Cannabis Market Challenges
Leasing Restrictions
Many commercial landlords cannot lease to cannabis companies under the terms of their mortgage agreements, not because of inherent risk or “unsavory” reputation. For any commercial landlord that has a mortgage issued by a federally insured bank, their loan documents will include a provision in the “Representation & Warranties” section that prohibits leasing to illegal businesses and will often expressly preclude allowing a cannabis business to operate in the mortgaged property. The provision will look something like this:
Borrower hereby covenants and agrees that it shall not commit, permit or suffer to exist any illegal activities (whether or not such illegality is determined by local, state or federal law) or activities relating to controlled substances (as determined by local, state or federal law) at the Property (including, without limitation, any growing, distributing and/or dispensing of marijuana (whether for medicinal, recreational or other uses).)
Restrictive Zoning & Varying Setback Regulations
- All microbusiness, on-site consumption site or retail dispensary uses shall be permitted only in industrial zoned districts and subject to the regulations set forth in this Article.
- The lot line of any property whereupon exists a microbusiness, on-site consumption site, or retail dispensary shall not be located within a 1,000-foot radius of a residential area.
- The lot line of any property, whereupon exists a microbusiness, on-site consumption site, or retail dispensary shall not be located within a 200-foot radius of religious properties.
- The lot line of any property whereupon exists a microbusiness, on-site consumption site or retail dispensary shall not be located within a 500-foot radius of all education facilities meaning K-12 pursuant to the New York State Education Law and libraries.
- The lot line of any property whereupon exists a microbusiness, on-site consumption site or retail dispensary shall not be located within a 500-foot radius of parks and playgrounds.
- The lot line of any property whereupon exists a microbusiness, on-site consumption site or retail dispensary shall not be located within a 500-foot radius of childcare centers and youth organizations.
- The lot line of any property whereupon exists a microbusiness, on-site consumption site or retail dispensary shall not be located within a 500-foot radius of any dance studios, batting cages, and gymnasiums or similar venues where minors converge.
- The lot line of any property whereupon exists a microbusiness, on-site consumption site or retail dispensary shall not be located within a 500-foot radius of of the lot line of another such microbusiness, on-site consumption site or retail dispensary.