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What to Expect in Cannabis Real Estate Deals

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Cannabis real estate transactions can be notoriously complicated – much more so than your average real estate deal. On January 9, 2024, I’ll be speaking on a panel called “Navigating Real Estate Issues Impacting the Cannabis Industry” for the Los Angeles County Bar Association, where my co-panelists and I plan on touching on many of the most precarious issues in these sorts of transactions. Today, I want to preview some of the key issues we see in these kinds of deals.

Location, location, location

The most important factor in any cannabis real estate transaction is location. Licensing authorities impose all sorts of requirements or restrictions on real estate locations, including:

  • Zoning laws are usually hyper restrictive for cannabis companies. Cannabis businesses may be relegated to very small areas within a city. Permissible zones often change depending on the type of use. For example, some cities may allow storefront retail facilities closer to residential areas, whereas you can virtually guaranty that volatile manufacturing will be stuck in industrial zones.
  • States and cities also impose all kinds of location-specific restrictions. Cannabis businesses, for example, may be prohibited within X feet of schools, parks, churches, libraries, etc. In places like California, cities often add restrictions on top of state-specific requirements.
  • States or cities may also impose limitations on the number of cannabis businesses that can be located in a specific area. Sometimes we see caps on licenses within a city (more on that later), whereas some cities will instead prohibit two different cannabis businesses from existing within a certain distance from each other.
  • In addition to location-specific issues, there may be a host of property-specific issues that could disqualify a potential property. A piece of real estate may be properly zoned and outside buffer zones, but may not comply with local parking requirements, setback requirements, electricity needs, and so on.

Each of the issues above can be automatic disqualifiers for a parcel of real estate. Things like buffer zone locations can be difficult to figure out and change over time. For example, a school might open up in an area before a cannabis business submits a license application, and it may lose out on its chance to do so. All of this is to say that performing diligence on a property and its location is absolutely critical prior to entering into a lease or committing to purchase a piece of real estate.

Buying v. leasing?

When a cannabis company finds a good piece of property in a good location, the next most important decision it needs to make is whether to buy it or lease it. There are some key exceptions here, like large farms or processing facilities in industrial or agricultural areas. But in general, most cannabis companies tend to lease. There are a lot of reasons why cannabis companies opt to lease real estate instead of buying. I discussed that in detail here. But generally speaking:

  • Cannabis companies are startups with limited funds that opt to lease, rather than buy.
  • Buying real estate is usually much more complicated than leasing it.
  • Businesses don’t want to commit to a multi-million dollar purchase before knowing they can secure a license and/or have any prospect of success.
  • Financing is a big challenge! That brings me to the next point.

Financing, escrow, and title

Securing financing has long been a challenge for cannabis companies. In fact, my last post analyzed key issues that cannabis companies can expect when trying to secure financing. Few startup cannabis companies are sufficiently capitalized to purchase real estate without financing, and because traditional financing is almost never available, buyers usually end up with much higher interest rates and more lender-friendly terms.

But buyers are not the only ones that have to deal with financing-related issues. If a cannabis company wants to lease a piece of property that is subject to a mortgage, it will probably not happen. Big banks do not usually bank cannabis money, and usually will have the ability to default their borrower (the landlord) for leasing to a cannabis company. I’ve seen a lot of potential real estate leases fail for this reason alone.

Another difficulty here is getting escrow companies or title insurance companies to work on cannabis real estate transactions. Like bigger banks, many of them simply won’t do touch cannabis transaction. This is especially so in jurisdictions when they commence licensing.

Addressing licensing uncertainty in cannabis real estate deals

There is no way a cannabis company can guarantee that it will secure a license. Even in non-competitive jurisdictions, there are a host of potential property- or location-specific issues that could bar a license application. The chance of losing out is much, much higher in a city with 3 licenses up for grabs and 30 different applicants. I recently wrote about some key issues for competitive licensing jurisdictions and real estate leases here.

Of course, there are ways to hedge against these kinds of uncertainty. Here are a few I’ve seen:

  • Non-binding letters of intent or term sheets may be acceptable to some cities, but they obviously come with the risk that the lessor could walk away or change key terms if the agreement is not binding.
  • Options to lease or purchase upon securing a license, as opposed to full-scale leases or purchase agreements, can be a good way to tie up a piece of property while waiting for a license to issue.
  • Leases with termination rights if a license is not secured are yet another way to hedge against denial of an application.

It’s key to point out that licensing authorities may have strict requirements on what a tenant needs to show in order to apply. Some cities will not allow a document unless it is binding (i.e., an option or a full-fledged lease). This is yet another reason why early diligence is so key.

Other issues for cannabis real estate transactions

Some other key issues that I’ve seen come up more than once include the following:

  • I have never seen a cannabis applicant that did not construct at least some tenant improvements to their facility in order to get licensed. Tenant improvements can lead to increases in real property taxes. It’s best practice to address who is responsible for those improvements in a lease.
  • Going off the last point, I’ve seen quite a few cannabis tenants turn a dilapidated building in an industrial area into a highly productive, state-of-the-art facility. As you can imagine, this costs a lot of money. Savvy tenants may try to negotiate some kind of tenant improvement allowance from the landlord. Or they may use their improvements to justify lower rent or a longer lease term.
  • Form commercial real estate leases universally require tenants to comply with all laws. It’s good practice to carve out federal cannabis laws. Not only will this avoid a default trap, but it will also prevent a landlord from trying to later terminate a lease with the claim that they were unaware that cannabis was federally illegal (yes, I’ve seen things like that happen).
  • Renewal options are key! Cannabis leases tend to hover around five year initial terms. In states like California where licenses are effectively tied to a single piece of real estate forever, landlords have immense power to walk away from the lease at the end of the lease term unless a tenant has renewal options (and timely exercises them). This obviously would be devastating for an applicant who couldn’t move its license elsewhere.
  • Purchase options are also important. Cannabis lease rent tends to be much higher than market rent for similar non-cannabis uses. And it almost always increases year over year. Businesses with multi-year lease terms may want a purchase option so that they can determine whether it makes more sense to buy the property outright (if doing very well) as opposed to paying X times market rate each month.

I could keep going here for a long time. The point is that real estate deals in the cannabis space are difficult and are riddled with potential pitfalls. Using a form lease from a normal commercial transaction is almost always a bad idea, and failing to properly diligence real estate can lead to repercussions.



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What if the World’s Biggest Tobacco Company Entered the Cannabis Industry?

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The World’s Biggest Tobacco Company Is Quietly Entering The Weed Industry

What Does This Mean For The Future Of Weed?

 

From the 1950’s to the 1990’s, cigarettes were considered to be a ‘cool’ habit and somewhat of a fashion accessory globally.

 

There was even a time when Hollywood celebrities were photographed smoking, which made them seem like the epitome of sophistication. Big names including Humphrey Bogart and James Dean were pictured smoking, but it was also so common and accepted around the world. That did not last long, as eventually evidence that cigarettes killed people from cancer and other fatal health conditions became impossible to ignore.


While there were many names in Big Tobacco that helped popularize the consumption of cigarettes, and made it easy for people to get access to it, Philip Morris International (PMI) were one of the biggest players – and they still are, to this day. They own some of the most common cigarette brands that are consumed around the world, including Marlboro, Chesterfield, and L&M. Surely, one can blame PMI’s products for tempting people to make poor health choices that may have taken them to the grave…

 

According to the World Health Organization, tobacco smoking is responsible for the deaths of around 8 million people globally.


Yet, with the rise of cannabis, PMI wanted a piece of the pie.

 

The History Of Philip Morris’ Interests In Cannabis


If you’re only hearing about Big Tobacco’s interest in cannabis right now, you might be shocked to learn that their interest in weed goes as far back as 1969. There are some internal documents that prove PMI was interested in learning about the potential of cannabis. However, they were considering weed a competitor as well as a potential product.

In fact, a 1970 memo even shows that PMI acknowledges the possibility of marijuana legalization.


Fast forward to 2016, when PMI made a significant investment worth $20 million to an Israeli biotech firm specializing in medical cannabis, called Syqe Medical. At the time, Syqe was working on developing a medical marijuana inhaler which would provide metered dosing of weed for medical patients. According to the deal, Syqe Medical will also work on developing certain technologies that would enable Philip Morris to minimize the health effects caused by smoking.

 

By 2023, Philip Morris made a deal to acquire Syqe Medical for a cool $650 million, as long as there were certain conditions met. In a report by Calcalist, the deal features a number of milestones, though the bottom line is that if the inhaler developed by Syqe passes the clinical trials, PMI will then go ahead to buy all shares of the company for the aforementioned amount.

 

Another Silent Move Into The Weed Space

 

More recently, in January 2025, a press release was published detailing Vectura Fertin Pharma’s (VFP), a subsidiary of Philip Morris International, joint venture with a Canadian biotech firm focusing on cannabinoid-based drugs – Avicanna.

 

According to the press release, the joint venture seeks to promote cannabis accessibility and research. Avicanna already has a stronghold in the wellness sector. However, the press release hardly makes any other mention about the involvement of Philip Morris International, but it’s clear that Big Tobacco has long had their eye in the cannabis industry. Back in 2016, when they first got involved with Syqe Medical, it highlighted the firm’s interest in wellness, but the partnership with Avicanna cements that.

 

Changes In Consumer Perception And Habits

 

It only makes sense for Big Tobacco to pivot to cannabis – or wellness, in general. After all, if you can’t beat em, join em!


And it’s clear: for several years now, there has been a decrease in cigarette smoking; young adults are now shifting from tobacco, as well as alcohol, and increasing their cannabis consumption instead.

 

And Philip Morris isn’t the only player in Big Tobacco who’s expressed an interest in a slice of the (weed) pie. Back in 2017, American holding company Altria Group began moving away from cigarettes, with their $1.8 billion investment into the Cronos Group, a large Canadian cannabis company. Altria owns several big American companies including Philip Morris; so much so, that even their website now declares the tagline: “Moving Beyond Smoking”.

 

However, Altria faced issues due to regulatory concerns.

 

British American Tobacco (BAT) has also been interested in cannabis. For some time now, they’ve been researching weed products, particularly infusing CBD and THC into their electronic cigarettes which are sold under the Vuse and Vype brand names. In 2021, BAT began a trial launch of CBD products in the United Kingdom.


RJ Reynolds, which is also now under British American Tobacco, has also considered joining the weed industry. According to internal documents, RJ Reynolds has considered cannabis both an opportunity and a competitor as far back as the 1970s.

 

Conclusion


At the end of the day, cannabis isn’t a real threat to the tobacco industry. The tobacco industry simply shot itself on the foot – all it needed was time, to prove that it does indeed cause cancer and kill people. On the other hand, cannabis was a friend more than a foe: legalization and a growing consumption of weed proved its ability to save lives.

 

That said, the relationship between tobacco and weed continues to evolve. Through cannabis legalization, Big Tobacco can learn from the challenges and opportunities that cannabis had to go through. It can be said that one thing is clear, though: the drop in tobacco consumption is a major opportunity for cannabis, with more people looking to substitute tobacco with a healthier alternative.

As a response, we may continue to see tobacco companies investing in Big Cannabis – just as we’ve seen in the examples mentioned above. This partnership is fantastic news for both industries, and we can only hope to see more!  

 

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Who are the Next 5 States to Legalize Recreational or Medical Cannabis Starting in 2025?

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As the landscape of marijuana legalization continues to evolve across the United States, 2025 is shaping up to be a pivotal year for states considering reforms. Advocacy groups are closely monitoring legislative developments and public sentiment, identifying specific states that are likely to make significant strides toward legalization. This article explores the states most likely to legalize marijuana in 2025, examining the political climate, public opinion, and advocacy efforts that may influence these changes.

 

The Current State of Marijuana Legalization in the U.S.

 

As of 2023, a growing number of states have legalized marijuana for both medical and recreational use. According to the National Conference of State Legislatures (NCSL), 21 states and Washington D.C. have legalized recreational marijuana, while 37 states allow medical marijuana use. This rapid expansion reflects changing public attitudes toward cannabis, which have shifted dramatically over the past two decades.

 

Public Opinion Trends

 

Public support for marijuana legalization has reached unprecedented levels. A Gallup poll conducted in late 2022 found that 68% of Americans support legalizing marijuana, a significant increase from just 25% in 1995. This shift in public opinion is crucial for lawmakers as they consider new legislation. Advocacy groups are leveraging this support to push for reforms in states where legalization has yet to occur.

 

 The Role of Advocacy Groups

 

Organizations such as the National Organization for the Reform of Marijuana Laws (NORML) and the Marijuana Policy Project (MPP) play a vital role in advocating for legalization. They provide research, mobilize grassroots campaigns, and lobby lawmakers to promote cannabis reform. Their insights into which states are most likely to legalize in 2025 are based on legislative trends, political dynamics, and public sentiment.

 

Key States Likely to Legalize Marijuana in 2025

 

Pennsylvania has emerged as a strong contender for marijuana legalization in 2025. The state has a robust medical marijuana program established in 2016 that has seen significant success, with over 600,000 registered patients. However, advocates argue that the time has come to expand access to adult-use cannabis.

 

Political Support

 

The recent election of Governor Josh Shapiro has energized legalization efforts. Shapiro has expressed support for legalizing recreational marijuana and has indicated a willingness to work with lawmakers across party lines. In early 2025, a bipartisan bill is expected to be introduced that aims to create a regulated market for adult-use cannabis.

 

 Advocacy Efforts

 

Advocacy groups are actively mobilizing support among residents and lawmakers alike. Campaigns highlighting the potential economic benefits—such as job creation and tax revenue—are gaining traction. Additionally, public polls indicate strong support among Pennsylvanians for legalization, further bolstering advocacy efforts.

 

Hawaii has long been known for its progressive stance on cannabis; it was one of the first states to legalize medical marijuana in 2000. However, efforts to legalize recreational use have stalled in previous legislative sessions.

 

 Current Developments

 

In 2025, advocates are optimistic about renewed efforts to pass comprehensive cannabis legislation. The Senate previously approved a bill aimed at legalizing recreational use, but it failed in the House due to opposition from conservative lawmakers.

 

 Political Dynamics

The political landscape appears more favorable this year with new leadership in the House that may be more open to discussing cannabis reform. Governor Josh Green has also expressed support for legalization, emphasizing its potential economic benefits for Hawaii’s tourism-driven economy.

 

 Advocacy Strategies

 

Advocacy groups are focusing on grassroots campaigns and community engagement to build momentum for legalization. Public forums and educational events aim to inform residents about the benefits of legalization while addressing concerns regarding regulation and safety.

 

South Carolina has made strides toward medical marijuana legalization but remains one of the few states without comprehensive access to cannabis products. In recent years, lawmakers have introduced several bills aimed at establishing a medical program; however, these efforts have faced significant hurdles.

 

 Legislative Prospects for 2025

 

In 2025, advocates are hopeful that a revived medical marijuana proposal will gain traction. The proposed legislation would allow patients with qualifying conditions access through licensed pharmacies under strict regulations.

 

 Political Climate

 

The political climate remains challenging, with resistance from conservative factions within the legislature. However, increasing public support—evidenced by recent polls showing over 70% approval for medical cannabis—may sway some lawmakers toward supporting reform.

 

 Advocacy Efforts

 

Advocacy organizations like SC Compassionate Care are working tirelessly to educate the public and legislators about the benefits of medical marijuana. They emphasize patient stories and health outcomes as part of their strategy to garner support.

 

Kansas is one of the few remaining states without any form of legalized marijuana use. Despite this restrictive environment, there is a growing movement advocating for medical cannabis legislation.

 

 Legislative Opportunities

 

In 2025, advocates believe there is a significant opportunity for progress on medical marijuana legislation. Several bills have been introduced in previous sessions that gained some bipartisan support but ultimately failed due to opposition from key lawmakers.

 

 Public Sentiment

 

Public opinion in Kansas is shifting; recent surveys indicate that nearly 60% of residents support legalizing medical marijuana. This growing acceptance may influence legislators who have previously opposed reform.

 

 Advocacy Strategies

 

Groups like Kansas Cannabis Coalition are actively campaigning for change by organizing rallies and educational events throughout the state. They aim to raise awareness about the therapeutic benefits of cannabis while pushing for legislative action.

 

North Carolina has been making headlines regarding potential cannabis reform. While it currently allows limited use of CBD oil for certain medical conditions, comprehensive medical or recreational legalization remains elusive.

 

 Political Dynamics

 

In recent years, there have been increased discussions among lawmakers about introducing medical marijuana legislation. The current governor supports reform efforts; however, opposition from conservative members poses challenges.

 

 Advocacy Efforts

 

Advocacy groups such as NC NORML are working diligently to build grassroots support for legalization initiatives. They focus on educating citizens about cannabis benefits while lobbying legislators directly.

 

Wisconsin’s approach toward cannabis remains conservative compared to neighboring states like Illinois and Michigan. While some local municipalities have decriminalized possession or implemented medicinal programs at their discretion, comprehensive statewide reform is still lacking.

 

 Legislative Prospects

Advocates believe that changing political dynamics could lead Wisconsin toward more progressive policies regarding both medical and adult-use legalization by 2025. Recent elections have resulted in a more favorable balance within state government regarding cannabis issues.

 

Public Support

 

Public opinion polls indicate strong support among Wisconsinites—over 60% favoring legalization efforts—creating an opportunity for advocates seeking legislative change.

 

Advocacy Strategies

 

Organizations like Wisconsin NORML are mobilizing citizens through educational campaigns aimed at dispelling myths surrounding cannabis while promoting its economic benefits through taxation and job creation associated with regulated markets.

 

New Hampshire has long been considered an outlier among New England states regarding cannabis laws; it legalized medical marijuana back in 2013 but has yet to pass adult-use legislation despite numerous attempts over recent years.

 

Current Developments

 

In early 2025, advocates anticipate renewed efforts aimed at legalizing recreational use through proposed bills introduced during legislative sessions scheduled throughout spring months ahead.

 

 Political Climate

 

While there is bipartisan interest among some legislators regarding potential reforms related specifically towards taxation structures associated with regulated markets—opposition remains strong from conservative factions within government bodies overall limiting chances significantly unless public pressure mounts significantly enough leading into future elections cycles ahead!

 

Virginia made headlines when it legalized recreational cannabis possession starting July 1st ,2021—but sales remain unregulated until further action occurs within state government bodies responsible overseeing these matters moving forward!

 

Legislative Prospects

 

Advocates believe that enhancing existing laws by adding regulated sales will be crucial steps towards creating an effective market structure benefiting consumers while generating tax revenue needed fund essential services statewide!

 

 Conclusion

 

As we look ahead into 2025—the landscape surrounding marijuana legalization continues evolving rapidly across various states nationwide! With growing public support coupled alongside advocacy group efforts pushing forward reforms—it’s clear many opportunities exist within multiple jurisdictions ripe opportunities await those willing engage actively participate shaping future policies governing this vital industry.

 

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Emotional Regulation Get Easier with Cannabis?

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Emotional regulation refers to an individual’s ability to manage to various emotional stimuli in an appropriate manner.

When one is able to regulate their emotions, it means that they are able to withhold intense and extreme emotions, even when the situation normally calls for it. As a result, they are able to express their emotions in a proper way; it is controlled but not suppressed, it’s mindful and aware. Effective emotional regulation has been linked to emotional maturity, better relationships, and an improvement in overall well-being.


However, using certain drugs as well as alcohol have proven to negatively impact one’s ability to regulate their emotions. This is because drugs engage with the neurotransmitters in the brain, including those responsible for the production of serotonin and dopamine, which are necessary for healthy emotional regulation. When we consume central nervous system depressants such as alcohol, as well as stimulants in drugs, these severely impede our serotonin levels which can cause depression and other mental health issues. In addition, drugs have been found to affect emotional dysregulation and dependence.


But not cannabis.

 

According to the results of a clinical study conducted by researchers at the Oregon State University and Washington State University, inhaling weed containing over 20% THC was not found to have any impact on emotional regulation.

For the study, investigators analyzed the effects of weed smoking on 12 adults; all the participants already had experience smoking weed in the past and even used their own cannabis supply. The researchers then analyzed the mood and emotional regulation capabilities of the participants during times of sobriety as well as when they were stoned from weed. Surprisingly, they found that the subjects’ performance didn’t differ when made to undergo several tasks after smoking weed.


“There was no evidence that acute high-potency cannabis use affected participants’ implicit or explicit emotional regulation,” they said. The researchers also noted that the participants acknowledged there was an improvement in their mood and anxiety reduction after using weed.


“The current pilot study assessed whether being under the influence of high-potency cannabis flower affects emotion regulation among a sample of young adults who use cannabis regularly,” they concluded. “While participants reported more positive mood and decreases in anxiety while intoxicated, there was no evidence to suggest that intoxication from high-potency cannabis flower affected emotion regulation,” the researchers wrote.

 

How Else Can Cannabis Benefit Emotional Health?

 

Thousands of people rely on cannabis for its benefits on their emotional and mental well-being. In fact, most cannabis consumers have a positive association with cannabis and emotions, since it can effectively help them reduce encounters of negative emotions in general. For example, instead of ruminating in stress and worry, people can medicate with weed at the end of the day. This not only aids in relaxation, but also offers a natural, safe outlet for coping with the stresses of everyday life.


In the same vein, this is also why more individuals, particularly those in high-stress positions such as parents, CEO’s, and entrepreneurs, have made microdosing or getting high a part of their daily life. No longer is alcohol seen as the only way to cope: weed is in, and it’s a much healthier way of dealing with life.

 

While this may be something that science can’t explain just yet, cannabis does have the unique ability to slow down one’s racing thoughts and the endless mental chatter, while helping make it easier to focus on the present. For this reason and more, weed has already been widely integrated into many wellness retreats in legal cities. Weed, mindfulness, and yoga simply go together so well, enhancing the peaceful effects of one another. Cannabis consumers can also enjoy a great deal of relaxing activities with a heightened sense of enjoyment, effectively helping one forget about their negative emotions such as anger, stress, and frustration.

So the next time you’re feeling extremely irritable or pissed off, why not pop a gummy or have a toke, and spend some time outside. You’ll see how difficult it can be to stay mad.

 

What You Take Matters

 

For those who want to use cannabis to improve their emotional regulation, what you take – and how much of it – matters just as much too.


That’s why there are many more studies suggesting that low-dose THC is best especially for anxiety and stress. On the other hand, high doses of THC can be detrimental for your mental and emotional well-being.

 

According to a 2017 study conducted by researchers at the University of Illinois at Chicago and the University of Chicago: “We found that THC at low doses reduced stress, while higher doses had the opposite effect, underscoring the importance of dose when it comes to THC and its effects,” they said. The same is also true for psychedelics, which can partly explain the popularity of microdosing psychedelics. Meanwhile, anything that can you too high can in fact, cause intense anxiety and stress.

 

Conclusion


It can feel almost impossible to avoid stressful situations that can cause you to feel out of whack, emotionally. In fact, stress is just a normal part of life. But losing your temper, ruminating in negative emotions for hours, and being so upset that it affects other aspects of your life, is not normal.


That said, there are a variety of ways you can deal with stress and the negative emotions it brings. Cannabis can be a key ingredient for helping you restore balance in your emotions as well as mental health.

 

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