Not sure if you’ve heard the news, but Marijuana Dispensaries are completely legal in California. The state passes the use of recreational marijuana this past election, and dispensaries will no longer be “taboo” to many landlords.
I signed a two year lease deal for a dispensary last year. The transaction itself was quite simple. The difficulty lied in trust and comfort level with the use and communication between the tenant and the landlord. The challenge for the dispensaries are quite overwhelming, with most cities completely opposed to the use and willing to do everything in their power to prevent them from opening within its boundaries. This leads to opportunities for landlords who are willing to accommodate and work with these businesses. Dispensaries pay in cash, on time and are willing to pay a significant premium in rent and abide by almost every rule and regulation a landlord can think of.
However, on the flip side, these tenants always seem to really understand the laws and their rights. This can make removing these tenants more difficult and also their presence can adversely affect your property with unwanted patrons, police and angry neighbors.
Ultimately, as a landlord, if you have a difficult property and are willing to accept some additional risk, a dispensary could prove to be a marriage made in heaven.
- Large premium in rent
- Pays rent on time and in cash
- Willingness to follow all rules and regulations
- Potential fines from local government
- Not ideal co-tenant. Public perception similar to smoke shops, massage parlors, karaoke clubs, and gentlemen’s clubs.
- May hurt value of property