call them sophisticated folks to people who
[00:13:00]
just. They’ve been smoking pot for since they’ve been in middle school and they just love it and they want to just Get into the industry.
Are you getting the gamut? Are people coming to you? They have their stuff together. They’re poking around like, where do people typically show up in their process
Gregg Hilzer:
So I get the full spectrum. I get, I get the gamut. And I, I give everyone time to talk to me because if you’re, if you’re not ready, If you don’t have your stuff together, I’m going to tell you that. I mean, I have a, I mean, I, I’m pretty straight with, with people. Um, and I’d rather people not waste time and waste valuable, you know, resources and money, you know, looking to move forward in a process that they’re not ready to move forward.
So if someone’s obviously not ready, um, like they don’t know exactly what aspect of this industry that they want to get into, or. They don’t
[00:14:00]
have any money or they don’t have any, you know, cannabis industry know how like try to solve for those things before you jump in the pool.
Michael Belasco:
Yeah,
Gregg Hilzer:
and I’m, so I will talk with everyone, I will try to help people, um, but if you’re not ready, um, if you’re not really like buttoned up, I mean, you know,
Michael Belasco:
And that’s what every industry, right? I mean, you have to understand there’s a business opportunity there, but then if you’re not the subject matter expert, you need to backfill your team. Maybe you, you know, in my world, you know, and this is going to be a question, you know, and it’s about land. So you understand the supply demand opportunity. There’s risk because a lot of people don’t understand it. The legislation’s not even really in place yet, which correlates to high reward. So some people with the risk tolerance, maybe they have no background in marijuana and there’s probably a lot of people that are maybe interested in the
[00:15:00]
space. They don’t find it to be offensive.
They just haven’t really done it. but they’re, they’re interested. So in my mind with, with the real estate lens on, my first thing is okay. Supply demand fundamentals at the macro sound good. The risk reward sounds great. I have a map of the United States. I am trying to hone in on land. First criteria to me is where am I allowed to do this first and foremost, right?
At least in my mind. So I’m thinking about is there a database, is there a map where I could point to and say, here’s the, here’s the friendlies. In the country.
And is there, or is that an opportunity for someone to, to write that
Gregg Hilzer:
so on a macro sense, yeah, I mean, there are states that are medical markets. So there are 38 states that have medical markets. There are 24 states that are adult use markets. There are, there are three states on the ballot today. So Florida. North Dakota, South Dakota all have,
[00:16:00]
um, adult use referendums on the ballot.
People are voting for it right now. It’s interesting, by the way, as an aside, like we could coming out of this election, have a majority of us States with adult use cannabis programs. That’s a relevant data point, because then if, if that holds true, you will have a majority of United States senators. representing states that have adult use cannabis marketplaces. So the odds, I think, uh, forward movement on cannabis go up when the math works and the math will work once you have 26
Michael Belasco:
political level? Yeah. Right.
Gregg Hilzer:
So that’s, that’s an aside. Um, so on a macro level, yeah, there are ways to suss out generally, you know, where are the medical markets, where are the adult use markets, but what, when you look at markets on a more, uh, You know, from a more micro perspective, you know, this is an industry get that gets
[00:17:00]
very local very fast and every state does it a little bit differently, but inevitably, in order to, you know, do what you want to do, whether it’s retail cultivation manufacturing, you need local side on and different states handle that differently.
So New York state, which by any objective measure has fumbled its. adult use markets, you know, um,
Michael Belasco:
How so?
Gregg Hilzer:
roll out. Well, how so? Well, we could have another podcast on how New York has sort of fouled things up, but generally speaking, um, the ratio of licensed retail dispensary to unlicensed retail dispensary in New York City is about one.
Michael Belasco:
mean, I’ve witnessed it. We’ve all witnessed it firsthand. If you, uh,
Gregg Hilzer:
Yeah. So there’s no, there’s no, and there’s no, and there’s no enforcement. of the regulations as
[00:18:00]
it pertains to licensed retail versus unlicensed retail. And that’s a problem when you have people paying a ton of money to set up licensed retail and they’re in direct competition and direct proximity with unlicensed retail.
So, like, that’s a, that’s a marketplace problem there. Um, there are also, you know, there were plenty of, lawsuits that held up the, um, licensing process. Um, there was a tremendous emphasis on having a social equity fund, giving, um, giving loans to social equity operators. Um, that went sideways because there turned out to not be nearly as much money in the fund that people thought there would be.
Um, and just the cannabis regulator in New York state is still going through, I’d say greater than average growing pains. Um, and it’s not their fault. There are some really talented people
[00:19:00]
that are with, uh, the Office of, uh, Cannabis Management there. And it’s just a very big market. It’s a complex market and they need a lot more resources.
And so, but that’s generally true of every adult use market. I mean, you’re, you’re dealing with newly established regulators trying to enforce newly established regulations. So, there, there are going to
Michael Belasco:
such kind of demand and such need that it just gets out of
Gregg Hilzer:
So there are going to be growing pains in every market. New York, far greater than average.
But anyway, my, my, my, my first point was going to be, one of the things that New York did, um, in its rollout of its adult use market was that it, it allowed municipalities to opt out of retail and, and consumption lounges, but nothing else. So if there was agricultural uses in the town, or if there were manufacturing uses in the town, or there were retail.
[00:20:00]
Um, if there were other, if there were other uses in the town,
Michael Belasco:
Yeah.
Gregg Hilzer:
could, you could have cannabis cultivation if there was other
Michael Belasco:
Meaning there was a zoning and cannabis cultivation could, um, fit under that zoning. There was no way the municipality could prevent that
Gregg Hilzer:
Right. Now,
Michael Belasco:
least on the
Gregg Hilzer:
Yeah. So, I mean, what they couldn’t do was like ban cannabis cultivation or manufacturing if they had other similar markets. cultivation or manufacturing uses. Um, they like still have time, place and, and, manner that they can, they can, you know, um, develop rules and resolutions for, but they can’t say that you can’t do it here. Jersey was different. New Jersey allowed towns to opt, you know, out of any or all of the different license classes.
[00:21:00]
So most, I mean, well over, you know, 65 percent of towns in the state of New Jersey opted out of everything.
Michael Belasco:
Isn’t that interesting? That’s really fascinating. You think it’s, it’s, it’s a popular, it has a popular vote. Everybody wants to have it in an adult use recreational use of it. However. There’s still taboo and it goes down to the local level where towns don’t want to be the ones that are perceived as, you know, maybe the mecca is too extreme of a word, but they don’t want to be perceived as the location where it’s all being
Gregg Hilzer:
Right.
Michael Belasco:
awning from, so to speak. So how, so what was the percent? it was 65%. 65%.
Gregg Hilzer:
actually probably a little higher when it first started. I think it was closer to 70 percent opted out. Um, now, the way that the New Jersey adult use market rolled out first was, you know, there wasn’t a lot of, you know, time for the towns to really understand what they needed to do and pass ordinances and things like that. And they had a
[00:22:00]
drop dead date where if they didn’t opt out, then they were in for everything for five years. So they were up against, I think it was like an, an August deadline of 2021. And, uh, you know, if they didn’t opt out, then they were in for everything. If they hadn’t passed. a comprehensive resolution sort of setting forth how they were going to deal with it.
So most, most of the towns opted out. Um, we’re still, we’re still, you know, under 50 percent of towns in New Jersey opting in. So more towns are still opted out than towns that are opted in. And that’s had an effect on the rollout of the adult use market for sure. And to tie it back to, uh, uh, commercial real estate, you know, you know, folks that want to get in, get into this industry are now looking in fewer towns. So that drives up
[00:23:00]
competition for all sorts of sites.
Michael Belasco:
Right. Right. So everybody’s looking at a much more constraint, which creates, you know, there’s competitive advantages. Some folks might have.
Just based on that, that, um, being, being true. So, um, I wanted to ask you now, one of the challenges I’ve, I’ve seen in this industry is capitalization. I think we maybe even touched on it briefly. Um, and you’re in close proximity. I, with a lot of groups in these operations, are these primarily self funded? What’s the world of capital markets looking like? And I know you’re not directly, or maybe you are, but, uh, are like. Are, is there a lot more outside capital getting involved in participating with businesses is still, is it very much primarily self funded by organizations?
What do you,
Gregg Hilzer:
Yeah. So it’s a, it’s a lot of self funding, a lot of, a lot of, uh, family offices, a lot of private. Private lending, um, you know, um, REITs
[00:24:00]
are there, like, there have been, you know, cannabis specific REITs that have, like, been in the space for several years, um, but it’s still cumbersome, um, and, you know, over the past few years, the, you know, actual price of money has gone up, that hasn’t made it easier, um, and so, you know, Financing is tough. You know, the, the like financial part of this industry is very, very difficult. And what people were hoping for was to get the rescheduling from Schedule 1 to Schedule 3 done by the end of this year. So next year we could focus on the SAFE Banking Act or some version of the SAFE Banking Act, which would, you know, provide new clarity. For, uh, financial institutions to, you know, get into the, uh, cannabis space. Uh, financial institutions, banks, and, you know, whatnot. Um,
[00:25:00]
because once cannabis is not a Schedule I drug under the Controlled Substance Act, that means it’s not federally illegal. Right now, it’s a Schedule I drug, it’s federally illegal. Schedule III is highly regulated, but it’s legal. Um, and so I think that You know, any federal movement will be meaningful. Um, we were looking for that to happen before the end of the year. Uh, recently, some things have happened that have indicated that, you know, cannabis rescheduling will not happen this year.
There was a, there was a hearing that was scheduled on, uh, uh, December 2nd. The, uh, DEA was going to hold a hearing. It was going to take, uh, Uh, you know, testimony from, you know, various experts, um, and within the last week, um, the hearing is still taking place, but they’re not taking any, uh, testimony. And so it’s clear that any decision on
[00:26:00]
rescheduling is going to be a 2025 thing. Um, so,
Michael Belasco:
do you think, like what, what brought that on? Why did
Gregg Hilzer:
um, it’s hard to say, I mean, you know, DEA generally doesn’t have a lot of positive muscle memory when it comes to cannabis, you know? And I just think that DEA may be a little bit hesitant. Um, I mean this is something that, you know, the Department of Justice formally recommended that cannabis get rescheduled out of Schedule 1 to Schedule 3.
Michael Belasco:
And no matter who comes in later, it’ll still, that’ll, that will still survive. Cause that’s, this is a bipartisan issue now.
Gregg Hilzer:
That’s the, that’s the recommendation of the Department of Justice. HHS has said, yes, this should be a Schedule 3 drug. DEA is holding hearings. Um, they would have to have a
[00:27:00]
compelling medical scientific reason to, you know, formally push back on HHS and, uh, DOJ. I don’t know that that’s going to happen, but this is a process like everything in cannabis that will take longer than expected. I mean, that’s just one of the golden rules.
Michael Belasco:
So back to, um, uh, actually I don’t even know if I, so, so back to the cat. So capital makes businesses viable. Right. And that’s, that’s the core. A lot of people are limited in their access to capital unless they have access to the family offices and things you had mentioned. So all of this, and the reason we’re talking about this is cause this stems down to what. A lot of financial institutions can and cannot do based on the scheduling of, of marijuana. So right now, no, and tell me if this is a correct statement. Right now, cannabis businesses cannot open bank accounts.
Yes
Gregg Hilzer:
can, um, if you’re dealing with a
[00:28:00]
state chartered financial institution, you certainly can.
Michael Belasco:
Yeah. Yeah,
Gregg Hilzer:
financial institutions, you know, have an issue. I mean, the deep dark secret is that some of them are banking cannabis operators, but like it’s federally illegal. and so the risk profile for a federally regulated. financial institution is tremendous. Um, a state chartered, uh, financial institution far, far less so, but they need to keep their eyes on their, you know, cannabis industry clients to make sure that they’re not,
Michael Belasco:
they’re, they’re legit.
Gregg Hilzer:
they’re doing things the right way. But if a, if a cannabis business is operating under the color of a valid state license, They’re going to be able to find banking. The fees will be what they will be.
Michael Belasco:
Mm hmm.
Gregg Hilzer:
won’t be small,
[00:29:00]
probably. Um, but, um, and generally speaking, you know, if you’re operating under the color of a valid state license, like, your risk profile of, you know, being rated by the federal government is exceedingly low. It’s not zero, but it’s really close to zero.
Michael Belasco:
Yeah. Fascinating. All right. Let’s, let’s go back now on the business side. These are barriers to entry, right? Um, so capital is a barrier to entry. Uh, it’s not, it’s doable, right? It’s, it’s local municipalities and finding the right, even if you find a viable spot, there’s still, I mean, there’s always just challenges
Gregg Hilzer:
Yeah. Absolutely.
Michael Belasco:
So, so finding viable property. Are there and what other barriers to entry like, you know, I know there’s regulations
Gregg Hilzer:
Sure.
Michael Belasco:
So like, you know, um, it’s still is it still the wild west so barriers to entry into the business
[00:30:00]
Um, there’s so many questions. Let’s just stick with that. What other barriers to entry? These are those are huge ones capital and and um, and finding land,
Gregg Hilzer:
estate, and municipal approval. Those are the, those are the, the three big ones. Um,
Michael Belasco:
you have any war stories or anything, um, that relate to success and failures in, um, you know, give us a good failure story and a good, uh, success story. Uh, you know, these are the things I think really fascinating when it comes.
Gregg Hilzer:
I mean, you know, some, some success stories, you know, I’ve had clients that have, Lockdown sites in towns that are willing to have, you know, you know, cannabis, retail, cannabis, uh, cultivation, um, have, you know, leases signed, or in some cases, uh, letters of intent signed, um, and then
[00:31:00]
when, when like commercial real estate owners realize what they have, They try to, they, they like try to like, you know, bail on the deals and, you know, deals ranging from, you know, letters of intent, which are not totally buttoned up, um, to, you know, fully baked leases, um, you know, contracts to like, you know, buy sites, you know, I’ve, I’ve, I’ve dealt with that numerous times. And you have to have clients that are willing to fight. Um, because you don’t want to let people just sort of push you out. Like once a commercial real estate owner realizes what they have, if they didn’t realize before and they, they get, you know, talked to by another potential cannabis operator saying, Hey. I will offer you 2x or 3x, whatever you’re going to get from, you know, this other operator, that stuff happens. Um, and I’ve had success, you know,
[00:32:00]
punching back, you know, making sure that, you know, landlords live up to the, you know, deal that, that we have baked in. And, um, you know, those are the success stories, you know, some of the not so successful stories is where You, you know, lock down a site, you, you know, go before a planning board, and for reasons, you know, unrelated to anything but just a cannabis bias, you’re run out of town.
Like, and, you know, it’s a really difficult thing to prepare for. You, by the way, you, like, try to prepare, you, like, try to know where, you know, Different boards are going to land different things that they’re going to, you know, want to talk about what they may be worried about. And you want to, you want to sort of, you know, get them to yes.
You know, you, you don’t want to, you know, go in there
[00:33:00]
blind. Um, but even when you think you have the right answers and you’re going to do this in a really buttoned up way, you’re going to follow all the, all the like regulations. Um, you’re going to operate your business in a best in class manner. You know, there could be one or two people that, for one reason or another, and likely reasons that will never be said, but you can sense they just have an anti cannabis bias, and, uh, they will, they will go on the record with some other reason.
Michael Belasco:
is across the board, by the way, whatever, any development, it’s not even just cannabis, any type of real estate development. This is all the time. I mean, that’s,
Gregg Hilzer:
but so then you’re, you know, there with your, you know, client who’s not yet licensed, who spent tons of money going through the license application, locking down real estate, doing a planning board application or a, or a
[00:34:00]
like zoning application. And the question is, you know, do you, do you like challenge. The ruling of the zoning board. And it’s difficult. I mean, because that’s way more money. Um, and you don’t know what the end result’s gonna be. Um, that happens. That happens. I mean, and some clients choose to fight others. choose to look in, in, in, in other towns. Um, so a lot of the successes and failures relate to commercial real estate and whether, whether you can lock it down, whether it’s properly zoned, whether you know, towns want it. Um, I think over time, what, what towns are going to realize in our Northeast region is that cannabis businesses are, you know, generally the most secure places In your town because they
[00:35:00]
have to be they have to have cameras all over the place You know everyone that’s going in and out has to have you know worker, you know IDs and badges and whatnot um, and if you’re in the Retail space, you know, they have to you know solve for like, you know traffic and crowds and things like that um, but also In the like in the retail space, you know cannabis customers stay and spend other money in towns,
Michael Belasco:
especially we got good restaurants around
Gregg Hilzer:
restaurants, you know, that’s, you know, certainly that’s certainly one example. Um, but generally property values go up. Um, I mean, and you know, cannabis retailers need to be concerned about How they operate cannabis businesses want to be good corporate citizens like they like like they want to do well for the town um
[00:36:00]
and um You know, it’s it’s still early in all these markets that that’s another thing That’s sort of another sort of macro issue The state of new jersey’s had an adult use market for two and a half years New york is about the same pennsylvania doesn’t have an adult use market yet, although it has a very large medical market Maryland and delaware are less than a year old Um, ohio’s less than a year old
Michael Belasco:
or adult use.
Gregg Hilzer:
Adult use.
Michael Belasco:
Okay,
Gregg Hilzer:
Yeah, Ohio’s had
Michael Belasco:
I didn’t know.
Gregg Hilzer:
for less than a year. Um, so we’re, you know, in the northeast, mid Atlantic, you know, near where we are, it’s still very, very early.
Michael Belasco:
Yeah.
Gregg Hilzer:
so there’s still lots of opportunity.
Michael Belasco:
Awesome. There’s a, there’s of questions I want to ask you, but I want to, I want to bring this down. This will be a wrap up question. Maybe we get into some fun stuff, too. But, uh, somebody who’s considering getting into
[00:37:00]
this space, some practical advice based on all the All the good outcomes and riffraff you’ve seen, you know, like this is a great, the bad example was great because it’s like, don’t go throw money after the, the, the lesson I took from that story is don’t go through all this money at something without, I would have gone and had meet soft meetings with the planning department, which maybe should have happened by the, by whoever was starting this business. To me, it was clear as day when you told me the story,
um, what advice would you have for folks just starting to get what would be a best practice to, to set themselves up for success, uh, to avoid any early pitfalls. And you could speak to like the 10, 000 foot level. We don’t need to get into like deep detail, but what is some sort of guiding principles that you might, might have for, for a successful outcome?
Gregg Hilzer:
first of all, learn the industry. Learn the industry, know, know, you know, know where you want to go. And by that I mean, know what you
[00:38:00]
want to do in the industry. Like, whether you want to go into retail, go into cultivation, manufacturing, know what the costs are for each of those different facets. Um, and, you know, build a, build a really good team. I mean, you’re going to need lawyers. You’re going to need operational people. You’re, you know, you’re going to need other accountants. You mean it takes a village, but you know, learn the industry, um, and you know, have the expectation that things will take longer and cost more. Um, but also like. Don’t skimp on the time you put in to your business plan because, um, you know, that’s a really good exercise.
I mean, going through that exercise really prepares you for the whole process soup to nuts and, you know, you know, speak with people that are
[00:39:00]
in the space because, you know, I can, I can speak to. The legal issues that you’re going to need to, you know, that you’re going to need to solve for to get from where you are through the licensing process.
And then once you open, but I’ve never operated a cultivation facility a manufacturing facility. But if you want to do those businesses, talk to someone because it’s a highly regulated space. Um, it’s not easy. So learn as much as you can about as much as you can. And then try and be as specific as possible with how you want to get from zero to like launch. But also, by the way, success is not getting licensed. Success is not, you know, launching. Success is success. Like a successful business, like a profitable business. So, you know, don’t do your business plan, and I’ve seen this a
[00:40:00]
lot. Don’t draw up a business plan that gets you to doors open. That’s not a business
Michael Belasco:
your license. Then you think you won.
Gregg Hilzer:
That’s like, that’s like the first 30%. Like, the other 70 percent needs to be like, how are you successful once you’re in the market? And you need to be thinking about these things early. Um, so speaking with people that are in the space, Um, is going to be really, really helpful because you’re going to like, you’re not launching this business to just open your doors because you think it’s cool.
You’re opening this to make money. You need to have a plan to get there. So make sure that you focus on that.
Michael Belasco:
Awesome. Any, any good, um, resources, whether it’s publications or, or like organizations to, or conferences or anything like that, that you would recommend people check out.
Gregg Hilzer:
so there’s a lot of content out there. I subscribe to too much content. I mean, I get, I get emails
[00:41:00]
from everyone from.
Michael Belasco:
the way, for our listeners, Greg is a literal encyclopedia on this stuff. I mean, when we go out and grab drinks, which is probably very frequently, it’s like, I can ask Greg anything and it just, it’s, it’s quite impressive, actually.
Gregg Hilzer:
I mean, you know, some of the, like, online resources that I like are the Green Market Report, um, MJ Biz Daily, Marijuana Moment, Normal, you know, those are four of probably the dozen that I, that I get. But yeah, I mean, there’s a lot of content out there. Um, there’s a lot of good information. There’s a lot of bad information also.
So, I mean, don’t take everything or anything at face value. Um, you know, but learn, you know. And I think that as people start to delve into this industry, like, they’ll be able to suss out, like, where the, where the, like, good information’s coming from and where it’s just noise. But yeah, I mean, be, be,
[00:42:00]
be a sponge and ask a lot of questions and don’t be afraid to reach out to people. I mean, cause generally I’ve found people in this industry want to, want to help others. Um, and uh, yeah, it takes a village. So get after it.
Michael Belasco:
Sound and wise advice. Um, Greg, this was awesome. Uh, we should do this more often. Maybe we’ll make like a regular cadence on this. And, um, you know, thank you so much for joining us. And to our listeners out there, um, we’ll put, you know, if Greg’s cool with it, we’ll put his contact info and stuff on the, um, on the site.
And if anybody’s, you know, looking to delve into this, this space, you know, there’s no better person than, than Greg Hilzer, um, to get in touch with. So, um, thanks everyone for listening. And Greg, thank you so much for, for joining
Gregg Hilzer:
Thanks for having me.
