ROBERT SIEGEL, HOST:
When a state legalizes marijuana, as Oregon and Alaska did this month, it can spark a real estate boom. That's what happened in Colorado. State law there says the drug has to be grown indoors. But layers of regulation and tight zoning have made property hard to come by for pot growers. Luke Runyon of member station KUNC has our report.
LUKE RUNYON, BYLINE: I'm standing in the back of a warehouse space in Aurora, Colorado, just east of Denver. And it's a beige building - empty right now, but it might not be for very much longer. And I'm here for a real estate showing. The tour starts inside the empty building - just a bare, dusty shell. My guide - Jason Thomas with Avalon Realty Advisors, a real estate firm that's willing to work with marijuana businesses.
JASON THOMAS: This is a new building for the industry.
UNIDENTIFIED MAN #1: And the sprinkler system is functional. OK.
RUNYON: That's the client. He'd only agree to talk on tape if we don't use his name. He still has a job in marketing and could be fired if his boss finds out. And while the building doesn't look like much - there's a huge pile of sawdust on the floor - the client is smitten.
UNIDENTIFIED MAN #1: It's prettier than a lot of the pigs I've looked at. I must say. I've looked at a lot of them.
RUNYON: And what he sees is potential. The room is big enough to hold upwards of 6,000 marijuana plants. And even more important - it complies with strict zoning rules that require grow facilities to be separated from residential areas. Since Colorado started sales of recreational marijuana in January, state-licensed grow sites can't keep up with the demand. And real estate agent Jason Thomas says that's leading to a rush on industrial warehouse space.
THOMAS: Finding a property is probably the most difficult piece of putting the business together in this industry right now - by far.
BOB COSTELLO: You know, it's the "Twilight Zone," because five years ago if people were doing this, they would go to prison and serve hard time.
RUNYON: Bob Costello bills himself as the cannabis-friendly real estate broker. And he's been busy lately. See, Colorado's marijuana industry needs a lot of real estate between retail shops and testing laboratories and kitchens to make edible pot. Plus, the plant itself has to be grown indoors. Because the industry still functions in a legal gray area - federally outlawed, but legal within the state's boundaries - Costello says there's little data collected on how the market's performing.
COSTELLO: It's like I go to the pay phone and call my connection, you know, and I go, psst, I got one. And they go, you got one? How much? Three million dollars. OK. OK. I'll take it. And it never gets entered in any database. So there's a lot of anecdotal evidence about what pricing really is.
RUNYON: Couple that with layers of regulation from the state and Costello says securing a space is tough. Most real estate deals so far have flipped empty buildings into grow sites. But city planners say as the green rush progresses, it might bring a building boom along with it.
THOMAS: We can cover that as we move forward.
UNIDENTIFIED MAN #1: OK.
RUNYON: Back at the real estate showing in Aurora, the aspiring marijuana entrepreneur likes the office building enough to make an offer.
UNIDENTIFIED MAN #1: It's a great position to be in - to be part of the beginning of an industry. You know, and hopefully get into it and shape it in a way where it can prosper and succeed.
RUNYON: It'll take about $400,000 in upgrades. But if the client's business team secures licenses, the first few buds of marijuana could be harvested here by this time next year. For NPR News, I'm Luke Runyon in Fort Collins, Colorado.
SIEGEL: And that story came to us from Harvest Public Media, a reporting collaboration that focuses on agriculture. Transcript provided by NPR, Copyright NPR.