Last year, I wrote a post entitled “Cannabis Leases: Eight Important Tenant Considerations“. The post outlined eight of the more important considerations for tenants entering into cannabis leases. Today, I want to focus on some of the top considerations for landlords in leasing to cannabis tenants.
1. Compliance with Mortgages
Landlords that do not outright own property will probably have a much harder time leasing property to cannabis tenants. If landlords have mortgages on their property and the lender is a bank, that can generally be a huge roadblock to these leases. Mortgages generally allow lenders to call a loan if the property is being used for illegal activity, which necessary includes cannabis activity given the fact that cannabis is still illegal under federal law. This could lead to dramatic consequences from the landlord and its mortgaged property.
2. Who is the Tenant?
We’ve received a lot of calls over the years from landlords excited to lease to cannabis tenants, only to find out quickly into the call that the property at issue is in a city that completely bans cannabis activities with no exception. In these cases, the would-be tenant would openly violate local law (and thereby state law)