Cannabis leasing is incredibly complicated for both lessors and lessees. But things can get a lot more complicated in competitive license jurisdictions. I’ve worked with both lessors and lessee-applicants in competitive licensing jurisdictions, and today want to highlight some of the key things I’ve seen over the years.

#1 Why competitive licensing is different from everything else

If you’re reading this and are not familiar with competitive licensing, I’m referring to localities (or in some cases, states) that only allow a small, fixed number of licenses. In competitive licensing jurisdictions, you’ll often see dozens of applicants for a small handful of available licenses – for example, thirty or so applicants for four licenses.

You may point out that most cities in fact have some kind of cap on licenses, either expressly, because there is a finite application window, or because there is restrictive zoning. However, what I refer to as competitive licensing is a situation where, maybe 1-6 licenses will be available in one short application period.

This is why I refer to “competitive” licensing. And it gets truly competitive. Applicants may end up spending hundreds of thousands on legal, design, consulting, and other fees to just to submit an application. Without any guaranty of success.

So as you can imagine, this creates some pretty interesting dynamics for cannabis leasing. And that brings me to point #2.

#2 Is a cannabis lease even mandatory?

Put yourselves in the shoes of a competitive license applicant. You may be spending hundreds of thousands of dollars submitting an application with no guaranty of success. You may be up against a dozen or more highly capitalized, highly qualified companies looking for the same license. Do you want to get locked into a multi-year lease without any guaranty of being able to operate? Obviously not.

Many localities address this by requiring applicants to provide something less than a full-fledged lease. This may include a lease with an early termination right if the license doesn’t come through. Or it could be as simple as an option to lease or even an LOI. Recently, the trend seems to be in favor of binding options to lease, which is generally more “binding” than a simple LOI.

In all of these cases, the lessor usually wants something to allow the lessee to apply for the license. If there’s a lease with an early termination option, this may be reduced rent for some initial period – sometimes even reduced through a buildout. If it’s an option, there may be a monthly option fee that would be commensurate with some kind of reduced rent. But overall, lessors are generally charging the lessee something. After all, they are keeping the property off the market while the lessee applies for a license.

#3 Location, location, location

Both competitive licensing and more “open” jurisdictions limit potential locations to specific zones and areas within their borders. There are also generally buffer requirements (e.g., you can’t be next to a school). In my experience though, competitive licensing jurisdictions tend to be even more restrictive in terms of where applicants may apply. A trend I’ve seen is that applicants must often get a “zoning verification letter” prior to applying. A ZVL will allow the city to provide some initial sign-off on the proposed location.

In a jurisdiction with a restrictive location map, potential lessors are in for a lot of calls. I’ve worked with competitive licensing lessors who get numerous calls from brokers or potential lessees for leasing in restrictive map situations like this. Obviously, this means that rental value can go up – way up.

At the same time, lessors generally have zero experience with cannabis and are unfamiliar with cannabis laws. Lessors must be careful not to make promises about zoning, location compliance, buffer zone restrictions, or anything else. This should be squarely on the shoulders of the prospective lessee. Smart lessors disclaim and representations about basically anything in their agreements with the lessees.

#4 Lessors should expect some participation in the process

In any competitive cannabis licensing process I can remember, lessors are required to submit documents to the city that authorize the applied-for use. For some reason, simply signing a lease that authorizes the use just isn’t enough. So many localities require lessors to sign documents acknowledging that their lessee will be authorized to engage in cannabis use once licensed. The trend now seems to be to require lessors to sign not just statements, but notarized attestations.

Some localities go above and beyond. I’ve seen some that require lessors to certify that they only leased the property to the lessee at issue, in an effort to prohibit lessors from entering into multiple options to have fallback options if one proposed lessee doesn’t get a license (more on that below). Lessors should be aware of what they are signing so they don’t end up liable for some kind of false statement or even perjury.

#5 What can lessors do to hedge their risk?

Most localities require that lessors only authorize one specific entity to apply for a license at the lessor’s property. This is good for the proposed tenant, who has no competition for the specific property (after all, what would happen if two companies won at the same property?). But it’s not great for lessors, who have to trust that their proposed lessee will beat out all the competition or walk away. What landlord would want to get property leased for only a few months and start that process all over again?

Some cities address this by allowing lessors to authorize multiple applicants at the same address. This is obviously better for lessors. But it’s not great for lessees for the inverse reason of what I noted above. In those places, lessors should expect to see proposed lessees demanding exclusivity – and in those cases the lessors may be justified in asking for higher option payments.

Conclusion

Competitive licensing is tough, but can be made a lot more difficult if the property owner and proposed lessee aren’t on the same page. Dealing with the issues raised above is critical at the outset, or an applicant can waste a lot of time and money on a situation that won’t work. Stay tuned to the Canna Law Blog for more cannabis real estate issues.

You’ve almost certainly heard of THC. Roughly half of Americans say they’ve tried marijuana, and THC is the cannabinoid that’s responsible for its psychoactive effects. Since Colorado and Washington became the first states to legalize recreational marijuana use in the U.S., the majority of the country has followed suit. It’s only illegal in 12 states, and even then, it’s decriminalized in some places. In the near future, it may even be moved to a Schedule 3 drug.

However, THC isn’t the only compound in marijuana that’s gained popularity. It’s one of over 100 cannabinoids that have been identified, and each one has its own set of potential therapeutic benefits. CBD is the most well-known, followed by CBG, CBN, and delta-8 THC. However, there’s another cannabinoid that’s gaining traction: THCA.

What Is THCA?

The Science Behind THCA

Even at temperatures ranging between 4ºC and 18ºC (39ºF to 64ºF), THCA tends to decarboxylate, a quality that points to its sensitive nature and the intricate care needed in its preservation. This characteristic presents a conundrum in achieving precise laboratory results; ‘THC contamination‘ is practically a given with all THCA testing.

What Does THCA Do Inside the Human Body?

While it might appear as a challenge in the scientific community, it is this very attribute that has piqued the curiosity of researchers and enthusiasts alike. Everything that exists in the world of cannabis compounds has a role to play in the human body through the Endocannabinoid System (ECS). This remarkable system, discovered recently thanks to the pioneering work of Raphael Mechoulam, stands as a guardian of homeostasis, ensuring a balanced internal environment for various vital systems, including the brain and immune system.

THCA’s large molecular size prevents it from binding to the CB1 receptors, which are responsible for THC’s psychoactive effects. It also does not bind to CB2 receptors, which are primarily responsible for anti-inflammatory responses. THCA still produces an array of therapeutic effects. According to 2023 research, it’s been shown to be an effective anti-inflammatory agent. It also improves neuroproductivity, making it potentially beneficial for treating neurodegenerative diseases. Some research on rats has shown THCA to reduce nausea and vomiting as well.

THCA vs. THCV

THCV is another interesting cannabinoid found in cannabis. It’s similar to THCA in that it doesn’t bind to the CB1 receptor, but it has different effects on the body. Unlike THCA, THCV binds to CB1 and CB2 receptors. It can act as an appetite suppressant, making it a potential treatment for obesity-related conditions, including diabetes.

THCV is technically a psychoactive compound, but its effects are quite different from those of THC. Only very high dosages result in a feeling of euphoria, and its effects wear off sooner than the effects of THC. THCV is typically present in low concentrations, but certain strains can have higher levels of THCV compared to others. Most of the time, these strains also have higher THC content than the average strain.

THCA vs. THC

Potency

In fact, that’s usually the main reason people buy high-THCA flower (like that from Bud Brothers THCA Raleigh). Due to the much higher concentration of THC this process produces, it sometimes yields a more potent high than regular marijuana of the same caliber.

Benefits

THCA has been studied for its potential anti-inflammatory and neuroprotective benefits, so it may be beneficial for treating certain chronic conditions (neurodegenerative diseases). It’s also been studied for its ability to reduce nausea and improve appetite. It’s also worth noting that THCA can be enjoyed without being intoxicated, which is a huge benefit for those who don’t want to experience the effects of THC. As the main psychoactive compound in cannabis, THC is a lot more heavily researched. According to an extensive body of research spanning decades, benefits include:

• A mind-altering effect users describe as “energizing,” “elevating,” “relaxing,” “pleasurable,” or “psychedelic.”

• Pain relief from chronic pain syndromes like Fibromyalgia, Arthritis, and Multiple Sclerosis

• Appetite stimulation for chemotherapy patients undergoing cancer treatment

• Neuroprotective qualities to protect nerve cells from damage and degeneration

• Improved sleep quality and duration

• Chronic pain relief

• Relief from stress, anxiety, PTSD, depression, and other mood disorders

• Overall improved mood and outlook on life

In general, THC serves most of the “benefits” of all the other cannabinoids. However, it’s also mind-altering, which is a turn-off for cannabis users who only want the therapeutic benefits. THCA is among the several cannabinoids that helps fill this gap.

Consumption

However, THCA is more complicated. It isn’t enough for THCA users to find a way to ingest it without cooking, burning, or vaping it. It can turn into THC even under slight warmth or sunlight. If it’s forgotten in the car for too long, it’s ruined. The only two options for THCA users are:

Most often, THCA users blend it into a juice or smoothie, as its bitter flavor is, according to some, nearly unbearable on its own. It can also be mixed into other food items and consumed that way (as long as they are cold foods). For anyone willing to put up with the taste, it’s also possible to consume the cannabis flower as-is.

Legality

At the federal level, THCA isn’t illegal, but it can quickly turn into THC (often without the user’s awareness). And, THC is generally the reason people use cannabis. It could be considered an analog of THC and still be subject to federal law. under the Analogue Act.

If you’re purchasing a THC product (such as cannabis flower) with THCA content, it will still be subject to cannabis laws in your state, even if you don’t intend to use the substance for its psychoactive effects.

It’s important to research the local laws and regulations before using THCA products. In a legal state, you might be able to purchase it with relative ease. However, it’s always better to err on the side of caution and double-check first.

Final Thoughts

SHOULD YOU SMOKE OR EAT THCA, IS THERE A BEST WAY TO INGEST IT?