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Navigating the realm of zoning regulations for real estate and property development can be an extremely daunting task, and one that many owners, investors and developers can underestimate. Zoning approvals and entitlements can make or break a real estate project. While experienced real estate professionals will likely ensure that a contemplated real estate project meets existing standards for local zoning requirements at the time of acquisition and planning, emerging industry professionals and investors may overlook this part of the process. This has become a primary challenge for the regulated cannabis industry.
Emerging industries often require custom development standards including zoning approvals and entitlements. This can lead to the need for advanced legal and administrative processes such as zoning variances, conditional-use permits or custom development deals. Successfully zoned properties for the regulated cannabis industry can become highly valuable and help to position licensed operators for a collaborative relationship with local regulators.
So where do zoning regulations come from, why is the process so complicated and what purpose do zoning regulations serve? Many historians and academics have attributed modern-day zoning regulations back to the origin of city-states when the safety and sanitation of various city-state operations was a matter of community survival. Improper organization of city-state waste removal operations, for example, could be the difference between population growth or a plague upon the community. Over time, these city-state guiding principals (i.e., what we now call zoning regulations) have become more sophisticated alongside the complexity of modern-day society.
Planning and zoning experts have coined a term for community operations or property developments that may be perceived as less than desirable. This designation has become known as a “not in my backyard” (NIMBY) operation, which the community perceives as undesirable. The label, appropriately, speaks for itself. NIMBY operations have typically been classified to include waste-processing, energy production and industrial manufacturing. An analogy would be to compare a community to a household, where the boiler room or the septic tank could be labeled as NIMBY operations, hidden in the basement or beneath the backyard. (Ironically for this NIMBY analogy, the sceptic tank is literally in the backyard — but nonetheless, you get the point.)
By creating an advanced set of zoning regulations, influenced by a long-term master plan, the local municipality can designate various areas of zoned properties or zoned developments in order to separate categorical operations (i.e., residential, commercial, industrial or special-use). Zoning regulations allow a municipality to guide and control the way in which property trends occur within the local community, creating a strong influence on community prosperity.
For zoned properties or zoned development that fit into a standard category of the modern-day community, zoning regulations are relatively simple. However, for nonstandard property developments associated with emerging industries, such as the regulated cannabis industry, that may be perceived as undesirable (i.e., NIMBY developments), the process to receive zoning authorizations can become extremely complicated and challenging.
Zoning regulations can empower a local municipality to allow or restrict emerging industry developments from entering the community, and the regulated cannabis industry is a perfect modern-day example. Obtaining the required approvals from local zoning authorities for regulated cannabis developments can be expensive and time-consuming and require complicated administrative or legal processes.
The regulated cannabis industry has created an exceptionally difficult area in which to accomplish property development. Throughout the early 2000s, as medical and adult-use cannabis legalization started to lift prohibition on a state-by-state basis, the rules and regulations that have been adopted have been extremely complex, nonstandard and unique in structure. Included in these sets of nonstandard rules and regulations have been extremely variable zoning regulations. In many cases, local zoning codes have been used as a tool to restrict regulated cannabis at the local level regardless of voter-based legislation at the state level. A good example of these specific challenges can be seen along the northern East Coast of the United States. Currently, 45 local towns throughout New Jersey have formed a coalition to restrict the regulated cannabis industry, many utilizing local zoning regulations to bolster their case.
The history of zoning regulations and their ability to influence the local community gives us a sign of what is likely to come for the regulated cannabis industry. Zoning regulations have been used from the dawn of the city-state to regulate operations within the community that may be perceived or propagandized as undesirable. When the first few states began to pass legislation permitting medical and adult-use cannabis, it remained unclear how these regulated cannabis facilities were going to impact the overall safety and prosperity in the local community. As more communities welcome regulated cannabis operations away from the street-corner and into regulated marketplaces, we could find that these changes to our communities are going to be highly desirable. But until that data becomes clear, the propagandized stigma of regulated cannabis will likely create more complexity in zoning regulations and authorizations, not less.
Until regulated cannabis finds clarity and finality in federal legalization, the industry will likely continue to see local zoning authorities implement highly restrictive and complex zoning regulations to govern regulated cannabis facilities.