Margaret Jackson's report on how marijuana grow operations have changed the industrial real estate market in Denver lays bare, again, the essential truth from legalization: collectively, we were unprepared to deal with its consequences, intended or otherwise.
That we have a reasonably functioning marijuana industry sector is really a testament to the ingenuity of lawmakers who crafted a business and regulatory framework in a short amount of time -- and their commitment to implementing the will of voters.
As frustrating it is for Denver companies who slogged through years of tougher times only to see space costs shoot through the roof, the future still looks bright. Positive economic conditions and trends that favor sustained demand for U.S.-made products should outlast what looks like a temporary market imbalance here that's translating into opportunity for commercial real estate and a headache for business and industry.
Equally important, the pot sector is changing. Fast. For one, the legal pot 'experiment' is nearing its end. As much teeth-gnashing as will continue over the wisdom of Colorado's electorate to favor regulation in lieu of prohibition, legal pot is now less a burning existential issue in Colorado and more a policy challenge. We've entered a planning and management phase that, as a practical matter, should ease the short-term pain manifest in things like the cost of industrial space.
Communities are better understanding how they want to manage pot. Breckenridge voted yesterday to keep retail outlets off Main Street. Does that mean pot has no place in there? Hardly. Others will begin to ease grow restrictions on the sector, as Jackson’s article eludes. This should translate into decentralized grow operations outside Denver’s industrial areas – and more space options.
The pot industry also seems poised for a period of consolidation and major price volatility that without fail impacts growth sectors as early movers profit and exit, bubbles form and burst, and supply and demand align into equilibrium. In Colorado, it appears that retail prices for marijuana are set to fall significantly. Will it impact the sector in ways falling oil prices can shock the energy space? Will production take a hit? It's hard to see as demand steadily rises, but volatility and unsteady growth seem likely.
And after an extended period of shock and dismay, elected officials should -- should -- be fully recovered, having had time to catch their breath and contemplate ways to better manage a new, growing industry sector. It's no excuse for the near absence of things like inventive advertising -- where on earth is the meaningful messaging that communicates the downside of use to youths? -- but a deer-in-the-headlights gaze in some quarters is giving way to recognition that it's time to seriously manage the reality.
As policymakers find their stride, it's up to industry to ensure that demand for industrial space isn't a casualty in the discussion. Manufacturing is a sector poised to again fill the (new) industrial corridors not only of our urban spaces but in places where raw materials are easily obtained -- like Colorado's Western Slope for the booming food and beverage industry there -- as well as places where lifestyle and business intersect and new talent will power technology-inspired manufacturing.
Collectively we'll set aside a short-term hiccup and continue to focus on things that matter: workforce, new markets, and the search for business partners that drive opportunity.