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

  1. Home
  2.  → 
  3. Commercial Real Estate
  4.  → Real Estate Transactions in the Cannabis Industry

Real Estate Transactions in the Cannabis Industry

On Behalf of | Apr 19, 2018 | Commercial Real Estate

For Washington and Oregon

As long as the transaction doesn’t involve bank financing, law firms with real estate experience and licensed Limited Practice Officers (LPO) can close real estate transactions.

Approximately one year ago…

The title companies around the country were advised to stay away from the cannabis industry.  JDSA continues to stand by the industry to assist with creative solutions to these hurdles.

Here is a recap with updates that may impact you and your business:

Recap:  2017 Title and Escrow Changes

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 Bulletin states, 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

This 2017 mandate from title & escrow affects anyone who may want to purchase property and rent space to cannabis operations – therefore, this applies to those with no tie to the industry, other than a something as simple as a lease.

Updates:  2018 Changes

After the Bulletin was first released, title insurance was available with the inclusion of an exception related to violation of federal law.  The current practice is to disallow the issuance of title insurance altogether.  Additionally, title companies used to provide a marijuana buyer with a list of the subject property’s known encumbrances. However, as of recent, even this request has been denied.

So, why the change?

We were told that the possible reason for the title companies’ sudden change of heart was because of Sean Spicer’s and the Attorney General Jeff Session’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. And considering that the Attorney General repealed the Cole Memo in January 2018, trepidation surrounding the industry has only increased.

What is the industry’s reaction?

The cannabis industry has grown accustom to forced creativity in order to simply retain some semblance of normalcy in business.

Typically, financial institutions acting as lenders require the purchase and sale be closed by a title company.  The borrower has to negotiate a very unusual exception to close a bank-financed transaction outside of a title company.

The good news is, 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.

How JDSA can help

JDSA is equipped to close real estate transactions that do not involve bank financing for cannabis businesses in Washington and Oregon. 

These transactions are forced to close without title insurance.  Even though title companies have determined that closing real estate transactions for land that may be used for cannabis growing, processing or retail sale is too risky, JDSA is well-prepared to help ease some of the risk.

We have successfully closed numerous cannabis real estate and/or cannabis business sales, drafted purchase and sale documents, issued settlement statements and recorded all the necessary transfer documents.  Our JDSA real estate professionals, attorneys and LPOs perform county record searches, utilizing our 70+ years of real estate experience to best fit the cannabis industry member’s needs.

If you should have questions or need legal assistance with a cannabis real estate transaction, contact an attorney at JDSA Law and read up on all the latest Cannabis topics on the JDSA Blog.