Cannabis Property Appraisals in California

What cannabis properties do you appraise?

The real estate behind every license category the state issues. California's Department of Cannabis Control (DCC) has sole authority to issue state cannabis licenses, and Business and Professions Code Section 26050 lists the license types, including cultivation (Types 1 through 5B), manufacturing (Types 6 and 7), testing laboratories (Type 8), retailers (Type 10), distributors (Type 11), microbusinesses (Type 12) and processors (Type 14). The DCC also licenses delivery-only retailers (Type 9). Each of those activities happens in a real building or on a real parcel, and that property is what we appraise.

That means storefront dispensaries in retail corridors, delivery operations in light industrial space, cultivation in warehouses, greenhouses and rural acreage, extraction and infusion in purpose-built manufacturing space, and distribution in warehouse buildings. We appraise existing facilities, proposed facilities and conversions, and we handle related industrial, retail, land and agricultural property in the same assignment when a client owns both.

How does local control affect the value of cannabis property?

More than almost any other use, cannabis value starts with the city or county. Under Section 26200, local governments can regulate cannabis businesses through zoning, land use and business licenses, or "completely prohibit" one or more types of licensed businesses. The DCC will not issue a state license that violates a local ordinance, and it must deny an application when the local jurisdiction says the activity is prohibited (Section 26055).

The result is a patchwork. The DCC's where cannabis businesses are allowed page reports that 256 of California's 540 cities and counties allow at least one type of cannabis business, 284 do not allow any type, and 302 do not allow any retail cannabis business. Two similar buildings a mile apart can have very different sets of legal uses, which affects rents, buyer demand, comparable sales and highest and best use. A credible appraisal identifies the permitted uses at the property, what a typical buyer or tenant could legally do there, and how much of the value depends on the cannabis use continuing.

What does state licensing require of the property itself?

Several state rules attach to the location, not just the operator. Under Section 26054, a licensed premises generally cannot be within a 600-foot radius of a K-12 school, day care center or youth center that exists when the license is issued, unless the DCC or the local jurisdiction specifies a different radius. The DCC regulations define a licensed premises as a contiguous area occupied by only one licensee, and Section 26055(c) bars material changes to the premises, or its use, from the diagram on file without written DCC approval.

The landowner is part of the file, too. The DCC regulations require an applicant who does not own the property to provide a document from the landowner confirming the applicant may occupy and use it for the licensed activity, along with the lease where one applies, and the DCC offers an optional landowner consent form (Form 9206). State licenses run 12 months and are renewed annually under Section 26050. For an appraisal, that means the lease, the landowner consent, the local permit and the premises boundaries all bear on how the income and the use are analyzed.

How do cultivation, manufacturing, distribution and retail buildings differ?

Each license type puts different demands on the building. The DCC's cultivation license types separate outdoor cultivation (no artificial light on mature plants), mixed-light cultivation in greenhouses, glass houses and hoop houses, and indoor cultivation in a permanent structure using at least 25 watts of artificial light per square foot. That is why power capacity, HVAC, water and the building envelope matter so much in a cultivation appraisal.

Manufacturing splits between Type 7 extraction with volatile solvents such as butane or propane and Type 6 non-volatile or mechanical extraction, along with infusion, packaging and shared-use facilities, so fire separation and building improvements vary widely. Distribution is warehouse and logistics space, retail is either a storefront open to the public or a delivery-only operation, and a microbusiness combines at least three activities at one location. We analyze which improvements add value for a typical buyer and which are specific to one operator.

Do you value the cannabis business or license?

No. We appraise the real property. A cannabis appraisal has to separate the real estate from the business, the license, the inventory and the equipment, and that separation is where many reports fall short. When a lease rate reflects the cannabis use, we look at what that use adds, how secure it is, and what the property would rent or sell for to other users if the use ended.

Federal treatment of cannabis is different from California's and is still changing, which can affect lending, insurance and lease terms. The report states its assumptions plainly. This page is general information, not legal advice. Talk to your attorney or CPA about your situation.

Who orders cannabis property appraisals?

Private and hard money lenders making loans secured by cannabis-use property, including bridge loans and construction loans with as-complete values. Owners and landlords deciding whether to lease, sell or refinance. Trustees and executors who need a date-of-death appraisal, partners in a buyout, spouses in a divorce, and attorneys in litigation. Owners with several sites can use a single portfolio appraisal.

We cover every California county, from Los Angeles and Orange County to the Sacramento region and the rural North. As with every assignment, our fees are never tied to the appraised value.

How do I start a cannabis property appraisal?

Call or text (805) 990-9700 and you talk directly to the appraiser, not a coordinator or an appraisal management company. Tell us the property, the license type and local permit, the lease if there is one, and the purpose of the appraisal. Your appraiser confirms scope and timing on the first call.

Rush commercial appraisals are available in 5 to 7 business days. Standard timing depends on the property and scope. Call (805) 990-9700 for a timeline on your assignment.

Talk to your appraiser: (805) 990-9700