Cannabis businesses and leasing property: A primer
Both tenants and landlords need to make sure any property intended for cannabusiness use is not only suitable for the business itself, but flexible enough for future changes due to new developments in regulations, either at the local or state level.
Conduct due diligence on the property
Before developing or signing a lease, you must first do due diligence on the property to ensure that it fits within the requirements of local and state laws, specifically as they pertain to cannabis businesses. While you may associate zoning and title analysis with purchasing property instead of leasing, those with cannabusinesses will find that a little extra due diligence goes a long way towards avoiding property headaches down the road.
Check the neighborhood
In addition to conducting an analysis on zoning and property titles, checking out potential neighbors can directly impact the potential of a specific property for a cannabis business. This is even more true for those who share a building with non-cannabis tenants. For future situations where neighbors may complain about a cannabis business, or even worse, bring a civil action against it, it's a good idea to include an early termination clause in a lease for this specific reason.
Reject form leases
Form leases are incredibly easy, but they're often the wrong choice for a cannabis business. Form leases often miss important factors that can result in a legal mess down the road, so take the time and work with an experienced professional who can write a proper lease specifically for your business.
Keep license timelines in mind
While California has been hard at work issuing temporary licenses to those who satisfy local requirements, for others whose local regulations are still a work in progress, temporary license timelines can impact many factors of a lease. For this reason, it's important to build contingencies into the lease, such as rent reduction or abatement, as well as an option for early termination.
CCA is here to help contact us today to discuss the due diligence requirements for your property or lease as it relates to a cannabis business.