BB&K attorney Seena Samimi discussed in a Lawline presentation how conflicting medical marijuana laws impact commercial real estate owners, and what they should know in leasing to dispensaries.
Real estate impacts probably don’t spring to mind when you think about the trend toward decriminalization and legalization of marijuana.
Property owners and managers with tenants in the marijuana industry want to ensure that the rent continues to flow and that the property continues to be suitable for leasing to subsequent tenants. The burgeoning marijuana industry presents challenges to both.
Recently, BB&K attorney Seena Samimi gave an hour-long presentation to Lawline discussing how the federal prohibition on marijuana juxtaposes with state and local laws that trend toward legalizing the drug — and how this impacts landlords. Here are five takeaways from the presentation, which you can read more about and find a link to listen for yourself on Lawline Today by clicking here.
1. Federal and state law conflict is a real issue. Marijuana is still illegal under federal law - make sure you know what enforcement issues the DOJ cares about and what it leaves to the states.
2. Know the zoning laws. Just because a state has legalized marijuana doesn't mean a pot-related business can be anywhere. As with zoning laws applying to alcohol and other industries, the counties and municipalities often get the last say.
3. Specificity in leases is critical. If a lease provision states the property may not be used for any “illegal purpose,” how does that play out when state and federal law are in conflict? Be very, very specific in your lease provisions.
4. A marijuana tenant’s rent is higher. A lot higher. In fact, due to increased costs for everything from utilities to security to increased risk of damage to property, marijuana tenants pay 20 to 40 percent more per square foot than other tenants.
5. Property values may get temporarily high, as well. In states where marijuana is legal and counties and municipalities may still ban participation, property values in locales that do allow marijuana cultivation, distribution and use are flying higher as a result of the supply and demand in balance.
