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Renting a Medical Cannabis Business

One of the
biggest issues surrounding medical cannabis businesses today is landlord
liability. Most landlords are hesitant to rent to medical cannabis dispensaries
for fear that they may be held li

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on

Thomas Hawk

O

ne of the
biggest issues surrounding medical cannabis businesses today is landlord
liability. Most landlords are hesitant to rent to medical cannabis dispensaries
for fear that they may be held liable for the operations of their tenants.
Thus, the ever looming question—Can I lose my property if I rent to
a medical cannabis business?
The simple answer, if there ever was one, is both
yes and no. Landlords may be liable under federal, state and local law.
                                                                                                   

Prosecution
of Landlords Under Federal Law

Federally, the
government can try and seize the property of landlords who lease to medical
cannabis businesses. In cases like these, the
federal government can bring a civil forfeiture action against a property owner
based solely on the fact that a tenant is operating a medical
cannabis business. But don’t be too quick to run the
other way. If the landlord doesn’t know that
there is a medical
cannabis business
operating on the property or, upon learning about it, does all she can to end
such use of the property, the landlord may be
equipped with the Innocent
Owner Defense (IOD). While there are federal
enforcement actions in California, the seizure of property under federal law
has been VERY rare.
There are few, if any, examples of actual asset
forfeiture actions by the federal government.

Although federal law “makes it unlawful to rent, lease,
profit from or make available for use . . . a place for the purpose of
unlawfully manufacturing, storing, distributing . . . marijuana,” this
isn’t necessarily a justification for going after landlords.
As a
general practice, most proceedings are not brought against landlords except
where the landlord participated in the cannabis business operation or its
proceeds, or the tenant’s operation neither complied with federal statutes nor
the state’s medical cannabis law.

Prosecution
of Landlords Under California Law

If
the state is moving forward with a prosecution,
California typically targets the collective
operators and not the landlords. However, Health and Safety Code 11366.5 makes
the charge of maintaining a location a crime that a landlord could technically
be charged with, but it’s rarely done. This is a “wobbler,” which means it can
be brought as a felony or misdemeanor depending
on the circumstances of the case.

Prosecution
of Landlords Under City Ordinances

Even if a
dispensary complies with California law, this is no guarantee that it may
continue to operate because cities may enact ordinances that restrict medical
cannabis businesses or even ban them all together. A case out of the Inland Empire determined that state
medical
cannabis law does not overrule
local bans. As such, operators and growers are bound by any city ordinance put
into effect to ban or legalize medical
cannabis businesses.

Although most
cities leave their landlords alone, the Los Angeles City Attorney does prosecute
landlords and force them to evict their tenants. Currently, the City of Los
Angeles has closed down 500 dispensaries and prosecuted many of the landlords.

Conclusion:
What To Do If You Are A Landlord Or Potential Tenant Seeking To Reassure Your
Landlord

First, know your
local laws, rights and climate. Some cities have an ordinance “banning” medical
cannabis businesses, but look the other way, while others are serious about
enforcement. Next make sure that the location is not close to a school, church or
park. Finally, have common sense, be respectful, and be a good neighbor.

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