Two years ago, Kelley Bruce’s husband and a business partner bought a remote, 240-acre property outside the town of Dinsmore for about $600,000. That same property is now up for sale for the asking price of $8 million. Bruce said it’s a steal, considering it comes with a fully-fledged marijuana farm on site.
Less than two days after posting the property on the marijuana real estate website 420property.com, Bruce said their phone was “ringing off the hook” with potential buyers.
“We’ve got people calling us, potential celebrity investors contacting us,” Bruce said. “… People are feeling a little bit more confident that (the marijuana industry is) not going to go away — at least from the medical side.”
This spike in land prices is now common, according to local real estate brokers, who state that California’s new regulations on medicinal and recreational marijuana have caught the attention of outside investors seeking to get a piece of the county’s prized cannabis market.
“Humboldt County grows the best weed in the world and they’ve branded themselves. It’s almost like you have a mansion in Torrance, California, or you have a mansion in Napa,” said Charlie Tripodi, owner of The Land Man real estate business in Eureka. “May be the same building, but people are sure going to want the one in Napa just because of the name. Nothing else.”
But as the state marijuana market floods with new producers and President Donald Trump’s administration signals a possible crackdown on recreational marijuana, the question now is how long this land boom will last.
“All it’s going to take is one tweak by Trump to say ‘I’m going to challenge the state marijuana laws and going after people’ and things are going to get real crazy,” Tripodi said.
‘Proof is in the production’
Within the last four years, Ming Tree Realtors President Larry Doss of Eureka said he’s seen prices for large acreage and ranch property prices increase by about 90 percent, with some increasing by as much as 150 percent if they have the right conditions for a marijuana grow.
“This is the first time in my lifetime I’ve seen these kind of increases,” Doss said.
These properties have not only caught the eye of local investors, but also from those in New York, Florida, Texas, and Nevada, to name a few. However, properties that are selling are those with county cannabis cultivation permits.
“The proof is going to be in the production,” Doss continued. “The really top quality producers are going to do well and then I think there is going to be another junction point. The ones that don’t grow quantity and quality well aren’t going to do as well because the competition is greater now.”
Tripodi said he has sold over 3,000 large acreage properties in Humboldt County in his 16-year career. Many of the properties now on the market for millions of dollars were some he had sold at much lower prices in the past.
“And now they’re going for prices that border on unbelievable,” he said.
Within the last year, Tripodi said the land market has shifted from a seller’s market to a buyer’s market due to the state legalization of recreational marijuana and Humboldt County medical marijuana market.
“People ended their season and they realized people got all this money last year and they say, ‘S– yeah, I’ll sell for that amount,'” Tripodi said. “So they’re throwing out their land at high prices and some of them are getting it and some them are not.”
Boom or bust?
When Bruce’s husband purchased the Dinsmore property two years ago to add to their Alpha Organic Group collective, she said the land was pretty much barren. Now it is home to several greenhouses and soil beds, an irrigation pond, water storage tanks, a five-bedroom house complete with a redwood burl bar, and — most importantly — is in the process of obtaining county cultivation permits.
Bruce said they spoke with a Realtor who recommended a price of around $5 million to $6 million for the property. She disagreed.
“I think $8 million is where it needs to be and I think people in Humboldt County can understand that it has something that is so valuable,” she said. “The land is now forever permitted to cultivate cannabis. Regardless of whether you want to do it or not, you can sell. It’s only going to go up.”
Pacific Partners Real Estate owner and broker Scott Pesch and other local Realtors have likened the recent property demand to California’s Gold Rush days. But Pesch said this initial boom may slow down as the cannabis industry expands to other areas of the state and the price of the product drops.
“The whole reason behind the (property) value doubling is the rent doubles,” Pesch said. “It’s because of the income coming in. Your property is only worth what income it can achieve.”
Since posting their property online, Bruce said they have received calls from buyers in Southern California all the way out to Hawaii. Compared to the multi-generational farmers in the county, Bruce and her husband are relative newcomers, having moved from Colorado about 10 years ago. Bruce said she understands the concerns by some locals about maintaining the local economy local and not selling to outside investors.
“I just feel that Humboldt — don’t sell yourself short, but don’t just sell yourself either,” she said. “Bring someone on to your land and property that you feel comfortable bringing here.”
As a rural property owner and real estate broker, Tripodi said he faces the same dilemma. While he recognizes that the cannabis industry has played a significant part in his rural real estate sales for the past 16 years, Tripodi said he got into the business to promote rural lifestyles.
“I would hope the people I sell land to have the same aspirations and ideals,” Tripodi said. “And that it’s about being in Humboldt County for what Humboldt County is, not what it can give them.”