I have recently encountered multiple cases within the past few months involving issues specifically arising out of the leasing of Medical Marijuana Dispensary ("MMD") tenants. As of 2014, Colorado residents over the age of 21 are legally allowed to posses and purchase an ounce of marijuana at a time. The law also allows the cultivation of limited amounts of marijuana in an enclosed, locked space. However, California law is not so lenient and in fact The Los Angeles City Attorney Office is extremely meticulous when it comes to regulating MMD operations and tenancies. It is for this reason that landlords should consider the following 8 tips when taking on an MMD tenant.
1. Prop D Compliance or Bust
City of Los Angeles Proposition D was passed in May 2013 to regulate MMDs operating in the city. Proposition D limits the number of MMDs permitted to legally operate in the city and imposes strict requirements on how the businesses are run. It is imperative to ensure that your prospective or current tenant is in compliance with Proposition D to avoid legal liability that can arise out of maintaining an illegal business on your property. Be sure to stay on top of tenants once compliance is confirmed with periodic check-ins to ensure they are still in compliance.
2. Play it Safe
Many MMDs operate on a cash only basis leaving them susceptible to increased crime. It is important to require them to have a security guard present on-site during business hours to protect both them and neighboring tenants. Security guards can also prevent on-site usage which is strictly prohibited.
3. Candid Camera
Install surveillance cameras to keep the MMD and its members accountable.
4. Odor Control
Require your the MMD to install an industrial grade filtration system to keep odors in check. Heavy, unpleasant smells are cause for nuisance complaints that can bring landlords negative attention from the City Attorney.
5. Light It Up
Require your MMD tenant to upgrade lighting in the parking lot so it is secure from crime and on-site usage.
6. Spread the Word
Ask the MMD to post specific signage restricting use on the premises and in the surrounding neighborhood. If restrictions are violated, the MMD should take measures to suspend or revoke the offending member's membership rights. Parking lot signage is also key to ensure high-volume MMDs do not monopolize available parking.
7. Selling vs. Cultivating
Educate yourself as to the restrictions Proposition D places on cultivating marijuana and selling marijuana at the same address.
Business relationships with MMDs can be difficult but when run properly, can also be very lucrative to both parties. It is important to understand your respective bargaining positions and find a common ground to ensure the best possible outcome. This is most often achieved by employing a third party, such as an attorney, to bring perspective to negotiations.
Compromise is also key when dealing with the City Attorney's office whose focus is to find solutions before resorting to litigation.
The Rad Firm, APC is equipped to help you should you be interested in bringing on an MMD tenant. We can walk you through the process, draft a strong lease and advise you so that the relationship is a sustainable one.