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Medical Cannabis Operator, Flemington, NJ

Colby Piper Headshot
Episode #: 182
Medical Cannabis Operator, Flemington, NJ

Guest: Colby Piper
Topics: Ripco Real Estate, recreational cannabis, medical cannabis


Chris Ressa 0:00
This is Retail Retold, the story of how that store ended up in your neighborhood. I’m your host, Chris Ressa, and I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC Management.

Welcome to Retail Retold, everyone. Excited for you to be here today. We have an interesting topic with an interesting guest today. Today we have Colby Piper, we’ll be talking about the cannabis industry, which we really haven’t done on this show before. So I’m excited for him to be here. Welcome to the show. Colby.

Colby Piper 0:35
Thank you for having me, Chris. How are you?

Ressa 0:38
I’m doing great, man. Colby, tell us a little bit more about who you are and what you do.

Piper 0:46
Alright, so I’m Colby Piper. I’m the director of the Cannabis Division here at Ripco Real Estate. Ripco is the leading independent retail, leasing, and investment sales firm in the tri-state. We’ve covered majority of the market share. I’ve been here for about six years. And then I decided to open up a niche division, which was the cannabis real estate division, as I was following the regulations that were coming out in New Jersey, as well as three or four other states.

So we opened up the division, we were able to get a lot of deals done pretty quickly. We’ve done about 325,000 square feet of cannabis specific real estate. So keeping my finger on the pulse of the cannabis market here, we opened up the division makes it a little bit cooler. And a little bit more personal to me. My father is one of the first of 100 doctors here in New Jersey to prescribe cannabis.

And my mother is a four time, four form cancer survivor, who was an avid cannabis patient. So to see the plant working in its everyday life as I grew up, and seeing its effects, makes the plant a little bit more personal to me. So not only am I in the cannabis space to do with real estate, obviously, but it is a little bit more personal to me. So I call it making the world a greener place. No pun intended.

Ressa 2:14
Making the world a greener place. Wow, that’s really interesting. I didn’t know that about you. Your father’s a doctor prescribing cannabis, your mother’s a cancer survivor, good for her, and you are in the real estate side of it. So tell us a little bit about, you know, I know you’re pretty specific to the tri-state, but what you’re seeing, what’s going on with cannabis real estate, you mentioned 325,000 square feet, is that like grow houses, retail stores, doctor’s offices, what’s going on?

Piper 2:47
It’s a mixture, it’s a mixture of both, majority of the square footage is obviously cultivation and manufacturing. But the retail square footage is picking up pretty crazy. The market is completely out of control. It’s getting smaller and smaller as the day’s progress.

Only good thing is towns are now starting to opt in. Because we only had 100, about 180 towns that have opted in in New Jersey out of the 500 that will allow some specific type of cannabis real estate or cannabis operation done in that given town. So that already shrunk the market to begin with. And then zoning and the regulations of where you can place these businesses also shrunk the market as well.

Ressa 3:36
Wow. So there’s a lot to unpack there. Let’s go back. You said the markets getting smaller. What do you mean by that?

Piper 3:43
The market is getting smaller because the state is releasing more and more retail licenses. As these retail licenses get released. They will be taken off the retail spaces in a given times. Some of these towns here in New Jersey will only allow two retail locations, or maybe five, some are unlimited. So it automatically starts boxing some of the people out, shooting the market that way.

Ressa 4:09
Got it. And in New Jersey, are these all private retail licenses meaning they’re private companies or private businesses? Because I saw in New York there’s some private public partnership between the government, between the state government and it’s a fun they created to open up locations. It reminded me of like, if you’re familiar locally, Pennsylvania opens up liquor stores. The state is the tenant who’s opening them up. Is New Jersey, like purely private ownership or is it like some public private partnership?

Piper 4:45
There’s all private ownership besides the major MSOs, which are multi-state operators like Trulieve, Curaleaf, GreenThumb industry, those larger operators, they’re still private but yes, the majority are private here. It’s a weird thing to think about the release that they’re gonna serve some type of fund or grant program for helping social equity applicants get their funding.

Ressa 5:15
Dopamine is the way to think about it in New Jersey, a lot of the liquor licenses, whereas there’s a limited amount in a town. Somebody gets the license and the license is worth everything. Is that how it’s turning out with the cannabis?

Piper 5:31
Semi, but that will be almost jumping the gun because you can’t sell the licensing until a given time. So, but to your point, the operation is valuable when it’s up and running, not wanting to license.

Ressa 5:50
Got it. Okay. That’s helpful. So how have, you know, you said 180 opted in, which I know there’s 500 towns in New Jersey, but 180 seems like a significant amount. As the, are you starting to see the tide turning and people and communities be more receptive to allowing cannabis businesses in their backyard?

Piper 6:20
So what’s really happening is, the state, what I’m finding out when I’m speaking to some of these towns is the state ultimately didn’t give the town’s enough time to make a decision to opt in or opt out. So the town’s automatically chose to opt out, which would allow them an opportunity to opt back in in the future. Okay, so majority of towns already opted out automatically, because they didn’t have enough time to formulate their cannabis board.

So as its businesses progress, towns have been able to formulate the kind of cannabis board are now on the verge of it again, so they will become more towns coming on. So that’s the main reason why there was only such a small amount. Now in the given towns and make it even smaller out of the 180 sometimes don’t allow retail operations sometimes only allow cultivation, sometimes may only allow manufacturing. And that shrinks down for everyone that’s getting the license as well.

Ressa 7:21
So this, the state, so if I understand this, the state releases a license, but the town doesn’t necessarily have to allow that operation in their specific town. I guess my question is, how does one acquire one of these licenses? How competitive is it to get one of these? And how does somebody go and try to get it whether it’s cultivation, retail? How does someone get a license?

Piper 7:50
So what I would say is the most competitive license to get is probably the cultivation license because they put a cap on it. I think there’s a total of 37 licenses allowed for cultivators, but there will be micro businesses that are smaller than tier one, tier two or tier three cultivation licenses, which are unlimited. So those are able to switch to an annual license. So I don’t know how the numbers are gonna work out with the state. But the retail licenses. They’re technically state is releasing unlimited amounts, there is no limit on those. So I feel as if those are less competitive to get also no limit.

Ressa 8:41
So you just got to be first in that town.

Piper 8:43
Correct. Or, you know, lobby the town to switch over to allow you and given down.

Ressa 8:51
So in retail, we always talk about sales performance. Right, we talked about whether it’s a food operator or a clothing operator, we’re talking about sales performance. How has the sales performance of these cannabis locations been? Are they doing like, you know that the, you know, Apple and Lululemon are always like the highest per square foot specialty retailers in America, and every market is cannabis producing high sales per square foot. What’s going on from a retail perspective?

Piper 9:30
So very high per sales per square foot. I believe the state reported that the adult use cannabis industry has done about $30 million since April, it’s been open. And it’s been across, I believe, 13 locations. So that’s $10 million of location a little bit $3 million, or location, and they’re operating out of 20 3000 to 5000 square feet. Wow, we’re doing pretty good numbers, that’s just, that’s not including the medical market.

Ressa 10:09
That’s not including the medical. Okay, that’s the recreational, and you said, and so maybe averaging 3 million give or take, you know, obviously that’s back of the napkin math, but it gives good context on a sales per square foot basis. Now the retail operators, they are buying it from the cultivation people?

Piper 10:30
The people, the current operators that are selling recreational marijuana, recreational cannabis, as well as recreational as well as medical cannabis or seed to sale. So they have a growth facility and they’re selling their own product. They’re also gonna purchase other products from other growers in the given state is able to buy other brands.

Ressa 10:56
Well, there you go. That’s why that growing licenses and cultivating licenses a lot is a lot more scarce than the retail license. Okay, now that makes a lot of sense to me. Okay. Well, that’s, and how big is the, at least in your world? The medical marijuana piece of it, now, is that is the real whitespace? Recreational, or is medical still hot?

Piper 11:26
They’re both equal, medical stuff. They’re making it so the medical market could never die, just like you could never run out of prescriptions. So it’s kind of pretty, pretty solid, the medical market.

Ressa 11:45
Got it. Really helpful. I want to pivot to a real estate lens for a second. How has the reception been? And crypto deals? You know, I’ve dealt with crypto for years, and crypto deals with landlords all over. How’s the landlord community been responding to having medical marijuana or recreational marijuana in shopping centers?

Piper 12:10
So they’re all very curious. They’re curious because cannabis pays a premium, and they’re curious because cannabis drives people to their shopping center.

Ressa 12:25
I’m curious. That’s why you’re here today. Call me because I’m curious.

Piper 12:31
It puts a lot of people in your shopping center. But the issue is some of the anchors. They don’t allow it. Sure. Is it possible for you to approach to anchors and say, hey, I want to parcel off my our condo out my pad site in the center? And will you allow me to put a cannabis dispensary on?

Ressa 12:59
Technically you have to, I understand waivers all too well, because it’s not just cannabis. Whether it’s, you know, a restaurant, I mean, I’m in the business of getting waivers. Right. So I’m in the business of getting waivers. Have you seen anything you have to give names? Have you seen any retailers be receptive to give a waiver to allow cannabis in the center? Yeah. Wow. You said that quick. So some national retailers have said all right.

Piper 13:27
Yeah. Well, some of them will kind of just turn a blind eye too because it’s such a small percentage of the center. Say it was five square feet out of 100 square feet or 3000 square feet out of 100,000 square feet. It’s very small.

Ressa 13:46
You mentioned you mentioned something though, which was traffic? I would imagine. I don’t know. But I would imagine if I went to one of these retailers for a waiver and I said that they would be like yeah, but is it the right traffic that we want to the center?

Piper 14:02
Yeah, absolutely. There’s no, the stigmatism behind the cannabis is what needs to be changed across everyone. At the end of the day, you’re the people that everyone is stereotyping that are coming to the dispensary, don’t come, they buy the product in smaller increments than dispensary provides.

So I say there’s also tax and so the price is already high. So the black market will always remain strong. Why would these average or whatever stereotype people that people have a stigmatism behind cannabis are coming, why would they go to the dispensary?

Ressa 14:54
Fascinating. That is fascinating actually, that’s a really interesting perspective.

Piper 15:04
For the market, for the cannabis, for the smokers that need to find a safe place to purchase the cannabis. And it’s the majority of the people that are 35 and 32. Wow.

Ressa 15:19
Yeah, yeah, I think yeah, I don’t think that’s gonna. Got it. We’re going to take a quick break here. And now a word from one of our sponsors.

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Ressa 16:27
Last piece of this, tell me about the state versus federal, right, because landlords with mortgages struggled to lease space to cannabis operators, correct?

Piper 16:43
Yeah, but they can always refinance. So he spends $1, but he can always refinance. There’s multiple private lenders, and lenders out there that would love to refinance your property. There’s also ways for you to refinance and then also sell out to a cannabis REIT, which could also be very lucrative for you.

Ressa 17:07
Got it. Okay.

Piper 17:12
The money is expensive, but there’s ways to do it, multiple ways.

Ressa 17:19
And because the margins are so strong, and there’s so much whitespace, the cannabis operators at the moment are paying a premium in rent to get to the properties, correct.

Piper 17:32
Alright, so I tried to tell, I’ve been negotiating with clients as well as landlords, you can’t really charge retail or more than 20% entry over market, 20, 25%. On the sole purpose that to add tax is about 60% on the retail, they’re the only operation that cannot underwrite, or losing an attorney, they can’t write off any of their losses, the retailer.

So if you do, on average, if you have a store that does $10 million a year, they’re profiting about $700,000 off of that because of the 280 tax code. So if you were to charge them higher than that for them to sustain the business, or as it increases because they pay the 3% annual increase in say year five to seven or eight as the market expands with more retailers, their sales numbers are going to drop, but their rent insurance…

Ressa 18:43
And right now you said it was $30 million?

Piper 18:53
$30 million in recreational cannabis was done in four months, April, May, June, July, April, May, June, so three months.

Ressa 19:00
Got it, and then there were 30 locations opened, 30. Wow. Wow, that’s some big numbers in only a four month period, holy cow.

Piper 19:13
Right. But as time progresses those numbers are gonna go down because there’s more avenues to get it, right, so the prices of the numbers across the board are gonna go down, the products are gonna stay the same price, but the average retailers are gonna be making less money.

Ressa 19:31
Because what is the, is the product, can I charge whatever I want? Like, if I’ve got some special one can I charge whatever I want or is the price regulated?

Piper 19:41
The price is not regulated, the pound price is the price. So the wholesale price.

Ressa 19:53
Got it. Okay. Well, listen. Fascinating stuff. Like I said, but what a great response when I said, how, what’s the landlord’s reaction? And you said curious, I think I fall into the curious bucket.

Piper 20:09
As a landlord. It’s crazy. The private lenders reach out to me and smaller banks reach out to me and say, how do we get involved? And you know, Valley Bank lends to cannabis and refinances properties to cannabis on a relationship based. How do they do it? I don’t know. They’re one of the largest, they do it across the country. And that’s a large bank. So the money’s there.

Ressa 20:36
Let’s talk about you for a second. I got three fun questions for you. Are you ready? I’m ready. All right. Question one. We call this ‘Clear the Air’. Question one. What is one skill you don’t possess, but wish you did?

Piper 20:49
Sometimes I wish I could sing.

Ressa 20:53
Yeah, me too. I can’t do that. All right. Go rapid fire here. Question two. When’s the last time you tried something for the first time? And what was it?

Piper 21:03
Man, I couldn’t do it so often kind of thing. I think first time I was at Blue Ribbon sushi this past weekend, and it was my first time having some exotic fish. It was pretty good.

Ressa 21:24
Very cool. Yeah. I’m big sushi fan. Alright. Question three. What is one thing most people agree with but you do not?

Piper 21:39
What is one thing and most people agree with that I do not? People don’t wash their hands prior to going into the bathroom, they wash them after going to the bathroom. I believe you should wash your hands prior to going to the bathroom. And then after you go into the bathroom.

Ressa 22:02
That’s a unique one.

Piper 22:04
So like why you’re gonna dirty, like, you don’t want to spread, I don’t know this is hard, but I don’t know if you want to spread that to everyone else. So you have to wash before and after you go.

Ressa 22:22
Funny, okay. All right. You have a story. Let’s go to story. Flemington, New Jersey. Tell us how that happened.

Piper 22:33
So Flemington, New Jersey was the second cannabis deal I ever did. And it took three years. Oh, boy. Long story. So when we met the client, the client was presented to us they were on one given space in Flemington, New Jersey. And we negotiated a deal and down to the lease signing basic motion.

So, attorneys on our end, I represented the landlord attorneys on our end, we paid the tenant ends up going dark. In 2019. The state took three years to issue their license since their ATC which is alternative treatments, which means they are fully integrated, which means they are seed to sale. So they grow what they can sell. So they went dark. And then 2021 came around. And they called me and said Hey, is the space still available?

Ressa 23:36
The space was, when you say, just so we’re clear. When you say went dark? You don’t mean the store closed? Do you mean like there wasn’t, they went they ghosted you?

Piper 23:42
It goes through me, correct, couldn’t have find them call and call them nowhere to be found nothing, nothing, nothing, then they just come out of the woodworks three years later. And it’s like, Hey, is the space available? That space was already leased by me. But they applied to the state with that given address. So we had to do some cool things.

And we ended up negotiating the deal and getting the deal done. But it was very, very interesting that we had a very interesting thing or intricate negotiation process. Landlord did what he had to do to have the tenant in the space and then they just ghosted us and then came back like, Hey, we got our license, and we’re ready to move now. And they wanted to, you know, sign a lease within the first week and a half.

Ressa 24:33
So, a couple of things. So one, did the tenant ever tell you why they go sit? You

Piper 24:41
know, that’s kind of like one of those things that are unsaid.

Ressa 24:46
Okay. But you had mentioned something in that story, and I’m curious how it’s played out. They had registered the license under the address that you had already leased to a different tenant, right. So they Have to one wind that.

Piper 25:01
Yeah. So I believe they had to go back to the state and change since that they’re fully integrated. So they have their grow location, and the retail location. So what they did was they, I believe they had to go back to the state and change the address from like, sweet 686, B or C, whichever one are we given at that time?

Ressa 25:24
Was it in the same property? Yes.

Piper 25:27
It was same change made the difference.

Ressa 25:30
And why this location? I’m curious. I’m curious, because Howard cannabis retailers looking at real estate. So what made them like this profit?

Piper 25:41
Was the green light, a green zone? town from the beginning from 2019.

Ressa 25:48
They right. So they weren’t green zone.

Piper 25:50
They raised their hand and said, Hey, we want cannabis.

Ressa 25:53
And so their green zone. So that was they were first they were one of the first in the market. Great town, Flemington, and then. So they green lighted. But why this property in Flemington

Piper 26:07
ended up literally ends up whatever properties fall in the given zone for retail?

Ressa 26:13
I see. I see. No, it’s not. It’s not like some of these other retailers where I need I need this, you know, this this specification, this specification, this that I want this CO tendency, that patio seating, it’s not like that, correct?

Piper 26:33
No, they, they obviously look for aesthetics. Obviously, because the original build out for themselves is expensive. So they can save money on the way the building looks. They obviously look for aesthetic, they look for just like typical retailer. But they have to look in the given zone that they can be.

Ressa 26:56
I say on you mentioned the bill that what the build out of these locations, I’ve seen some they look like fancy day spots, or these expensive buildings

Piper 27:06
that normally there’s been, you know, retailers been 500 to a million, a million bucks, depending on

Ressa 27:15
500 grand to a million dollars. So you know, and you said there two to 5000 feet on a 2000 foot space

Piper 27:26
would pay for putting 700 grand and 5000 square foot they’re putting a million a million plus.

Ressa 27:33
Okay. That’s, that’s what they put

Piper 27:38
in their call for a lot of money. Yeah,

Ressa 27:41
I mean, that’s, you know, 350 bucks a foot for an existing space. That’s fancy built out. Yeah. On the on that on the build out.

Piper 27:54
I should put the numbers in landlord numbers.

Ressa 28:00
Back. So when you went? And you were were you representing the landlord as well?

Piper 28:08
Yeah, represented the landlord. And then one. So was a broker who fell off in between and came back.

Ressa 28:14
So representing the landlord. What were some of the things you wanted to know about this? grower and retailer? Did they? Did they give you like, did you guys want to know what the store was gonna look like?

Piper 28:27
So they gave us just like any other retail, they gave us their plans, their rendering. They gave us their approval. They showed us their license. We did a background a little bit of a background check. We they had other operations in other states, one in a couple in Utah, Pennsylvania as well. I visited the one in Utah. And then landlord was comfortable to move forward

Ressa 28:57
on it. And what type of property is this? Is this grocery anchored center? Is this a small multi tenant strip? What does this mean?

Piper 29:03
is about 80,000 Shopping Center with some no major anchor, but the anchor is the home good for you guys.

Ressa 29:13
Okay, so home goods? Yeah. Is this on? 2022?

Piper 29:20
Yeah. 202 2002 Yeah,

Ressa 29:23
I know where this is now. Okay. I know where it is. And check it out. And I imagine now that the tenants open tend to open or not yet.

Piper 29:32
Right. Yeah, they’re almost done doling out your building out. Okay. Well, yeah, now that one’s gonna be nice. They do a really cool job.

Ressa 29:41
Really good. So now are Are you starting to get a bunch of retail clients from a cannabis perspective now?

Piper 29:52
Yeah, so the retail sector has been pretty crazy. You know, We have over 70 clients looking for space here in New Jersey so wow plus New York New Jersey so say New Jersey’s about 6065 The restaurant in New York. I’m in New York business now is getting mushy see myself more in New York than in New Jersey. So we finally have we have built a team so we’re able to be able to be more than one spot. Wow.

Ressa 30:30
Well, I have to check this out when it opens. Really cool story. Thank you for sharing. Thanks for giving us a real good perspective on the state of the cannabis real estate market really helpful. Want to take us to the last part of the show? I got three fun questions for you. Are you ready? I’m ready. All right. Question one. Call us retail wisdom coffee. What extinct retailer you wish would come back from the dead.

Piper 30:59
Do you remember Miami’s Oh yeah. I wish I only think I only like the French fries.

Ressa 31:12
Question two. What is the last item over $20 you bought in the store?

Piper 31:20
Air pods?

Ressa 31:22
They’re over 20

Piper 31:24
I left them in Vegas.

Ressa 31:26
Yeah. Question three. Colby, if me you and I were shopping in target and I lost you, what aisle would I find you in?

Piper 31:39
Deodorant, or…

Ressa 31:42
Deodorant? I don’t know if I want to go shopping with you now.

Piper 31:50
There’s nothing, I’m a big guy. There’s nothing else in target that fits. Oh my god like the food or the deodorant. That’s all the reason why. I should have said doctor.

Ressa 32:03
All right. Well, listen Kobe. This has been great. Anything else? Cannabis we didn’t really touch on that might be helpful to everyone out there.

Piper 32:13
I’m sure it’s very, very cool. The new industry so there’s very many avenues that multiple people can make money. You don’t have to be plant touching in order to be profitable through the cannabis industry. So everyone’s doing creative.

Ressa 32:34
How are people? Is there, is there toxic e-commerce with this yet?

Piper 32:41
Online Sales? Yeah, there’s online sales now.

Ressa 32:45
No, but I mean, if I open a, I meant more like omnichannel, like I have a location in New Jersey and then I now have a website and you can buy it online and pick it up in the store and things like that.

Piper 33:06
Yeah. So you could do that now. So they prefer you to place your order online into the store you purchase your product. They prefer to make the transaction as quick as possible.

Ressa 33:22
So same as the black market, right.

Piper 33:26
You know, people are complaining about lines, so make the transaction quick. Are there lines right now? Yeah, there’s lines. So what people have done is, they’ve taken more square footage, so they can sneak the line throughout the store, which puts less people outside on the street.

Ressa 33:47
Wow. Fascinating. Colby, thank you so much for hopping on today and shedding some light on this industry. Really appreciate it. And let’s stay in touch man.

Piper 33:59
Absolutely. Thank you have a great day.

Ressa 34:03
Thank you for listening to Retail Retold. If you want to share a story about a retail real estate deal that you were a part of on our show, please reach out to us at This show highlights the stories behind the deals from all perspectives. So it doesn’t matter if you are a retailer, broker, entrepreneur, architect or an attorney Also don’t forget to subscribe to Retail Retold so you don’t miss out on next Thursday’s episode.

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