Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Commercial Leasing Law & StrategyFeaturesLandlord Tenant LawLitigationRegulation

New York Cannabis Law's Lease Mandate Catch-22

By Marjorie J. Peerce, Michael P. Robotti and Kamera Boyd
November 01, 2021

New York's recently enacted cannabis law, the Marijuana Regulation and Taxation of 2021 (MRTA), created a maze of new legal requirements. These provisions affect not only cannabis companies, but also the companies that conduct business with them. Navigating this maze can be tricky, especially since much of the MRTA conflicts with federal law. One particularly complex area is the regulation of New York real estate as it relates to cannabis companies. Cannabis companies and landowners alike should be wary of the legal pitfalls in this area and seek appropriate legal guidance.

Under the MRTA, New York will grant licenses to companies to distribute cannabis. Although these companies will be state-licensed, it likely will violate the federal "stash-house law" to lease property to them. Landowners may be reluctant to lease to licensed cannabis businesses and risk federal criminal liability, when they could lease to other types of businesses without that risk. This landowner reluctance could create a Catch-22 for cannabis companies: to get a state license, they need property from which to operate their cannabis business; but to get property, under federal law, they cannot plan to sell cannabis from it.

The MRTA contains a provision that seems like it could help cannabis companies with reluctant landowners; specifically, it has a lease mandate, which prevents landowners from discriminating against at least some participants in the legal cannabis market. Precisely who the lease mandate protects, though, is subject to debate. While it could be read to prevent landowner discrimination against cannabis consumers and cannabis companies — as opposed to just cannabis consumers — such an interpretation likely would result in federal preemption of the mandate. To avoid preemption, courts likely will interpret the mandate narrowly, prohibiting discrimination only against cannabis consumers. So, cannabis companies should not put too much stock in this mandate when attempting to secure a property.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
How Secure Is the AI System Your Law Firm Is Using? Image

In a profession where confidentiality is paramount, failing to address AI security concerns could have disastrous consequences. It is vital that law firms and those in related industries ask the right questions about AI security to protect their clients and their reputation.

COVID-19 and Lease Negotiations: Early Termination Provisions Image

During the COVID-19 pandemic, some tenants were able to negotiate termination agreements with their landlords. But even though a landlord may agree to terminate a lease to regain control of a defaulting tenant's space without costly and lengthy litigation, typically a defaulting tenant that otherwise has no contractual right to terminate its lease will be in a much weaker bargaining position with respect to the conditions for termination.

Pleading Importation: ITC Decisions Highlight Need for Adequate Evidentiary Support Image

The International Trade Commission is empowered to block the importation into the United States of products that infringe U.S. intellectual property rights, In the past, the ITC generally instituted investigations without questioning the importation allegations in the complaint, however in several recent cases, the ITC declined to institute an investigation as to certain proposed respondents due to inadequate pleading of importation.

The Power of Your Inner Circle: Turning Friends and Social Contacts Into Business Allies Image

Practical strategies to explore doing business with friends and social contacts in a way that respects relationships and maximizes opportunities.

Authentic Communications Today Increase Success for Value-Driven Clients Image

As the relationship between in-house and outside counsel continues to evolve, lawyers must continue to foster a client-first mindset, offer business-focused solutions, and embrace technology that helps deliver work faster and more efficiently.