What’s More Valuable: The License or the Real Estate?

It’s one of the most common questions I get from buyers, sellers, and investors:

“Is the license or the real estate actually more valuable in this deal?”

In cannabis, value tends to follow scarcity. But scarcity shifts from state to state, and sometimes from year to year. If you don’t understand what the true bottleneck is in a specific market, you risk overpaying for the wrong asset.

Scarcity Drives Value

When legalization first rolls out in a state, license scarcity drives up license values to peak prices.

States like Florida (medical-only and vertically integrated), New York (delayed social equity retail rollout), or Delaware (newly awarded limited licenses) create immediate value in the license itself because few are available and not everyone can obtain one.

But as markets mature (think California, Oregon, Colorado) the dynamic often flips. Licenses become more accessible, but compliant, well-located real estate becomes the new choke point.

This is visible in the structure of the market:

Husch Blackwell shows a map of limited-license vs. open-license states, showing how regulatory caps directly affect supply dynamics.¹
Zoning restrictions, sensitive use buffers, and local setback requirements frequently eliminate 80–95% of potential properties from eligibility.²

If 90% of the available commercial properties are immediately disqualified, the building becomes the gate.

When the License Carries the Premium

A license typically carries more value when:

There are a low number of licenses issued relative to local population
The number of licenses awarded is capped at the state or municipal level
Application windows for new licenses are closed or tied to population growth
Higher application and renewal fees create barriers to entry

In these markets, the license is the scarce commodity.

In early-stage limited license markets, we routinely see the license command the majority of the transaction value.

When Real Estate Becomes the Bottleneck

Real estate becomes more valuable when:

Restrictive zoning, sensitive use buffers, and setback rules eliminate most viable properties
Local moratoriums or opt-outs reduce available jurisdictions
A higher number of licenses leads to more operators competing for limited space
New application windows leave existing licensees susceptible to being outpositioned by new players

In these markets, you might be able to obtain a license, but finding a compliant site that satisfies zoning, buffers, parking, power, and landlord willingness becomes the true hurdle. Minnesota is a great example of a market where hundreds of applicants are fighting over a limited number of compliant, well-located retail properties.

There, the building carries the premium.

The Most Valuable Deals Tie Them Together

The strongest transactions aren’t license-heavy or property-heavy. They reduce risk on both sides.

The highest-value assets typically have:

An active or annual license (not just an application)
A compliant site already approved for that license type
Power and infrastructure sufficient for operations
Clean ownership and transferability
Clear local support

When licensing risk and site risk are both minimized, buyer confidence increases. And confidence directly impacts valuation.

Deals fall apart for two primary reasons:

Regulatory uncertainty
Site viability concerns

If you eliminate both, you create premium value.

The Bigger Picture

Cannabis remains one of the only asset classes where regulatory design directly shapes valuation mechanics.

Zoning matters in traditional commercial real estate, but you can often rezone, redevelop, or repurpose. In cannabis, regulatory caps and political shifts can instantly reshape supply.

Understanding that interplay is what separates strategic buyers from reactive ones.

Where CannaMLS Fits In**

CannaMLS was built to bring transparency to a fragmented national market. Because we track cannabis license and real estate listings across the country, you can spot pricing patterns and compare comps by state, market, and license type. If you’re evaluating a transaction and want perspective beyond raw listings, you can connect directly with experienced cannabis professionals through CannaMLS. Message a PRO for help with:

Valuation guidance
Marketing to buyers\
Sell side representation
Financing support Cannabis is not a uniform market, and pricing is rarely straightforward. Feedback from professionals who are actively closing transactions can help you pressure test assumptions and reduce mispricing risk.