Cannabis business applications 101

DW1

Securing real estate is often one of the toughest challenges of getting a legal operation up and running

By Michele Brooke

The time is finally here. Applications are being accepted for dispensaries and cultivation sites by the local governing authority. You know there will be competition, and you hope the application process will be fair. But how can you make your application stand out from the others?

First, you will want to review the application and the corresponding ordinances with your attorney.

Next, you need to find real property. This is actually the hardest part of the process. Local ordinances (and state laws, where applicable) will tell you the required distance cannabis enterprises need to be located away from sensitive areas such as schools, churches, day care facilities, etc. The licensing requirements vary widely from city to city and state to state.

Also, be prepared: It’s not uncommon for real estate brokers and property owners to give the cannabis industry the cold shoulder. There is still a stigma on marijuana businesses in many places. I have been hung up on several times trying to help a client find a building. Don’t take it personally.

Once you do find a cannabis-friendly landlord and building in a proper zone, two things are advisable. First, hire someone to do a professional survey of the property, evidencing that it is not too close to a sensitive area. Next, have your attorney draft a provisional lease. The lease should be provisional because you do not want to become responsible for a lease if your application is not a winner in the selection process or lottery.

Traditional leases do not contain provisional language. Signing a lease without this language is not advisable, unless you have a Plan B to use the building in another way. Also, if you are the landlord, you will want protections put into the lease that traditional boilerplate real estate leases do not contain. A landlord should have an attorney who is familiar with the cannabis industry review or draft an industry-specific lease. Not all real estate attorneys have experience with the cannabis industry, and some may not foresee industry concerns.

Next, you will want to go through each provision and requirement of the application with a fine-toothed comb. Try to utilize local businesses; this looks good to city administrators, because these are businesses they know and are more likely to trust. For example, you might hire a local professional security company to go over your building blueprint to suggest cameras, lighting and other security measures. If there is anything in the rules that addresses security, make sure to include the security plan in the license application. Follow every instruction to the letter.

As a side note on this issue: discuss with the government agency or city planner in charge of the applications as to whether the blueprints will be open to the public. If made public record, plans could be used by the unsavory to plan a burglary or robbery. As a matter of safety, discuss this issue with the city.

On top of making sure you have all the elements of the application in place, it is advisable to have the following extra items communicate to the governing entity that you are ready for business and that the company will be run as a legitimate business.

– Business records, including bylaws and corporate minutes;

– A business plan;

– A standard operating procedures manual for your business;

– An industry-specific employee manual;

– Complete financial records, which also identify your accountant;

– Proper insurance policies;

– The biographies of your officers and/or board members.

Finally, remember that preparing your application is not something that should be done at the last minute. If you can, delegate sections of the application to others in your group. Just make sure everyone is accountable to stay on schedule, and plan on some things taking more time or being more expensive than you thought. Don’t stress. You are ready for this. Go for it!

 

Michele Brooke is an attorney in California who practices civil litigation and civil cannabis law (www.brookelawgroup). She is a member of Americans for Safe Access, NORML and the American Herbal Products Association.

 

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