Marijuana Producers Gobble Up Warehouse Space in Denver

The warehouse crunch means that many small businesses are struggling to find the warehouse space they need

Wall Street Journal

August 25, 2015—Steve Badgley has been hunting for a larger warehouse in the Denver area for more than a year. But his construction-supply business keeps getting squeezed out by a new entrant into the real-estate market: the marijuana industry.

Since voters in Colorado and Washington legalized recreational use of the drug in 2012, growers and distributors have gobbled up most of the available warehouse space in the Denver area, a major logistics hub for companies moving goods between the Midwest and the West Coast.

The marijuana industry is poised to expand quickly. Legal sales in Colorado of medical and recreational cannabis totaled about $700 million in 2014, the first full year for which statistics are available, according to a Wall Street Journal analysis of Colorado tax data. The number of active licenses to grow the plant for retail consumption shot up to 397 from 204, according to Colorado’s Marijuana Enforcement Division.

The problem for Denver business owners: marijuana producers require lots of space to grow, package and store their products. In all, growers and distributors took up a third of all the warehouse space leased in Colorado over the past 18 months, according to Cresa Partners, a brokerage.

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