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New York Cannabis Law's Lease Mandate Catch-22

By Marjorie J. Peerce, Michael P. Robotti and Kamera Boyd
November 01, 2021

New York's recently enacted cannabis law, the Marijuana Regulation and Taxation of 2021 (MRTA), created a maze of new legal requirements. These provisions affect not only cannabis companies, but also the companies that conduct business with them. Navigating this maze can be tricky, especially since much of the MRTA conflicts with federal law. One particularly complex area is the regulation of New York real estate as it relates to cannabis companies. Cannabis companies and landowners alike should be wary of the legal pitfalls in this area and seek appropriate legal guidance.

Under the MRTA, New York will grant licenses to companies to distribute cannabis. Although these companies will be state-licensed, it likely will violate the federal "stash-house law" to lease property to them. Landowners may be reluctant to lease to licensed cannabis businesses and risk federal criminal liability, when they could lease to other types of businesses without that risk. This landowner reluctance could create a Catch-22 for cannabis companies: to get a state license, they need property from which to operate their cannabis business; but to get property, under federal law, they cannot plan to sell cannabis from it.

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