Marijuana Growers as New Tenants for Industrial and Commercial Properties

After taking a quick break from the blog, we are back. Prior to the break, we ran ongoing posts about the extension of tax cuts. So, during the break, Congress passed and President Obama signed a new tax bill extending the Bush era tax cuts for all Americans. I am sure many people were relieved.

However, I do not want to spend too much time talking about taxes right now. Rather, I would like to take this opportunity to discuss industrial and commercial real estate. Due to the slow nature of leasing during this period in the economy, landlords are beginning to open up to the idea of leasing commercial and industrial properties to marijuana growers. Michael Shaw of the Sacramento County Business Journal wrote a very interesting article on this subject. I suggest that you check it out if you are interested.

You may be wondering, how can landlord’s rent space to a marijuana grower… isn’t marijuana illegal? Well, under Proposition 215, passed by the voters 1996, it is legal for patients with a valid doctor's recommendation to possess and cultivate marijuana for personal medical use. As such, if a grower has the proper authorization, it is legal for the grower to possess and cultivate marijuana under California law.

However, under federal law, the possession and cultivation of marijuana remains illegal. Thus, we have conflicting laws on this subject. Right now, the Obama administration is not pursuing persons who are using marijuana for medical purposes. As a result, many people are openly growing marijuana.

This is a potentially dangerous area for those involved in the business of marijuana, as the policy of the administration may change. Consequently, many marijuana dispensaries could be raided and potentially properties seized. What is more, much of the regulation of Proposition 215 is left to the counties and as a result, the regulations are wildly inconsistent between counties.

As such, if you want to enter into the marijuana business, you need to be very careful. Although this may sound self-serving, I suggest that you consult with a lawyer before entering into the business.