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September 18, 2019

Cannabis retail tenant at long-vacant Portland site part of growing trend

Photo / Maureen Milliken The building at 1207 Forest Ave., which once housed the Wok Inn, will be a retail medical cannabis store, after Eliot-based Sweet Dirt recently leaseed it.

The former Wok Inn restaurant at 1207 Forest Ave., Portland, vacant for six years, was suddenly very popular this summer.

The owner, BVM Portland LLC, recently signed a lease with Sweet Dirt Inc., a registered medical cannabis dispensary and grower based in Eliot, after weighing a number of potential tenants.

The lease for the 4,926-square-foot standalone building at the intersection of Forest and Allen avenues came after the landlord "was inundated" with interest, said Jennifer Small, of Malone Commercial Brokers, who represented the landlord.

While cannabis companies have been seeking property for the past five years, state and municipal actions this year, some of which go into effect this week, have sparked retail activity.

Josh Soley, of Maine Realty Advisors, said he has a waiting list of close to a dozen potential tenants looking for space to lease, but regulations and other issues can make it tough to find.

Erin Bogdanovich, a broker at the firm, is focusing on how to negotiate federal, state and city regulations to place clients. "It's a lot of calling around, a lot of checking, but it's worth it," she said.

The Sweet Dirt lease at 1207 Forest Ave. is the latest result of that effort.

Adult use retail stores can't open until the state Office of Marijuana Policy is ready to accept business applications, possibly by next March. But expanded rules for medical marijuana use and sales have medical caregivers looking for space.

Enhanced rules for medical stores became effective in December, and June's legislation clarified them further, easing some of the wariness and uncertainty about earlier laws over the past few years.

The June legislation also requires towns and cities to opt in to allowing retail sales. Portland has proposed rules that cap the number of stores at 20. Other cities are weighing what types of stores to allow and what their local rules would be. About 20 towns and cities have opted in so far.

Portland earlier this year also rezoned the city, allowing marijuana retail businesses in the Forest Avenue corridor, as well as along Washington Avenue, in West Bayside and downtown, and in the area of St. John and Valley streets.

While regulations regarding the sale of cannabis are more complicated and far-reaching than other industries, and the stigma associated with the long-illegal product still hangs in the air, real estate opportunities are beginning to open up, said Soley.

Showing the money

Bogdanovich said that, aside from Portland and especially Forest Avenue, where several leases have recently been signed, hot areas are South Portland, Biddeford, Auburn, Sanford and Bangor.

Soley said that cannabis firms are willing to pay more than market rates for leasing the space they need — in Portland, that means more than $50 a square foot, the going rate for some peninsula properties, or more than $20 a square foot farther out on Forest Avenue.

His firm deals with high-end, innovative clients that have good reputations and are knowledgeable and ready to operate under state and federal regulations. He said such clients "can show the money, they show they can get the work done," and have a proven track record.

"They're the boutique operations, kind of the Allagash Brewing [of cannabis]," he said. The stores are sleek, clean and contemporary, and insulated well for smell and sound.

Banks, wary of allowing customers with debt loads to have cannabis-business tenants because of federal regulations, limit what properties are available. State and local licensing rules and more can also be complicated.

"It's a struggle every step of the way," Solely said.

A win-win

Despite the struggle, the 1207 Forest Ave. lease is a victory for all involved, the brokers on both end of the deal said.

"It was vacant for quite a long time," said Small. "It was just waiting for the right tenant. It's a unique opportunity to bring some use and revitalization for the building."

The single-story building was built in 1960, renovated in 1987, and is at one of the city's busiest intersections.

It has a large parking lot, which was a big selling point, Solely said.

Sweet Dirt, owned by Hughes and Kristin Pope, is an ideal tenant for a landlord — an established, professional company that does quality work.

Bogdanovich said that while the tenant could use the entire building, such firms are limited now to 2,000 square feet, so they'll sublease the remaining half of the building.

Small said that when companies started approaching property owner BVM, "we were looking for the strongest representative [in the cannabis industry] available." Sweet Dirt is an existing company that's doing well.

"The landlord is excited about the use, excited to have a tenant in there," she said. She said having a tenant in the building is also good for the area. "It's exciting to see that corner come back to life."

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