New medical marijuana rules ignite Sonoma County real estate rush

As state and local governments continue to clarify the legal framework for medical marijuana businesses, Sonoma County is fast garnering interest from local and outside operations to secure as much commercial real estate as possible.

“It’s more dynamic climate than it ever has been,” said Joe Rogoway, whose Santa Rosa-based law firm specializes in cannabis issues. “Cities and counties are working to permit these activities the quickest. Just for Santa Rosa, we’re seeing people who have always been here formalizing what they’re doing. By regulating what’s happening, then they can collect taxes.” Governments that develop regulatory guidelines stand to get millions in tax income and millions more in economic activity, he said.

With private-equity funds, venture capitalists and experienced operators approaching the industry, it could become an economic driver rivaling some of the region’s largest industries, he said.

“The scale of it is phenomenal,” Rogoway said.

Since the California Medical Marijuana Regulation and Safety Act, or MMRSA, became law in October, there has been a property rush for commercial property, according to cannabis industry advocates and real estate agents. Sonoma County’s location on the Highway 101 corridor from major cannabis growing regions in counties to the north makes it a potential hub for distribution, transportation, processing, packaging and refining, according to Tawny Logan, executive director of Sonoma County Growers Alliance.

“Sonoma County is set up to be the biggest player in producing the raw product in Northern California,” Logan said. “Sacramento would be its eastern cousin.”

She is concerned that the real estate rush will take warehouses, already a scant local resource, off the market for indoor cultivation operations, forcing local companies that service the industry to go elsewhere. Rogoway’s team has been working with Santa Rosa and county of Sonoma officials and planners to expand Santa Rosa’s recent commercial cultivation ordinance, which took effect April 18, to include more than property zoned for industrial uses, namely adding “business park” zoning, and for the county to allow cultivation in certain agricultural properties.

While the details of what’s planned aren’t yet clear, nearly 200,000 square feet of industrial and office property in southwest Santa Rosa recently were purchased and leased by entities led by local figures who run medical cannabis businesses in Sonoma and Mendocino counties. Nearly 12 acres with about 150,000 square feet of industrial space at the northwest corner of Giffen Avenue and Lombardi Lane were sold May 6 to Giffen Avenue Property LLC for $6.32 million, according to public records. The other property connected to the buyers of the Giffen Avenue buildings is 2330 Circadian Way, just around the corner in the business park.

Principals of the entities that bought the Giffen buildings and leased the Circadian space didn’t respond to requests for comment.

On April 1, 2330 Circadian Way LLC, CBD Guild and Critical Solutions LLC leased the “B” section of the building, about 34,000 square feet, according to a Keegan & Coppin Co. Inc./ONCOR International list of recent transactions and a landlord’s notice on the door. Peace in Medicine, which has dispensaries in Santa Rosa and Sebastopol, had received city zoning clearance for a 35,000 square feet of administrative offices, testing lab, product development and storage at 2330 Circadian. However, that organization dropped the plan in March, spokesman Joel Freston said in an email. He didn’t say why.

The registered address for Giffen Avenue Property is 2330 Circadian, and the address for 2330 Circadian Way LLC is 4770 Occidental Rd. Giffen Avenue Property managing members on the deed are Dennis Hunter and Edward Fussell. Different from Dennis Hunter the local developer and chairman of Ygrene Energy Fund, Dennis Franklin Hunter is a registered principal of several botanical products companies based at 4770 Occidental Rd. west of Santa Rosa. One such operation is CannaCraft Inc., startup distributor of cannabis-based medicines, including the AbsoluteXtracts line of high-THC cannabis oil and Care By Design therapeutics rich in cannaboid, or CBD, a key component of medical marijuana. Dennis Hunter at 4770 Occidental is the registered agent for Critical Solutions. Edward Fussell is a co-founder of Emerald Pharms, a cannabis dispensary in Hopland.

Led by Modesto-based Tamimi Investments and Clifton Holdings LLC of Oakland, the seller of the Giffen Avenue properties financed $5.32 million of the latest sale price, the documents said. Paul Schwartz of Terra Firma Global Partners represented the seller of the Giffen buildings. Dino D’Argenzio and Erlina Othman of Keegan & Coppin represented the new tenants of 2330 Circadian.