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Flourishing marijuana trade is leaving Denver short on warehouse space

The expanding green industry is raising the cost of commercial real estate

Doug Pensinger/Getty Images

Here's an amusing byproduct of the legalization of marijuana use in some American states: it's putting a strain on the nation's freight network. The Wall Street Journal reports that Denver, a central hub for transportation of goods across the country, is experiencing a shortage of warehouse space due to increased demand from marijuana producers.

Cresa Partners, a real estate brokerage firm, reports that as much as a third of new warehouse space leased in Colorado over the past 18 months has gone to marijuana growers and distributors. They need ample space to conduct their business, so they're competing hard for it when it becomes available and raising prices as a result. The WSJ notes a 10 percent increase in warehouse rent prices and a doubling of the cost to buy warehouse space in Colorado since the start of last year. This has left local businesses frustrated, but it's also adding to the costs of interstate traders who are finding it hard to secure storage for their goods as they pass between the US west coast and midwest.

The marijuana industry is growing up fast, and not everyone's thrilled about it

Denver is a particular hotspot for growth in the marijuana industry, because Colorado was one of the first states, along with Washington in 2012, to legalize its recreational use. Alaska, Oregon, and Washington DC have recently followed in those footsteps, and there's some speculation that they could face a similar increase in demand for commercial real estate. Not everyone's unhappy, of course, as warehouse owners are getting the benefit of a more competitive marketplace, though even they are a bit fretful about the eventual impact of allowing marijuana production or packaging at their facilities. It might not be so easy, it's suggested, to re-let those properties after they've been specialized as manufacturing plants. In other words, new renters might be put off by the smell — then again, that might count as a bonus for some.