California Real Estate and Cannabis

In January 2018, California is preparing to license the cannabis businesses. Investors view cannabis (aka “pot” or marijuana) as a “Pot of Gold”. Real estate values explain why: currently, in Sonoma County an acre of planted wine grapes according to realtor, John Bergman is valued at no more than $200,000. In contrast CNBC reports in an 8/13/17 article that an acre of planted cannabis is valued at more than $1m.

To put in perspective, currently  two of the world’s leading wine regions (and California) are Napa Valley where the per square foot price of an acre of land is approximately $7 per square foot and Paso Robles where the per square foot price of an acre of land is as little as $1 per square foot (due to drought and other factors). In 2016 Paso Robles was voted the best wine town in 13 western states (ahead of Napa) by industry leader Sunset Magazine. So in 2017, the land in Napa is worth 7x that of Paso Robles.

In 2017, Sonoma land (a 3rd winemaking capital) is valued at $200,000 per acre of planted wine ($4.6 per square foot) while the same land planted with Cannabis is worth nearly $23 per square foot. Appears that Cannabis is a “gold rush” for both land and the product which has multiple uses from consumer ingestion, to foods, to medicinal research. Related industries include: consumer products (eg. hemp), wellness facilities, and research centers.

If this “good math” holds true, in January 2018 a new gold rush begins, California is the epi-center and it all starts with the land which is viewed as highly favorable for the growth of cannabis due to the propitious California Mediterranean climate which is both lucrative for wine and cannabis production. Stands to reason that once investors do the math, any land undervalued wineries (due to drought, over-saturation of the market for wine or other reasons) may be converted to richly rewarding cannabis farms, so stay tuned.

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