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Issues and Ramifications of Leasing to Cannabis Providers
The legalization of cannabis in New Jersey has created tremendous economic opportunities for commercial and industrial property owners. Aside from the potential financial benefits, property owners should approach this newer market in a cautious manner before embarking on leasing to cannabis retailers and/or growers given the multitude of issues and concerns surrounding the cannabis industry. Property owners should be aware of some of the issues outlined below and the potential ramifications of leasing to a cannabis provider.
Zoning
Initially, property owners should confirm with the municipality that it will permit the sale and/or growth of cannabis and confirm the zoning restrictions such as hours of operation and signage.
Financing
This is one of the greatest hurdles for cannabis operators and landlords to navigate given the current conflict between the state and federal laws criminalizing cannabis. Most financial institutions will not provide financing to cannabis operators or property owners who intend on leasing to cannabis operators based on the current federal law. However, there are some local banks which may provide financing, but the number is currently somewhat limited. Moreover, because of the current federal illegality, most financial institutions are unwilling to accept money that comes from a property with a cannabis operation which may trigger issues with operating accounts, cash management accounts and lockbox agreements.
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