July 18, 2022In the News

DiGiacomo featured in Law360's article, "What The Cannabis Industry Must Know To Secure Real Estate"

The cannabis industry in the U.S. has developed as a patchwork of state and local regulatory regimes under the canopy of federal prohibition, creating unique real estate challenges for operators considering entering the space.
One of the most fraught aspects of getting a cannabis business off the ground in a newly legal state can be securing the real property necessary to build out cultivation facilities, product testing labs, manufacturing facilities or dispensaries.
The U.S. cannabis industry's patchwork of state and local regulatory regimes has created unique real estate challenges for operators looking to enter the space, experts say. (Antonio Masiello/Getty Images)
Law360 spoke with several attorneys whose practices straddle the intersection of real estate and cannabis law to learn some trends, traps and tips that experts have uncovered.

Alternative Models

With cannabis operators often unable to get conventional financing to purchase a property and landlords' general wariness about renting to them, the industry has developed a stable of alternative solutions.

More recently, the industry has seen a proliferation of dedicated marijuana real estate investment trust, or REITs, whose entire business model is acquiring property that can be leased to cannabis operators.

"The leases in cannabis are not as stable, they often have outs or more risk," said Dave DiGiacomo, partner and co-lead of the cannabis group at Michael Best & Friedrich LLP. "And then a lot of the cannabis REITs are providing some more of that stability for the operator."

REITs, he added, can "put them in a better position, to not have those risks with the other landlord who doesn't have that level of comfort."

Read more of the Law360 article by clicking here

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