Michael Best Partner Shawn Stigler was quoted in Law360's article "Four Issues with Converting Warehouses to Cannabis Farms" on November 6, 2019.
Leasing to cannabis growers presents a unique set of challenges for warehouse owners looking to cash in on the drug's legalization in many states, whether it's ensuring safety and security or getting the backing of lenders and insurers. But lawyers say keeping a few key points in mind during the leasing process can go a long way in avoiding problems.
The most serious risk of housing a cannabis operation is that the federal government will step in and take action, lawyers say, given that marijuana remains illegal at the federal level. While that's a possibility that property owners must be aware of, many lawyers believe the chances of it happening are slim.
But there are other issues to keep in mind, including the potential for inexperienced tenants to overlook critical aspects of the leasing process and logistical surprises that may pop up for landlords who are doing their first conversion from a warehouse to a cannabis-growing facility, according to experts. It's also important for landlords to safeguard against any potential future changes in the law, lawyers say.
Lease provisions should make clear that in the event of a regulatory change, landlords "have a right to terminate the lease immediately," said Shawn Stigler of Michael Best & Friedrich LLP. "That's a challenge for both sides."
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