Prime Factors
Florida’s medical marijuana market
holds four significant considerations
for commercial real estate
Tara Tedrow
2018 Real Estate Legal Summit Class Instructor:
“Medical Marijuana:
The Impact on Commercial Real Estate”
Florida has been home to a burgeoning medical marijuana
market since 2014, and the industry has had its eyes
on the Sunshine State ever since. In 2016, Florida voters
overwhelmingly supported the passage of Amendment
2, a constitutional amendment that legalized medical marijuana’s
billion-dollar industry for Florida. Though some laws are in place
and regulations continue to be developed, many are unclear as to
how medical marijuana impacts their industry. Here are four considerations
to keep in mind when analyzing how these regulations may
aff ect the commercial side of real estate:
Commercial real estate may see marked growth
Because indoor medical marijuana cultivation
requires enough space and a consistent
climate to support continual plant growth,
the sale and leasing of industrial spaces and
vacant or improved agricultural lands could
see an uptick. Though licensed Medical
Marijuana Treatment Centers (MMTC) typically
have one location for cultivation and processing,
they have the potential for dozens of
dispensary locations to be approved. Since
the latest round of MMTC license applications
have been released for final adoption, license
hopefuls have been locking down properties
for cultivation, processing facilities, and retail
dispensing. With now more than 110,000 patients registered in
Florida, existing MMTCs will also be looking for key retail dispensing
locations in high population centers to meet this growing demand.
Brokers shouldn’t be surprised if they start to get calls about suitable
locations for MMTCs statewide.
Standard agreements may require additional care
Use caution when using standard agreements. Many groups have
no problem using their standard agreement templates for business
and real estate transactions, but in the world of medical marijuana
nothing is business as usual. Simple boilerplate provisions can
cause serious problems; for example, agreeing to comply with all
local, state, and federal laws is typically a no-brainer provision. But
because medical marijuana (and marijuana generally) remains illegal
under federal law, that provision would put a licensed MMTC in
automatic default. Similarly, even though landlords aren't growing
or selling the medical marijuana products, that doesn't mean they
are necessarily immune from such federal liability. Thus, the federal
liability implications of any agreements must
always be carefully considered.
Financing may need to be figured out diff erently
Because of marijuana's federal illegality, obtaining
financing is diff icult, if not impossible,
for many in the industry. While there are lenders
and private groups willing to finance some
deals, the terms of those loan agreements
must be carefully reviewed. For example,
collateral for the loan should not necessarily
be in the form of all the business’ assets. Why?
Because as a lender (who isn't licensed to sell
marijuana), coming into possession of all marijuana products by
virtue of a default means that lender could now potentially be liable
for violating both federal and state law.
Local codes and ordinances may require special caution
Under Florida Statutes Chapter 381.986, local governments can
either ban or permit medical marijuana dispensaries in their jurisdiction.
However, if permitted, such dispensaries must be treated as
SPECIAL SECTION
Since the latest round of
Medical Marijuana Treatment
Center license applications
have been released for final
adoption, license hopefuls have
been locking down properties
for cultivation, processing
facilities, and retail dispensing.
Continued on page 23
12 Orlando REALTOR® July / August 2018