Leasing Commercial Property For Marijuana Businesses

Is a marijuana business interested in leasing out your commercial property? Fearing the risks involved, many landlords hesitate to rent out commercial properties to a marijuana business.

Most marijuana businesses looking to rent a space will be willing to offer you an amount much higher than your asking price. With a number of states clamoring to make cannabis legal, the real estate market is soon to be swamped with collectives.

Here’s what you need to know before leasing your commercial property out to a marijuana business:

1) Legal Gray Area
Laws relating to marijuana at the federal, state, and local levels are often contradictory, leaving this still a gray area for most parts. For example, a marijuana business that may be legal in your state may still be deemed illegal by the federal government.

2) Potential Forfeiture
Cultivating and distributing marijuana is a crime under the federal law. Properties, where such activities are carried out, are therefore subject to forfeiture. Those who lease out properties to medical marijuana businesses can be named as defendants in civil complaints and criminal prosecutions.

One of the ways to protect yourself in such a situation is a lease with an exit clause. Such a lease protects the owner’s interests. These clauses specify that the lease will be violated in the case of federal intervention or threats of forfeiture.

3) Lease with Care
In California, where it is legal to grow and sell medical marijuana, the lease that permits marijuana activity must be accompanied by a state license. Ensure that your lease leaves no room for doubt on consumption of marijuana on the property, disturbance to neighbors, minimizing collateral damage, minimizing unsavory odors, etc.

4) Getting Banks on Board
you may require consent from your bank before signing such a lease. You may be paid in cash as banks tend to hesitate in offering financial services to marijuana businesses.

5) Specify Use of Premises
Not specifying the kind of activity allowed on your premises could lead to other issues. For example, your lease permits the sale of marijuana but does not prohibit cultivation – which may draw a legal problem later. Prepare for higher utility bills. Cultivation and storage of marijuana consume a lot of water and electricity.

6) Property Value
The price of your property may fluctuate depending on which way the legalization of marijuana debate swings. You may be offered a much lower amount for your commercial property once you put it up for sale after it was used as a marijuana business.

Have more questions? Call a Long Beach real estate lawyer with more than 15 years of experience! Contact the Law Offices of Jonathan D. Winters today.