It took Chris Abbott six stressful months to find a new space for his growing company. The 10,000-square-foot warehouse on the outskirts of Portland, Oregon, was once used to store industrial-strength compressors. Now the gritty space, its cinder walls repainted white, resembles a cross between a high-end laboratory and an industrial bakery. It’s the home of Botanica, Abbott’s edible marijuana company.
The new lease, which will let Botanica expand its business from nearby Washington into the Beaver state, didn’t come cheap. In the Portland area, most companies can rent industrial space for about $5 a square foot annually. Cannabis companies, however, pay a premium ranging from $12 to $18 a square foot.
“We were willing to pay above-market value to have a space there,” Abbott said. “I see the biggest barrier to entry in Oregon as getting real estate.”
The short history of legalized marijuana in the U.S. is rife with tales of tight supply and above-market leases. Local rules on where cannabis businesses can operate, combined with restrictions that prevent them from using bank financing, have limited the property available to entrepreneurs such as Abbott.
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