The Short List: Derek Peterson on Marijuana and Residential Real Estate

by Boston Agent


Derek is the CEO and Chairman of Terra Tech Corp, a publicly traded urban agricultural company focused on food production and medical marijuana.

At one point in time, the cannabis industry was essentially nonexistent outside of the black market; distributors used triple-beam balances from their alma maters, consumers were forced to purchase marijuana in settings fueled with other substances and law enforcement officials had an unquenchable thirst and ability to track down and detain participants in the industry.

However, the cannabis industry is now in full bloom, and its relationships with other industries, particularly that of real estate, is major. The marijuana space is undeniably intertwined with the residential real estate market, and to such a large extent that property managers, growers, consumers and other various stakeholders are all forced to track the two industries’ movements with great diligence.

4. Since Colorado legalized marijuana in 2012, Denver has experienced a residential real estate boom on nearly unprecedented levels. Denver’s residential real estate climb, though difficult to pinpoint precisely, could largely be due to a desire for non-Denver residents to move to the Mile High City for readily available access to legal and regulated marijuana. Given the rise in demand for Denver real estate among younger generations, prices have naturally risen in housing and rental markets. Though there was, at one point, concern that the stigma of dispensaries and marijuana itself would reduce the appeal that residential properties in the surrounding area might have, this fear on the part of homeowners and Realtors has fallen by the wayside, as the percentage of Americans in support of marijuana legalization and in favor of its use continues to rise.

3. While consumers of residential real estate appear to be moving into Denver, grower preferences in commercial real estate appear to shifting away from industrial developments on the outskirts of cities to even more isolated areas with different means of cultivation – rural grows with greenhouses. The reasons for that shift is that as the legal market matures and competition increases, large scale greenhouses are the most economical and sustainable way to cultivate. Whether industrial grows will become an obsolete component of the emerging industry remains to be seen, but for the time being, residential real estate is seen as a less practical method for cultivating marijuana plants than rural grows (or even industrial developments).

2. As a result of the emerging trend towards the usage of commercial real estate for marijuana cultivation, landlords have found themselves at less risk, as marijuana cultivation continues to shift away from illegal residential housing to legal commercial and agricultural properties. Furthermore, as a landlord, one no longer needs to risk civil asset forfeiture over law infringement on the part of their residents. The amount of trust between landlords and inhabitants of their rental properties, as a result of this decrease in risk, continues to increase in substantial proportions. Given the increase in trust amongst landlords and renters, as well as the rise in interest for the ownership of potential rental properties, it comes as little surprise that Denver is seeing spectacular growth in demand for its residential real estate.

1. As the CEO of a public marijuana company with dispensaries in multiple states, the trends in residential real estate prices and regulations in states that have absented themselves from marijuana prohibition are pressing factors in my work. As a result of the tendency for the residential real estate industry to influence and be influenced by marijuana markets, I have found myself spending a large amount of time paying attention to the residential real estate market and its relationship with the emerging cannabis industry, and it seems likely that both will be entangled in their inevitable shifts, rises and falls together for the foreseeable future.

Derek is the CEO and Chairman of Terra Tech Corp, a publicly traded urban agricultural company focused on food production and medical marijuana. He began the company in 2010 as a private startup, taking the company public in early 2011. He began his career in finance with Crowell, Weedon & Co, the largest independent broker-dealer on the West Coast.

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