It’s been a few months since we leased our space in Corvallis. To date, we are still unable to use the property for cannabis retail. The city of Corvallis has approved the site and the landlord has leased the site to our company for retail cannabis. But there is a catch: the site was previously occupied by a different cannabis retail store.
In June, that store was raided by the DEA and Oregon Liquor Control Commission (OLCC) on allegations the store was engaging in credit card fraud and shipping cannabis over state lines. The tenants and all cannabis products were removed from the store. The owner of the building then officially removed the tenants from their lease, including all of their belongings that were not removed during the raid. The next day, our company took over the lease and the OLCC received our application for change of ownership of the address. The wheels were in motion and we believed it was only a matter of time before our approval.
We were wrong.
The hard stop came when the OLCC realized the address on our application was still being held by the prior tenant’s license with the same address. The agency could not agree how to separate the license from the address. As it stood, the landlord had officially given notice that the prior tenant is not able to use the space, and the OLCC has suspended the license and taken steps for a revocation hearing.
Fast forward to today and we are paying rent on a space we can only use as a retail cannabis store. We asked the landlord for a suspension and/or relief on the lease until the revocation hearing and ultimately the ability for our application to be processed, but the landlord denied our request for any relief in compensation. The bigger picture is a lose-lose: if we back out of our lease agreement, we lose the potential for a Corvallis store, the reduced rental income drives down the value of the building for the landlord and fewer tax dollars make their way to the state to stop illegal cannabis activities.
On the one side, we have the OLCC, which cannot separate the now-suspended prior tenant from the address at which they have no legal right to occupy. On the other side, we have a building owner not granting any relief. This is the reality of our industry today. The regulating government is overworked and understaffed, leaving very little ability to solve problems quickly. And greed can cloud a landlord’s short-term judgement for a possible long-term tenant occupancy.
If you ever wonder why there is still a large portion of our industry in the black market, our company lives the argument every day. We play by the rules, and though the rules are sometimes hard to swallow, we follow them anyway. In the next few days, we will decide if this tag-team punching session is going to return a net positive in the five-year term of the lease.
The miracle is in the greens.