Marijuana Industry Player Who Just Bought Public Land for $1M Lists It for $12M
Above: City Manager George Lahanas on Aug. 13 and property buyer Jeff Yatooma on June 26.
That six-acre chunk of land for which the City of East Lansing auctioned off the purchase rights on eBay, selling it for about $1 million? The cannabis industry real estate broker who bought it is now listing the property for sale at $12 million.
That auction was won by Jeff Yatooma, a cannabis industry player, with his bid of $1,000,900.
Just last week, East Lansing’s City Council voted to approve Yatooma’s team’s site plan and special use permit (SUP) application to build a marijuana provisioning center, strip mall, and hotel on the site. That step was necessary to complete the sale.
Now Yatooma’s company, Cannabis Property Brokers, is listing the property for sale at $12 million.
The ad reads, “Make this provisioning center your flag ship location! This location is arguably the best location in the state given its proximity to the highway, Costco and Michigan State University. The real estate is part of a development to construct three new buildings including a 7,000 square-foot provisioning center, a four-story 107 room hotel, and 8,690 square-foot retail strip center. The individual provisioning center can be purchased on its own or in conjunction with one or both of the other two sites mentioned above.” (See the listing here.)
It isn’t clear from the ad whether the not-yet-built provisioning center site alone is being offered for $12 million, and the entire parcel would be available at a higher price. (A lot split application would be required to sell just part of the parcel.) Calls to the brokerage have not yet been returned.
The City has said the property was previously estimated to need about $3 million in environmental clean-up, but at City Council last week, the developers suggested they are taking an approach to the environmental issues that will likely cost significantly less.
Whether the brokers can really obtain the sum of $12 million for the sale remains to be seen. What this listing does seem to confirm is what some have been speculating – that the buyer intended to flip the property and to profit substantially from the flip.
This raises questions about how much more the City could have obtained with a wide advertisement of the property sale after the zoning was changed by City Council to allow marijuana industry use. That didn’t happen.
The City has never answered questions about who exactly was informed of the eBay auction, in spite of numerous requests from ELi to release that information. A Freedom of Information Act request showed up only a handful of individuals notified.
At last week’s City Council meeting, three members of City Council – Shanna Draheim, Erik Altmann, and Mark Meadows – defended the way the property was sold, although they said they wish it had been advertised openly during the auction period.
Said Altmann last week about the matter, “Yeah, we should have put a press release on the City website and blasted one out to all sorts of people in case somebody had maybe $1.2 million [versus $1 million] in pocket change that they decided would want to drop on this particular property on the spur of the moment, but we didn’t do that, and it didn’t matter, because it wasn’t going to change the value of this property or the outcome. We’ll do it next time.”
Below: Meadows and Altmann at the Aug. 13 meeting of Council.
Meadows agreed, saying, “Everybody on Council in twenty-twenty hindsight says ‘yeah, gee-whiz, we should have put out a press release about the sale of the Merritt Road property,’ and the fact that somebody [else] can jump on eBay and make a bid on it – it didn’t happen. So why are we even talking about it? The real issue is whether we got the result here that was an excellent result for the people of the City of East Lansing.”
Meanwhile, City Manager George Lahanas called the use of eBay a “cost efficient and somewhat fair” approach to the sale.
City leaders were interested in selling this property because the City continues to suffer from serious financial problems. The financial crisis has led to significant cuts in City personnel and services and led this Council to urge voters to pass an income tax, which voters did last year.
Note: After this article was published, we added three words ("not-yet-constructed") to make clear that the provisioning center mentioned in the ad is not yet constructed. The developers are presumably offering to build it at their cost. We also added: "The City has said the property was previously estimated to need about $3 million in environmental clean-up, but at City Council last week, the developers suggested they are taking an approach to the environmental issues that will likely cost significantly less."
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