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Leasing to California Cannabis Tenants
Leasing commercial real estate to a cannabis business in California can be a great opportunity for the right lessor, but it comes with significant risks. It’s important for lessors to understand these risks before entering into a lease with a cannabis business. This guide examines various questions our cannabis landlord clients frequently ask my law firm’s attorneys regarding leasing California properties to cannabis businesses.
1. What Risks Do I Face as a Commercial Landlord If I Decide to Rent to a Cannabis Tenant?
One of the most significant issues lessors must understand is that cannabis is still illegal. While California permits cannabis sales, cannabis remains a schedule I controlled substance under federal law, meaning the US treats it the same way as heroin. And while cannabis may soon be rescheduled to schedule III, that won’t make it federally legal.
This discrepancy exposes lessors to potential legal repercussions, from potential civil asset forfeiture to automatic and in some cases incurable defaults under mortgage contracts. While these risks cannot be completely eliminated, there are some risk-mitigation strategies that sophisticated cannabis lessors routinely use, including:
Insisting on Strict Compliance with State Regulations: Lessors
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