Article by Roger Vincent, LA Times
Growing up in Minnesota, Stephanie Smith dreamed of being a golf pro. Instead, the mother of five who lives in Pacific Palisades has ended up in the unlikeliest of trades.
She claims to be one of the largest marijuana-industry landlords in the state in a business that is growing chaotically as cities begin to allow recreational pot sales after passage of Proposition 64 two years ago.
And though it has been plenty lucrative for her, the murky legal status of the cannabis industry has led to a police search of her home and to some unflattering news coverage — including a headline that painted her as a drug lord.
“Cannabis is not illegal,” said Smith, who is not shy about what she does. “There is no such thing as a cannabis drug lord.”
But she does boast controlling nearly 2 million square feet of industrial property, mostly in Southern California. Not all of it is rented to the cannabis trade — one of her tenants is Walmart — but she found that cannabis growers can be desirable tenants willing to pay top-dollar rents.
That’s because there’s a race on among formerly underground growers and new entrepreneurs, as well as starry-eyed wannabes, angling to become rich supplying legal pot to Californians who want to get high.
Some are looking for prime storefronts to open often upscale retail shops, or in rare cases, cannabis bars where patrons can indulge on the property. Others want discreet warehouses — the kind of property Smith owns — where they can grow it, but the buildings are already in short supply.
Consider the city of Lynwood, which has lower taxes on cannabis businesses than others in the county, said Los Angeles attorney Aaron Herzberg, who helps retailers obtain cannabis sales licenses and arranges purchases of buildings for growers and manufacturers of cannabis products such as oils and edibles.
Prices for Lynwood industrial buildings were about $107 to $120 per square foot in 2016, he said. Now they are selling for more than $300 a square foot. He expects prices in the region to continue to climb as real estate speculators jump into the market.
“Prices will skyrocket,” Herzberg said. “People are land-banking.”
Smith learned about the demand in 2009 when she bought a former Los Angeles pawn shop that she decided to turn into a laundromat by upgrading the water, gas and power hookups.
Smith advertised the renovated building on Craigslist and got a quick response from a would-be tenant offering double her asking rent if he could use it for growing marijuana. Then another grower offered triple the asking rent.