Can You Modify a Commercial Space for Your Cannabis Business?

Female business owner next ot open sign on door

Can You Modify a Commercial Space for Your Cannabis Business?

May 19 2021, by Jessica McElfresh in Marijuana Business, Marijuana Business

Cannabis is a legal but highly regulated business in California. You can modify commercial space to fit your needs within the limits of state and local laws and regulations, just like any other business. However, there are special considerations due to the nature of a cannabis operation.

What Modifications are Off-Limits?

Some commercial spaces are off-limits for modification to a cannabis business. You can’t modify a building if it violates state or local laws, such as fire codes, safety rules, and zoning laws. You can’t convert a residential property for commercial use without special zoning permission. Any changes that you make to your space cannot block fire exits or disable fire sprinklers.

If you own the building, you won’t need to deal with a lease, but there may be other regulatory considerations.

If you lease the commercial property, you’ll need to negotiate with the landlord.

What’s the Landlord’s Role?

You cannot make any modifications without first consulting with your landlord. Any changes to the building should be discussed and put in writing.

If you want to make complex changes to an existing space, you may want to hire an architect to make sure the space is designed correctly. Typically, commercial landlords prefer to do the construction (or choose the contractor) because they’re familiar with the building, structure, and systems. There may be local or community requirements in terms of style, color, and design. Your landlord may want a consistent look.

Should your landlord allow you to take on modifications, you may have to:

  • Carry insurance that will cover damage to the building and injuries to workers.
  • Post a bond to pay expenses if you poorly manage the project or run out of money before it’s finished.
  • Protect the property owner against “mechanics’ liens” (which occur if you don’t pay contractors or suppliers) that “cloud” the property’s title and cause significant problems for the landlord.

As part of the lease, you and your landlord must state who will pay for the work. Usually, landlords give tenants money, known as a tenant improvement allowance. If your improvement cost exceeds your TIA, you will pay for the balance. If the building is new, the landlord gives a standard allowance (known as a “build-out”) to every tenant.

Why Should I Hire an Attorney to Help My Business?

Whether you’re purchasing a building or negotiating with a landlord, you’re facing potential legal traps you don’t want to fall into, such as:

  • Zoning is a highly complex area of law (take San Diego’s zoning ordinance, for example). You want to avoid costly or time-consuming violations or issues.
  • Negotiating favorable lease terms is critical to your business. If the property owned won’t agree to what you need, you might need to start searching for new space.
  • Submitting the design layout of your business is part of your application for a state cannabis business license (Cal. Civ. Code § 26501.5(c)) and C.C.R. §40105).

Contact McElfresh Law Today

Whether you are modifying, expanding, or opening a cannabis business, an attorney who focuses on marijuana laws is a valuable asset. McElfresh Law helps clients with the legal challenges of cannabis permitting, regulation, and licensing.

We pride ourselves on our all-inclusive and personalized legal support, so our clients enjoy long-term success and prosperity. We can do the same for you.

Call (858) 756-7107 today, or contact us online to schedule your consultation.