A Full-Service Law Firm Committed To Your Journey For Life

  1. Home
  2.  → 
  3. Agricultural Law, Land Use, Environmental Law
  4.  → Another Door Closed: Real Estate Transactions in the Cannabis Industry

Another Door Closed: Real Estate Transactions in the Cannabis Industry

On Behalf of | Jun 9, 2017 | Agricultural Law, Land Use, Environmental Law

On April 18, 2017, national title companies such as Fidelity National Title Insurance Company, Chicago Title Insurance Company and Alamo Title Insurance received Underwriting Bulletin No. 2017-RC-04, closing yet another door to the cannabis industry: title & escrow.  The memorandum, states that if the title company receives any notice from the broker, seller, buyer or anyone else, that the Land is or will be used in some capacity for growing, producing, distribution or dispensing of any type of marijuana or marijuana products, the title company is not allowed to:

  1. Be involved in the handling of any escrow or other funds of any type
  2. Issue any type of zoning coverage
  3. Issue title insurance without the inclusion of an exception related to violation of federal law

We have been told that the possible reason for the  title companies’ sudden change of heart is because of Sean Spicer’s and the Attorney General’s comments on marijuana and the current administrations unpredictability as to the topic.  This fear of federal enforcement is often used as an excuse by national companies to discontinuing working with the cannabis industry.

The cannabis industry has grown accustom to having to get creative in order to just retain some semblance of normalcy in business.   However, this new mandate from title & escrow affects folks who might want to purchase property and rent space to cannabis operations and thus applies to those with no tie to the industry, other than a something as simple as a lease.

Typically, financial institutions acting as lenders will require that the purchase and sale be closed by a title company.  The borrower would have to negotiate a very unusual exception to close a bank-financed transaction outside of a title company.  The good news is that as long as the real estate transaction doesn’t involve bank financing, law firms with real estate experience and licensed Limited Practice Officers (LPO) can close real estate transactions.  At JDSA, we can draft the purchase and sale documents, coordinate title insurance with the title company, issue settlement statements and record the transfer documents, be it a deed or real estate contract.

The cannabis industry once again must get creative in order to conduct normal business practices.

Even though the title companies have suddenly determined that closing real estate transactions for land that may be used for cannabis growing, processing or retail sale is too risky, Law firms such as JDSA are equipped to close real estate transactions that do not involve bank financing.  JDSA is standing by the industry and will assist with creative solutions to the hurdles that are put in place.