Cannabis and the Self Storage Industry

The year is 1983. You dance your way into the kitchen while enjoying Lionel Richie’s smashing new hit “All Night Long”, pour yourself a nice tall glass of Tang and flip on Good Morning America. Poised front and center is the always classy FLOTUS, Nancy Reagan, and you hear her utter that infamous phrase for the first time, “JUST SAY NO.”

This phrase has echoed throughout the decades but the war on drugs has shifted tremendously since that point in time. All but two states now have some form of medicinal cannabis use laws and 18 states have recreational cannabis. The blossoming of the cannabis industry has generated billions of dollars in tax revenue (the top three states alone generated $2.379B in 2020), helped over two million medical patients and created hundreds of thousands of jobs in the US. Now, this article is by no means here to argue for or against the legalization and or consumption of cannabis, but as you can tell by the numbers mentioned above – cannabis is here to stay in the US.

With that in mind – what is the impact that this will continue to have on the self storage industry?

In a recent conversation with Scott Zucker, a partner in the law firm Weissmann Zucker Euster Morochnik & Garber P.C. in Atlanta, he emphasized that the issues arising from cannabis and self storage are not necessarily the ones we would inherently think of.

It’s a very creative idea for a way to use the facility. But you have to really think it through.”

For example – cannabis is a perishable good – just like fruits and vegetables. Rotting bananas or carrots would not be a desired product in any storage unit, let alone cannabis, which is susceptible to mold, viruses, bacteria and fungi.

Mr. Zucker also drew a strong comparison between cannabis and gasoline. In a state where both products are legal, there are inherent risks that would prevent any owner from allowing them stored at the facility.

Whereas gasoline may stain and damage concrete or raise a concern for potential fires, allowing tenants to store cannabis draws the threat of break ins or criminal activity on the property. While no owner wants to heighten the risk at their property, it is difficult to turn down ready, willing and able customers.

As Jeff Greenberer noted in a 2014 ISS interview, “tenants involved with the cannabis industry are assumed to be ‘good payers,’ since they often deal in cash.” Though this may be attractive to struggling self storage businesses, he cautioned that operators accepting large cash transactions come with their own set of problems. “It’s a very creative idea for a way to use the facility. But you have to really think it through.”

Thankfully, when all is said and done, self storage facilities are not the ideal environment for tenants to attempt to grow their businesses (literally). Given the varying temperatures and lack of humidity control in the average storage facility, this is certainly not a breeding ground for prime cannabis cultivators. However, with that in mind, as cannabis continues to flourish within the United States, it should be kept on the back burner for all storage operators to see how and when the industry attempts to integrate with and or utilize our self storage facilities.

John C. Lindsey
Lindsey Self Storage Group

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