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10 Need-to-Knows Before Leasing Dispensary Property

Cannabis Retail Property Rental Tips Signing a property lease for a cannabis retail location is a major investment and business decision. Don't take it lightly! There are a few strategic choices you should carefully review and make sure you have fully considered before you commit.

Not sure how to find a cannabis dispensary location? Here are 10 questions to ask before you sign your name on the dotted line.

1. Are the physical features of the property sufficient?

First and foremost, carefully evaluate the property to ensure that its physical features fit not only your immediate needs but also the needs of your business as it continues to grow. Consider whether a location has sufficient warehouse and storage space, enough floor space for customers, bathrooms, processing rooms, and everything else you need

You’ll also want to ensure you have a sufficient shipping and receiving area, water supply, and access to high-speed internet. This is listed first for a reason! It is perhaps the single most important consideration.

2. Are there forthcoming legal developments which may affect business?

Another important consideration when evaluating locations for your cannabis dispensary is upcoming state or local legal developments that may potentially impact your business. Consult a local attorney to discuss these issues. Zoning or compliance policies may be up for review in the near future, or other legal questions may be decided that would impact your decision to lease one location over another.

3. What are the local demographics?

Look into the local demographics in the area surrounding this potential location. Does your customer base live nearby? If your audience is cannabis consumers with disposable income who are interested in artisan cannabis products, make sure the location supports that demographic. If you are looking to serve a more economically-friendly demographic, you probably don’t want to move into the most expensive neighborhood in the city.

4. Is the local area cannabis positive?

Doing a little investigation into the beliefs and attitudes of the community you are hoping to open a business in can help you avoid a number of unpleasant situations. Even though state law may permit the sale or usage of cannabis, in many communities municipal or local sentiment is still very much against cannabis in principle.

In Canada, this is especially important. In places like Toronto, cannabis laws allow individuals in the community to vote on whether they want cannabis retail stores operating in their neighborhood. If they vote no, you could be denied your license or begin your business with a bad footing in the community.

Choosing an area which has a healthy, cannabis-positive attitude can help you avoid this potential quagmire. Another way to get through this obstacle is through education. When a community is anti-legal cannabis, they tend to cite safety reasons. Help educate them on the methods you will use to make sure your retail operation doesn’t negatively impact the community. This includes things like ensuring there will be no cannabis visible from the outside, that signage with be understated and compliant, and that you plan to use a cannabis specific Point of Sale (POS) system to track and trace all products and verify identification.

5. Is the lessor fully onboard legally and financially?

One thing you will want to confirm is that the lessor is fully aware of your intended commercial activity on their property and that they have modified their lease to accommodate your occupancy in a way that best protects the both of you from potential legal ramifications. In some states, the property owner can be held jointly liable and have their assets seized despite not directly participating in the sale of cannabis whatsoever, should legal or compliance issues arise. You will want to maintain an honest and open relationship with your lessor at all times to minimize risk.

6. Have I carefully read and agree with all lease provisions?

Before you lease a property for a dispensary, have your attorney evaluate all the customized provisions the lessor may have added to the document, and make sure you agree with all of them. Typically these sorts of provisions will entail limited use clauses, covenants that the tenant vows to abide by all state and local laws, early termination clauses in case one or the other party violates the lease, and other modifications of this nature.

These are some of the most important considerations you should evaluate before signing a leasing agreement for your dispensary. Ensuring that the property will be sufficient for your needs, that the local legal climate is stable, that you have chosen the best possible fit to local commercial usage patterns, and that the lessor is fully onboard with the proposal. And that you fully agree to the final language of the document. Both of these steps will help you set yourself up for future success

7. Is this location accessible to a wide range of people?

When thinking about accessibility, you must consider two different aspects. First, not every customer coming to this location will have the same physical abilities and your store needs to be accessible to them as well. Can a person using a wheelchair get through the front door of this location? Is there room for them to get around once inside? Be sure to consider disability accessibility before signing a cannabis dispensary lease.

Secondly, consider accessibility for suppliers and employees. Is there enough parking for your employees? Is there room for suppliers, who may be in big rig trucks, to deliver efficiently to this location? Be sure to address accessibility from all angles.

8. Is this location far enough away from schools, park, or other legal requirements?

Each state or province can vary, but generally speaking, there are strict guidelines for how far a cannabis retail location must be from a school or park. In Colorado, no dispensary can be within 1,000 feet of a school. In California, that distance is a 600-foot radius. Check the local regulations and be sure the location you are considering is compliant.

9. Do traffic patterns surrounding the location support business?

You can dramatically improve your chances of opening a successful cannabis dispensary by carefully analyzing local demographics and traffic patterns, to make sure that your facility is located in an ideal area. Lease a property for a dispensary in a highly walkable neighborhood or area to increase foot traffic, and select a central location that has excellent roadway access to ensure clients find visiting your dispensary convenient and easy.

10. Have I completed a thorough cost assessment?

A cost assessment of any potential cannabis dispensary location should include big things like estimated utility costs. But it should also include the small things you may overlook, like janitorial services, insurance, parking costs, and more. All of these secondary costs can add up, and you don’t want to be stuck in a lease because you didn’t conduct a thorough cost assessment ahead of time.

Opening a cannabis retail business can be a steep learning curve. Get industry news, best practices, and tips for running a successful dispensary by subscribing to our blog.


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