© Provided by Benzinga L to R: Kristi Buechler, Senior Advisor; Bryan McLaren, Chairman, and CEO; Berekk Blackwell, COO; and Patrick Moroney, Director of Real Estate
Arizona-based Zoned Properties, Inc. (OTCQB: ZDPY), a leading real estate development firm for emerging and highly regulated industries, has for the past several years been pursuing an aggressive growth plan for servicing real estate in the cannabis industry while also achieving major milestones.
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The company has a successful track record while keeping its financial and capital structure healthy. Zoned Properties believes its strategy is beginning to reflect in the company’s year-over-year and year-to-date market valuation and its share price.
With such a limited and clean capital structure — only about 12.2 million shares outstanding — and a history of positive cash flow and income from operations, the company has intentionally never taken anything close to toxic debt, nor subjected its shareholders to overly dilutive capital raises. And now, with the completion of recent projects and expansion of new services, Zoned Properties may be in a position to raise meaningful capital with healthy terms for shareholders.
Zoned Properties’ ability to exceed targets and leverage its structures to create even greater value makes the company an exciting investment target for retail investors.
Following this impressive performance, Bryan McLaren, CEO of Zoned Properties, Inc. had a Q&A session with Benzinga to look at real estate in the cannabis industry and also examine what it takes to put together a multi-million dollar real estate project in such a challenging industry.
Benzinga: What is Zoned Properties’ outlook on real estate in the cannabis industry?
McLaren: As the United States continues to evolve its emerging cannabis industry — primarily regulated by local community zoning and permitting regulations — the importance of intelligent real estate development strategies and tactics has never been more important.
There are approximately 39,500 local governing bodies that control where a regulated cannabis project can be located and operated (i.e., counties, municipalities, and townships that create local zoning and permitting regulations).
The significance of these local discussions has never been more important for the future of an emerging industry such as cannabis. Zoned Properties has a decade of direct experience across the country with a team of experts devoted to best practices for how to regulate cannabis real estate projects.
Benzinga: Is there growth on that front?
McLaren: According to recent real estate data, there is approximately $16 trillion worth of commercial real estate in the United States, with roughly $1.5 trillion of industrially zoned properties — the primary location for most regulated cannabis projects. Regulated cannabis is one of the fastest-growing sectors in our economy with the likelihood to become a foundational marketplace for the future of our county. We have seen serious land-grabs for industrial and commercial-zoned properties that can house this emerging industry, even considering the lack of access to traditional banking resources.
As the cannabis industry is now regulated with licensing projects in over 35 states (medicinally and/or recreationally), market projections suggest that the real estate opportunity related to cannabis projects could boast a Total Addressable Market (TAM) of over $50 billion, and we’ve only just begun to discover the market size and potential for cannabis and its ancillary real estate service needs.
Benzinga: How can cannabis businesses and investors take full advantage of real estate in the cannabis industry?
McLaren: Real estate investing with a cannabis focus can be approached primarily in 1 of 2 ways: first, through a capital financing mechanism, which is typically in the form of a Real Estate Investment Trust (REIT) whereby the REIT acts as a bank to the cannabis operators in exchange for debt repayment or rental payments.
The second avenue to capitalizing on real estate in the cannabis industry is through the services approach, which is the strategic growth model for Zoned Properties. Our growth verticals include Advisory Services, Brokerage Services, Franchising Services, and PropTech (Property Technology) Data Services; we are confident that these specific growth verticals can best capture the value and scalability for real estate development services in the regulated cannabis industry.
These services give our team at Zoned Properties the best possible toolkit not only for clients and industry partners, but also to acquire and invest in the growth of our own portfolio of properties. This strategy differentiates Zoned Properties in many ways to position our company as a sort of quasi-REIT whereby we can take full advantage of both avenues for real estate investing in the cannabis industry.
Benzinga: What does it take to put together a multi-million-dollar real estate project in the cannabis industry?
McLaren: The beauty of operating as a quasi-REIT is that we can re-invest more of our cash flow and capital into our growth service verticals and not necessarily be restricted by many of the regulations that structure the formal REITs. And to be clear, there is real value in both structures. Some of the cannabis-focused REITs have done extremely well, providing a much-needed capital resource for the entire industry, and we can play together in the same sandbox to create leveraged value for the entire industry.
As Zoned Properties pursues large-scale acquisitions and development projects, similar to what we’ve done in Arizona with our large-scale portfolio, we can invite others to the table and provide pipeline access where others may not be able to go.
When you approach a multi-million-dollar real estate project that has significant risk, such as we see in the cannabis industry, the success stories all tend to have one thing in common: an experienced team that has the ability to pivot, mitigate risk and capture the greatest investment returns, which is exactly what we do at Zoned Properties.
Read more about Zoned Properties here.
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