Amarried couple who practice law for cannabis-industry clients is putting the “high” in the high desert.
Bob and Lisa Selan are not only legal advocates for cannabis growers and retailers but now real estate developers with two large marijuana-focused projects in Lancaster in north Los Angeles County.
In a real way, they exemplify how the marijuana industry – whose use has been newly expanded in California – is transforming. It’s going from the basic business of growing and selling the plant into the secondary and more involved disciplines of legal consulting and now, real estate development, for what is becoming a multibillion dollar industry.
In fact, a 2016 study by Arcview Market Research in San Francisco estimated that the combined medical and recreational pot market in California will expand from a current $2.8 billion to nearly $6.5 billion by 2020.
The couple, who live in Hidden Hills in the west San Fernando Valley, was led to the high desert of the Antelope Valley to be able to provide space for tenants to grow cannabis in a safe and secure location on two plots of land making up more than 40 acres.
“Our goal was to create a campus environment where all the facilities would share security guards and be able to be enclosed and fenced and not have to worry about having to protect themselves,” Lisa Selan said.
California was the first state to allow medical marijuana use legally after voters passed the Compassionate Use Act in 1996. A follow-up law in 2003 established an ID card system for patients using the drug. Currently, 29 states plus the District of Columbia allow medical use while eight and D.C. permit recreational use, or what’s called adult use.
Although adult (or recreational) use of marijuana became legal in California as of Jan. 1, the city of Lancaster only allows growing and manufacturing for medical purposes. It also does not allow dispensaries to sell the drug.
Mark Bozigian, the city manager, said that the council in approving an ordinance nearly a year ago felt that cultivation and manufacturing would provide a new industry and revenue for the city and that it could be done in a safe manner.
“When you start getting into distribution, there are probably more safety issues that you have to be concerned about,” Bozigian said.
Lancaster Mayor R. Rex Parris had been looking to allow medical marijuana to be grown in the city prior to his own use of the drug for pain management following surgery he had in 2016 for a cyst on his brain.
Lancaster has capped 10 licenses for growing and manufacturing operations. Four of the licenses have been issued and another three are under review, Bozigian said.
The Selans have three licenses for their operations – two for what’s called the Onion Plant and one for Fox Field.
The Onion Plant is a 53,000-square-foot existing building fully leased out to a cultivator and two manufacturers who extract oil from the cannabis plants. An adjacent 9.5 acres will be developed with additional structures.
Selectabis Fox Field, near the county-owned airport on the city’s west side, sits on 32 acres and the first phase will consist of 90,000 square feet in four buildings. About 60,000 square feet has already been leased. The Selans closed escrow on the property last month and plan to have the first tenants move in over the summer.
Both properties cost $5.4 million, which were bought along with business partners.
“We are just the landlords,” Bob Selan said of the role he and Lisa play for their tenants. “I don’t want to be the guy to tell a grower how to grow.”
Roots in law
Although they are now real estate developers, the law came first.
Both Selans graduated from Loyola Law School and were admitted to the bar in 1980.
In 2009, they began their careers in the cannabis industry. They started with Kush magazine, which had Bob as chief executive and Lisa as editor-in-chief. The publication expanded to northern California, Colorado and San Diego. But after a potential federal crackdown on marijuana in 2011, the magazine lost advertising and the couple got out of it the following year.
Meanwhile, they started taking a different approach with medical marijuana businesses as legal advisors helping with insurance, payroll and other back office functions. In 2013, they assisted in putting together the language for Proposition D, a voter-approved ballot measure limiting the number of pot dispensaries in the city of Los Angeles to the 135 that have been in continuous operation since September 2007. They were also behind the formation of the United Cannabis Business Association, a trade group of Prop D compliant dispensaries.
“It has been an ongoing time of trying to get permits and licenses for these businesses,” Lisa Selan said.
Those strong ties to the cannabis industry worked in the couple’s favor when it came to the elected officials in Lancaster. The city council and planning commission were appreciative that they were on the regulatory side and helping to craft rules and regulations and not just developers looking to make a buck off the cannabis trade.
When the Lancaster City Council took up the medical marijuana cultivation ordinance last February, there had been pushback from the more conservative elements in town.
“It was not a slam dunk,” Bob Selan admitted. “It was a lot of work and a lot of understanding and education on both sides.”
When the ordinance was before the planning commission, they took the members on a tour of a retail and growing operation so that the could see how professionally run a marijuana business could be.
Before the city council, where the opposition was concerned about children being exposed to the drug, the couple said that their facilities would be have security guards at the entrances so that not just anyone could walk into the growing operations. They also related how the cannabis would be regulated.
“We explained to them about the track and trade system; we explained to them how everything is monitored from seed to sale,” Lisa Selan said. “Once the city got comfortable with it, they were willing to pass it.”
Lancaster’s ordinance is different from most other cities in the county in that it allows for both volatile and non-volatile methods of extracting the oil from the cannabis plant in the manufacturing process.
A volatile method uses a solvent that is or produces a flammable gas or vapor capable of creating an explosion. That would include butane, hexane, propane and ethanol.
Because of the potential danger these solvents pose, the Selans began working early with the Los Angeles County Fire Department on rules and regulations of their use. When it came to the cannabis industry, protocols did not exist.
“In California, you could not find the word ‘cannabis’ in any fire code,” Bob Selan said.
Los Angeles County, however, is taking a proactive approach and has consulted with fire departments in other cities, counties and states that allow marijuana manufacturing facilities.
“Because there are lot of cities in L.A. county with rules on their books that are allowing manufacturing, they want to make sure they have it down so when there are applications and people are going to get sign offs that they have a set of protocols,” Lisa Selan said.
The design of their buildings also reflects state licensing requirements.
For instance, a grow area cannot be larger than 22,000 square feet. So that means a 30,000 square foot building can have one growing area, or perhaps two, 10,000-square-foot growing rooms. Common areas would have break rooms, changing rooms and showers for employees to wash off before or entering the growing area, Bob Selan said.
The couple is also working with a firm specializing in cannabis cultivation efficiency. These experts would be available to the tenants, so they are maximizing the growing system and not wasting energy, water or humidity.
“We are far from experts,” Lisa Selan said. “We help facilitate in getting them the location and then help them maximize their unit, so they can be as efficient as possible. These people work with them and make them better.”