Navigating Real Estate Issues for Cannabis Businesses
Created on April 20, 2021
Cannabis licenses are location specific, and every state agency governing the issuance of cannabis licenses requires applicants to demonstrate "site control", typically in the form of a lease, deed, or enforceable option to purchase. As a result, prospective cannabis business operators often face a funding conundrum - it is frequently difficult to fund a business without a license, but one cannot obtain a license without real estate, which requires some funding. Whether to purchase or lease real estate becomes a critical decision for any operator. The Company's ability to secure Real Estate – a hard asset -- against financing must be carefully balanced against maintaining sufficient liquidity to sustain operations.
This program, presented by Katy Young, Managing Partner of Ad Astra Law Group, LLP, President of the International Cannabis Bar Association, and Lauren Rudick, co-founder of Hiller P.C.'s Cannabis Practice, provides examples of creative solutions to resolving these threshold real estate focused application requirements.
The discussion opens with an overview of relevant federal laws around cannabis broadly, and specifically discusses the state level cannabis laws in New York and California, before diving into the specific issues around real estate for cannabis businesses. The presenters cover how to "cannabis-ize" a traditional lease by including, among other things: an explicit permitted use and applicable regulations; ensuring compliance with state (not federal) law; subjecting landlord rights of reentry and possession to regulatory requirements, building in flexibility to comply with regulatory requirements regarding, among other things, garbage disposal, signage, parking, lighting, ADA compliance, and heightened tenant diligence requirements, as well as reviewing site control within the context of an operator's short and long-term financing strategy. Examples will be grounded in California and New York laws primarily, but will have relevance for other states as well.
Discuss how real estate impacts and affects the state cannabis licensing process
Identify the clauses that must be included in a real estate lease for a cannabis business
Leverage real estate in a cannabis business financing plan
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