Larry Landlord owns a strip mall in Los Angeles. He hosts a few tenants: Taco Bell, Happy Dry Cleaners and Nailtacular Salon. He has one unit that he has had a lot of trouble leasing. He has tried everything he can think of - offering free rent, renovating and using a broker. Finally, he is approached by Mary Jane who is interested in leasing the unit for her medical marijuana dispensary, Ganja Givers. She has proper documentation from the city and capital to invest in improving the unit. Larry Landlord is excited to finally have a potential tenant but is concerned about her line of business.
Q: What can Larry do to protect himself?
A: In Los Angeles, there seem to be as many medical marijuana dispensaries as there are Starbucks. However, it is crucial to note that even though marijuana dispensaries are legal in the state of California, they are illegal under federal law. This means that at any point, the feds can come after a landlord who has a dispensary as a tenant and demand that he evict the tenant or face consequences such as losing his or her property. If you are looking into having a dispensary as a tenant, consider the following safeguards to minimize your liability:
1) Lease Provisions - Most commercial leases include a clause that prohibits the tenant from engaging in illegal acts on the premises but they do not specify which law they pertain to. In your lease, be sure to include language that states a tenant faces automatic eviction should they violate state or federal law.
2) Security Guards - The federal authorities are less likely to go after a dispensary that is running responsibly. Consider requiring your tenant to maintain a security guard on premises during business hours to prevent loiterers in the parking lot and other unsavory characters.
3) Stop the Stink - Marijuana has a pungent odor that carries easily. While the scent may be a beacon to some, it is a nuisance to others. Consider requiring your tenant to install a heavy duty air purification system to keep the odor inside. Be sure to hold them responsible for all maintenance and repairs.
Having a medical marijuana dispensary for a tenant presents new challenges and exposure to liability. The attorneys at The Rad Firm, APC, can walk you through the lease process and make sure you cover all of your bases.